Help!! After signing the lease tenant is attempting to back out!

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Help!! After signing the lease tenant is attempting to back out!

Nick Brubaker
Decatur, GA · Member since 2015 · 419 posts · 52 votes

Hi everyone,

Let me start by clarifying that I am inexperienced and this is my first attempt at finding a tenant for my first SFH. That said, please don't assume I am acting foolishly either - I have been very careful in these early stages of starting my business.

I have finally found a tenant for my first property.  She currently lives in California, but will be moving here to Georgia at the beginning of October to start work at one of the major animal research centers here.  The only reason I entertained her application at this point was that she was agreeing to pay rent for September as well, because she really liked the house.  

Anyway, after working with her for almost a week she finally signed the lease agreement on Docusign yesterday.  She has not yet maid any payment - was going to pay the security deposit through eRentPayment today.  Suddenly (and suspiciously) though her job offer is no longer certain apparently and she is stating that she will not be renting the house.  

My Lease Agreement is quite thorough (13 pages) and does not allow someone to back out in such a way.  

I told her already that the lease is binding and that only made things worse and she is now "formally intent on not renting the house".  

What do you all suggest I do?  I should add that I am really not looking forward to the idea of showing the house again and searching for quality tenants, it has taken me a very long time so far.  I also don't know how much I can stomach any kind of legal battle.  

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Kalimah Jenkins
Investor · Marietta, GA · Member since 2014 · 226 posts · 97 votes
10y
Nick Brubaker I would simply suggest you move on. You'd be wasting good time that you could use to find tenants. Perhaps you could get a better system in place for locating tenants. If she hasn't paid anything and just "sealed" the deal yesterday, consider it a learning experience and locate another tenant. A Zillow ad should get you some calls given its the end of the month.
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  • Kalimah Jenkins
    Investor · Marietta, GA · Member since 2014 · 226 posts · 97 votes
    10y
    Nick Brubaker I would simply suggest you move on. You'd be wasting good time that you could use to find tenants. Perhaps you could get a better system in place for locating tenants. If she hasn't paid anything and just "sealed" the deal yesterday, consider it a learning experience and locate another tenant. A Zillow ad should get you some calls given its the end of the month.
    8Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    10y

    Let her go. It isn't worth the fight. Now that you know this one won't work out get it back on the market.

    6Reply
  • Rich N.Pro Member
    Investor · Haverhill, MA · Member since 2015 · 761 posts · 328 votes
    10y

    As much as you have a lease, none of the monies changed hands, so its hard to keep any of it as a penalty plus she being in a different State....its just not worth any kind of drama or court or lost time chasing it down.  Best thing is to just move forward and get another tenant.

    Trust us, this will not be the first and it won't be the last time a tenant walks off on you.

    2Reply
  • Matt Sicignano
    Investor · Smyrna, GA · Member since 2014 · 96 posts · 72 votes
    10y

    She found a better/cheaper/closer/cuter house.....that happens, and you will be better able to deal with these kinds of things with more experience.  One of the ways is to get a deposit with the lease agreement, and a document signed that says if the tenant doesn't perform, that deposit is your liquidated damages. Don't sign or take off the market without those two!  As far as the legality's , I'm not one of those wimpy landlords that say it's not worth it, don't bother, too much trouble, etc. etc. etc.-I do go after tenants, but in this case I wouldn't.  The hurdle is that you have to serve her in California. Your expenses would be more than your damages.  

    0Reply
  • Paul Smythe
    Investor · Greenville, SC · Member since 2012 · 269 posts · 187 votes
    10y

    @Nick Brubaker I don't think you have an option other than to move on. I highly doubt they'll be paying you rent anytime soon if you did try to force them to honor the lease agreement. You'd be creating a nightmare.

    0Reply
  • Tommy F.
    Investor · Charlotte, NC · Member since 2015 · 183 posts · 146 votes
    10y
    Nick Brubaker ,don't waste anymore time. She's in California (maybe), you're in Georgia. FOR RENT should be in front yard before nightfall.
    0Reply
  • Marc W.
    Oak View, CA · Member since 2016 · 32 posts · 21 votes
    10y

    So you have a "lease agreement" where no money has changed hands, no delivery was made, and no costs were incurred...

    No judge will enforce that, best to move on. In the future, ask for deposit as earnest money. If they flake, that deposit is yours.

    0Reply
  • Nick Brubaker
    OP
    Decatur, GA · Member since 2015 · 419 posts · 52 votes
    10y

    Thank you everyone.  Very frustrating. 

    0Reply
  • Steve B.
    Engineer · Portland, OR · Member since 2014 · 1k+ posts · 1k+ votes
    10y
    Without a deposit you fail to meet sufficient consideration for a bilateral contract. Don't ever have a a prospective tenant sign anything you plan to hold them to with a deposit. As an aside, Out of state renters are usually much less serious than they seem. Something you will Learn over time
    2Reply
  • Steve B.
    Engineer · Portland, OR · Member since 2014 · 1k+ posts · 1k+ votes
    10y
    *without a deposit
    0Reply
  • Jonathan G.
    Investor · Marietta, GA · Member since 2015 · 382 posts · 258 votes
    10y
    Probably best to move on.
    0Reply
  • Brandon Schlichter
    Real Estate Agent · Circleville, OH · Member since 2008 · 633 posts · 488 votes
    10y

    Personally i keep showing, take up backup interested parties, and keep on generally doing everything till I have cash and a signed contract in hand. Up till that point every single tenant I deal with is lying to me.

    It sucks it has to be that way, but people always feel the landlord is the easiest and best person to screw over and they honestly think the world is theirs. So, for me I remind them that I don't actually NEED their lease + money, I Just need someone's and I'll go with the one who can do it first and is approved as a quality tenant.

    1Reply
  • Nattapon Permchom
    Investor · Columbia, SC · Member since 2010 · 30 posts · 6 votes
    10y
    Don't count chicken until it hatched, in this case I always continue advertising until I get lease signed, rent and security deposit money in my account, doing move in check list, and give them the key, then I can take my sign and deactivate all the ads. I recently had one prospect walked out too, he paid the screening and pass but decided not to move forward, but because my advertising is still active I have 3 more applications line up. I guess you better get used to this or let pm do it, otherwise this real estate might not be your thing. There're a lot of ways to make money out there, you don't have to do this if you're not happy doing it.
    0Reply
  • Sterling WhitePro Member
    Rental Property Investor · Indianapolis, IN · Member since 2014 · 554 posts · 153 votes
    10y

    As others have stated take this as a learning lesson, @Nick Brubaker. There's plenty of qualified tenants out there. Next time work towards getting security deposit in hand once tenant is approved.

    Podcast Guest on Show #308
    1Reply
  • Gail K.
    Augusta, GA · Member since 2014 · 1k+ posts · 1k+ votes
    10y

    Yes; it really is frustrating.  Years ago I had a tenant sign a lease but ask if he could hold off paying the security deposit/rent until the 1st of the month when he formally moved down here (he was visiting his daughter at the time) and received his disability check.

    This guy was an older, 100 percent service connected veteran. I work at a VA Medical Center so I'm well aware of what he gets each month (tax free). And at that time I trusted veterans. So I stupidly said yes.

    The 1st came...and went.  No tenant.  No response to calls.  I finally tracked him down through one of his references (his pastor of all things).  The guy answered his phone (by mistake).  Then told me had rented a "cheaper" place.  I explained we had a signed, legal contract.  He said "you do what you have to do" and hung up on me.  Son of a gun (or other things) would never have actually called me to tell me any of this and just left me hanging.

    I took his advice.  I filed for an eviction on him because 1. he was local, 2. it's cheap to do in my county, 3. since the notice was going to the last known address (my rental) he wouldn't respond to it anyway and I'd get the judgment without going in front of a court and 4. the judgment would remain on his credit history for the next 7 years.

    Ironically about a year later this guy shows up in the hospital with newly diagnosed diabetes.  I'm a registered dietitian.  Guess who gets to review his diet with him?  Guess who just about faints dead away when he sees me?  I very much enjoyed planning his meals out for him during his hospital stay.  Karma is a ....never mind.

    Anyway...in your case your applicant is in California; you are in Georgia.   If she had sent the security deposit already I'd have kept it, telling her she has a signed lease and I'll be using this to pay the first month worth of rent and she'd better hope that I find a replacement for her by October 1 (although in Georgia a landlord is NOT required to remedy this).

    However, since we're talking long distance and no money exchanged do what others have said; chalk it up to an experience and move on.

    Gail

    4Reply
  • Amber Gonion
    Real Estate Broker · Hugo, MN · Member since 2016 · 688 posts · 596 votes
    10y
    This is your first indication that this person will be a problem. Move on.
    0Reply
  • Phil Earley
    Property Manager · Cumming, GA · Member since 2015 · 261 posts · 199 votes
    10y

    Implement a non-refundable reservation deposit equal to the security deposit amount and due at the time the lease is signed.   Until you receive the non-refundable deposit, do not sign a lease and keep the home available as others stated above.  

    The non-refundable reservation deposit becomes the security deposit once the move in is completed.  If they back out to no fault of yours, the non-refundable deposit is yours.   

    1Reply
  • Leslie Cambre
    Luling, LA · Member since 2015 · 10 posts · 6 votes
    10y

    Move on. In the future, keep advertising and showing until you find a qualified tenant with money in hand. There are plenty of other people actually needing to rent your house. You just need to connect with that person. Good luck!

    1Reply
  • Stephen E.
    St Thomas, Ontario · Member since 2013 · 575 posts · 408 votes
    10y

    @Nick Brubaker You have a signed contract but no consideration, i.e. cash to back it up. You can't enforce this and the costs of doing so with someone you would have to locate and serve in another state simply make this uneconomic. The advice to keep showing until you have a signed, sealed contract with move in monies in hand is good advice. Tenants walk, it is a fact of life. They are driven by their interests, not yours. Remote leasing to someone who lives far away brings added risk precisely because you cannot enforce things. Good luck finding a good, local candidate.

    1Reply
  • George P.
    Real Estate Investor · Baltimore, MD · Member since 2008 · 1k+ posts · 268 votes
    10y

    why would you want to force someone to live in your house? I understand you are frustrated as your process has to start all over again. But would you rather have someone who WANTS to be there vs. someone who is FORCED to be there. Not only she may on purpose drive you insane with bogus requests, she is not likely to stay longer than 1 year. 

    just my 2c.

    1Reply
  • Dooreuhn Cee
    Real Estate Investor · Chicago, IL · Member since 2014 · 229 posts · 171 votes
    10y

    Never stop showing until you receive cash.

    You do have a legal contract violation even though money has not changed hands.  The requirement of "consideration" to make a contract valid has been satisfied when you relied upon her contractual promise and stopped showing the house to other candidates.  However, I agree with the above, move on.  

    1Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    10y
    I never sign a lease without getting at least the security deposit. Move on, there is no legal case here. Spend your time finding a new tenant and don't sign paperwork without a deposit. It puts all the risk on you.
    1Reply
  • Nick Brubaker
    OP
    Decatur, GA · Member since 2015 · 419 posts · 52 votes
    10y
    Originally posted by @Joe Splitrock:

    I never sign a lease without getting at least the security deposit. Move on, there is no legal case here. Spend your time finding a new tenant and don't sign paperwork without a deposit. It puts all the risk on you.

     Joe brings up an interesting point.  Do you all collect the deposit before signing the lease?  I know most do it "concurrently" (this was my plan as well), but even then do you take care of the payment before the paperwork?

    0Reply
  • Michael Noto
    Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
    10y

    @Nick Brubaker Always collect a deposit first. Then make them sign a form saying that the apartment is theirs and you are taking it off the market but if they back out you get to keep the security deposit. 

    Also in your lease do you have an early termination fee?

    1Reply
  • Stephen E.
    St Thomas, Ontario · Member since 2013 · 575 posts · 408 votes
    10y

    @Nick Brubaker I always collect first and last month's rent (no security deposit allowed in Ontario) at the time of lease signing. I insist that the tenant presents move in monies in the form of a bank money order or certified cheque, and I get this deposited in the bank within 24 hours. If they can't come up with move in money then I don't agree to sign a lease. Some landlords may take the very ill advised step of handing out keys before move in monies are paid. This is a substantial error and sets the scene for thousands in lost rent and lawyer's fees to get them out. A local quirk is that in Ontario the landlord is entitled to hold last month's rent deposit but the tenant is under no obligation to pay it once they move in, which reaffirms the necessity of collecting all move in monies at the outset without any compromise.

    1Reply
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