Can I reject an applicants request to withdraw their withdrawal?
Coconut Creek, FL · Member since 2016 · 57 posts · 22 votes
Lol no this is not a riddle. I actually had an applicant that was going through the screening process with the HOA of my community request to withdraw the lease agreement. The applicant did not want to wait any longer for an approval for the HOA and decided they wanted to move on. After informing the applicant several times that they will lose their deposit they kept trying to tell me that I owed them their deposit. The very next day they sent me a request to withdraw their withdrawal. I really do not want this person in my home right now. Am I allowed to reject this last request, legally? I already listed my home for rent again and am receiving inquiries for rent now. I have all withdrawal request in writing.
Joe Splitrock you missed the whole part about the HOA not making a decision yet. The applicant withdrew before their process was complete.
I got all that. I think you are getting too hung up on what your lease says. Just because it is in your lease doesn't mean it is legal, enforceable or collectible. Courts view matters in practical terms. They will not award you more than your actual loss. In this case the judge will question why you didn't just let the person change their mind and rent from you. Only one day passed between their written notice and their change of heart. No court in this country would award security deposit and two months rent in this situation. Since they haven't taken possession, at most the security deposit would be awarded. My guess is your lawyer is inexperienced. Of course he gets paid no matter how this would turn out in court.
Lots of people on BP will tell you to be tough, but they have never been to court and seen how these things really play out. You are very smart to refund the money and move on.
Well said.
My guess would be not many of the folks who think the money should be kept in this situation have been involved in more than 25-30 landlord tenant disputes.
The laws and statutes are interpreted by judges folks. Judges view landlords as wealthy business owners and tenants as good people with moderate means. If you think for a second that a judge won't hammer a landlord when he/she thinks that some wealthy landlord is taking advantage of a person with moderate means to line their pockets you are in for a rough ride.
I run a pretty large portfolio of rentals ($30million+) and I have been involved in more landlord tenant court cases then I can count. You can NEVER remove and or discount the human element from the court room. Here is some for food for thought. I once had an eviction thrown out one time because a judge said the font used in one section needed to be a bigger font than the rest of the notice. Thing is I appeared in front of that judge with that same notice about 50 times prior to that and he never once had an issue with it.
@Account Closed
One more thing. It is funny how many people jump to the conclusion this will end up in court. As if court is an easy option for a person who claims to be aggrieved. It is expensive and time consuming for them as well, and frankly, most people who go to a lawyer better have a case, and not an emotion. Ask yourself...would you go to court over $800.00? Would a lawyer take a case if the aggrieved amount is $800.00?
@Account Closed
None of us had access to your lease contract, and without knowing the exact working of the contract, it is hard to judge.....
BUT, just from a common sense perspective, the tenant did not just string you along, you string him along at the same time....If the HOA denies him, are you going to pay him $800 to compensate his waiting time? if not, you are playing two sets of rules here....
How about NOT collecting deposit at all when the decision process is so long and completely out of your control?
30 days is an unreasonable amount of time for an HOA to take to approve a tenant. Can you imagine what our vacancy rates would be if we waited 30 days to process every application? We wouldn't be in business.
@David Moore it is incredibly easy and inexpensive for a renter to get a non-profit attorney to take up a case like this. In most cases it costs a tenant nothing to hold a landlord like @Account Closed up in court. However, for a landlord to defend his position it can will be an expensive proposition. It is not an issue of IF it will end up in court, it is the act of preparing and trying to avoid for the worst case scenario. We live in an extremely litigious society where people feel it is their right to go to court over stupid reasons, especially when the lawyers are free...
Does anyone on this thread have a first hand story of a tenant taking them to court over an $800.00 issue? I'd like to hear about it.
Small claims court all over the country are full of suits for a few hundred $.
@David Moore I have had a tenant fight me for $245...
Hi @Account Closed ... I respect you greatly for not just "washing your hands of it" and then not really learning the reasoning behind each side and learning any lessons going forward; and instead you asked for further explanation. Good on YOU man!
Try taking off the owner hat and only wearing the PM hat and maybe you'll see better what everyone's getting at...the initial question being: whether you as the PM would think it's fair for an owner who knew about the delay off onto a renter as rent-compensation, without underlinggjnh/circling/highlighting, etc and telling them it's "non-refundable" if they don't wait the 30days. See where that answer gets u...Gotta go.
Not a lawyer myself - so no legal advice, just done concepts to ponder.
@Account Closed - you said that you don't make the rules for the HOA approval process; although that might be true, it certainly isn't the applicant who is imposing the rule of "there must be an HOA approval" - that mandate comes from you. The long holding period is not due to the applicant either - so to hold their money during that HOA approval is probably a practice I would avoid; I would try to identify what goes into the HOA approval process and add that to my INITIAL approval process so that I know there is a high likelihood of HOA approval.
Now, why was the notion of "getting a holding deposit" introduced (not by you, but in general)? Well, it can be hard to establish the actual dollar amount of damages in many instances, so there is the concept of "liquidated damages" - a holding deposit is nothing more than a form of liquidated damages. Which leads to the question of how much damage did you incur in this case? Because a judge, should it reach that point, would probably asking that to see whether you suffered damages of that sort. For those wondering whether a tenant or applicant would pay an attorney, keep in mind that there are groups like Community Legal Services that represent tenants without charge; I recently read where one such group was ONLY handling landlord tenant matters!
And sometimes, even when the rule and letter of the law says otherwise, it's wise to follow the "golden rule" of do unto others as you would wish to be treated. Put yourself in the position of the applicant, and see whether you would think it fair for some landlord to keep your money under similar circumstances; I would think you might feel it to be unfair.
So, IMO - and as others have stated - 30 days for the HOA to approve is ridiculously long. I can get basic screening results for combined report of eviction, criminal and credit in less than a day from the online screening company I use. Then it is a matter of employment and prior landlord verifications; these usually go quickly. But even when there are complexities - such as a name match on derogatory public records or somebody with a common name so that all sorts of matches occur - it should take a week at most IMO. So, reading between the lines, this HOA is not interested in having rentals there. How many rental units are in this HOA already, and what percentage of units are already rentals?
Does anyone on this thread have a first hand story of a tenant taking them to court over an $800.00 issue? I'd like to hear about it.
I have many. Most of which were under $800.
Personally as an owner/investor I totally disagree morally/ethically with these HOAs "approving renters" since they can then discriminate arbitrarily and are RARELY held accountable :( HUD/FHA laws basically get at the idea that "Ability to Pay and/or criminal record" are about the only factors that are fair reasons to deny! (And owners are the ones with the vested interest to make sure of those 2 things.)
As a renter: I'd never agree to pay the owner a non-refundable fee like this that was outside the owner's direct control AND have to wait 30days, unless I couldn't find housing ANYwhere else.
You as an owner going forward should examine whether you like the criteria used by HOAs to determine who is/isn't acceptable as a renter....they could put You as an owner within this HOA at risk for their possibly discriminatory decision.
**If these HOAs knew better, they would not do these approvals because they open themselves to lawsuits by frustrated/confused/savvy tenants. And IF an HOA approves 100%, why have the approval rule at all!
@Account Closed I understand your view point but, I do have to say that the right thing - which you are doing - is to give them their 'holding fee' back.
I completely understand that it is a holding deposit and not a security deposit. If the applicants were in agreement with you and then changed their minds for one reason or another, that yes, absolutely keep their holding deposit - you have spend time and money and may have even possible turned other applicants away so yes, you should be compensated. However.... this scenario is not your scenario.... in your case the applicants said that 1) they would like to be withdrawn from consideration; 2) you informed them that they would be on the hook for the holding deposit and then; 3) they decided to keep their agreement with you as it stood before. In this case you are the one turning them away.... I don't believe it's morally right for you to keep an applicant's holding deposit if YOU are the one that is making the judgment call on personality especially if they have passed all your other background verification processes. You have every right to change your mind and decide not to rent to them purely because of personality - that is not a protected class - however if this is the sole reason for denying them when they were initially approved... you should return the holding deposit.
Essentially..... If they are the ones to withdraw fully - which is not the case here - you keep the fee however; if.... you are the one denying them after they've been approved - then you should refund the fair (one exception would be if they lied to you on an application), doesn't get much more fair than that.
Andrew by no means am I coming down on you, the fact that you are seeking opinions from other landlords here only goes to show that you do care... I'm merely pointing things out. One other thing to consider - do you refer to this holding money as a 'Holding Deposit' or a 'Holding Fee'? ---- I noticed that you refer to it as a deposit in your previous postings here... if that is the case...tread carefully a 'deposit' by definition is refundable, a 'fee is' not.... not only could a judge make you give the deposit back but they could also fine you for the same amount on top of it in some states/townships -- your lawyer should know this or should of at least pointed it out to you.
Andrew I commend you for seeking out advice and giving the deposit back. It's really important to run your business with an ironclad lease, rules and standards however... the human factor is also something you should take into consideration as well as compassion and just plain 'doing the right thing' regardless of what is written in the lease - in the end you want to make your money, the right way without causing others hardships if you can and be seen as a respectful landlord/investor which helps the community.
I hope this helps,
Alex
@Account Closed
One more thing. It is funny how many people jump to the conclusion this will end up in court. As if court is an easy option for a person who claims to be aggrieved. It is expensive and time consuming for them as well, and frankly, most people who go to a lawyer better have a case, and not an emotion. Ask yourself...would you go to court over $800.00? Would a lawyer take a case if the aggrieved amount is $800.00?
Small claims court doesn't require a lawyer and low income people can get a lawyer for free in some cases. So the answer to your question is yes. I have personally taken people to court for less than $800. Also keep in mind, that although $800 may not be a lot of money to you, that could be a tenants entire life savings.
@Michaela G., @Kimberly H., @Diane G., @Mike Cumbie, @Sam Shueh, @Douglass Benson, @Christopher Brainard, @James Wise, @Michael Baes, @Connie Bhimireddy, @Steve Babiak, @Arlen Chou ---- All make good points to consider.
@Account Closed Whether she is "entitled" legally to her deposit back is a moot point. It's just bad customer service. That stuff gets back to other tenants and soon you'll see less and less qualified tenants coming your way because they won't want to end up in a similar situation.
Think of this as a way of creating goodwill. I have had equipment that has fallen out of warranty still get repaired/replaced free of charge because it's cheaper to keep a customer happy than deal with negative press.
You don't want to be the known as the person that rips people off on legal technicalities...
@Account Closed
One more thing. It is funny how many people jump to the conclusion this will end up in court. As if court is an easy option for a person who claims to be aggrieved. It is expensive and time consuming for them as well, and frankly, most people who go to a lawyer better have a case, and not an emotion. Ask yourself...would you go to court over $800.00? Would a lawyer take a case if the aggrieved amount is $800.00?
Hi David:
Unfortunately many states have consumer protection laws that apply to landlord-tenant situations. In Pennsylvania, for example, a judge could theoretically require the landlord to pay: (1) the tenant's attorney fees; (2) three times the amount of actual damages ($2,400); and (3) punitive damages. Whether the judge awards that depend on the exact facts. But in most cases, I would say the landlord has more to lose than the tenant.
I'm not going to plan my business on hypotheticals. I'm going to exercise my business plan according to contracts, approved by my attorney. The point of this thread is that @Account Closed was questioning whether or not he should keep money in his contract that he had a legal right to. While the threat of litigation is something to consider, a good number of people on this thread assume it is great risk....it just isn't. Sure, it could happen. But it is not a good excuse to be fearful of what might happen. If you run your business based on fear, I don't think you can make it. And there are steps you can take to protect yourself from frivolous lawsuits...your local REIA can help you with that one.
@David Moore you asked for specifics on people who have had to deal with lawsuits under $800 earlier and you got answers from people including myself. Then you say in your most recent post that "there are steps you can take to protect yourself from frivolous lawsuits...your local REIA can help you with that one."
Can you give some specifics on how the OP would protect himself from a frivolous lawsuit, without giving the money back? He is talking about a current event, not about planning for a future event.
Having somebody file a frivolous lawsuit is a great risk... it happens ALL of the time. Do you remember Liebeck vs MacDonald's? That was the biggest and most public one that people remember. I realize that Ms Liebeck was hurt and that she had serious injuries, but seriously was MacDonald's responsible for her putting the cup between her legs and spilling it?
My auto insurance company, BMW and myself were sued by a mechanic who replaced and an airbag in my car. He honked the horn and the airbag deployed. He was the one who installed it and wired it wrong! People will file for anything and against anybody that they feel can get money from. Did my case go to trial? No... the case settled out of court, because the legal system is about who can withstand the most time and monetary pain. Did the Liebeck vs MacDonald's case go to court? Yes she won $2.4M and it was appealed and eventually settled out of court. The point is that these cases usually settle out of court because of the pain factor.
My suggestion to @Account Closed is suggesting that either. My suggestion was designed to protect Andrew from a potential frivolous lawsuit, which is exactly what you said the local REIA would do.
Legally could he keep the money... probably. Morally should he keep the money... that is not my place to judge. From a potential downside vs upside analysis should he give the money back... if I could get the release letter, I would do it in a heartbeat.
To quote you..."Legally could he keep the money...probably". Legally, he can keep the money. Period. Morally, if you sign a contract as a tenant and you seek to back out of the contract after tying up a property for 27 days, should you get your money back?
I cannot share the method on how to avoid the frivolous suit. I can tell you it is quite legal and quite ingenious. Not my idea. Picked it up at the local REIA.
Like many have already mentioned here I think this HOA is out of line with a 30 day approval process. I know you didn't ask for this advice but I would seriously considering selling the condo and move on to another non HOA property. There is a pretty good chance you will have to deal with this same issue over and over again unless you can make a good friend with someone on the HOA board.
Being careful has nothing to do with fear. It is all about risk mitigation. Always assume it will end up in court. Imagine how your story will play out in front of a judge and take that in consideration when making decisions. Document all correspondence and take lots of photos. This is about protecting your business, not living in fear.
Lets say it does go to court. How much does your attorney charge per hour? It could easily cost more than $800 just to defend yourself and then you may still be stuck giving back the $800 plus damages back.
@Chris K. brought up the other good point which is that damages can exceed what you withheld. So on top of lawyers fees, original amount, you can also have damages. This is how $800 withheld can turn into thousands.
I can see on your profile that you are new to rental property, but don't let your beginners luck blind you to the risks. @James Wise offered a good perspective as someone who manages a considerable size portfolio. I encourage you to consider advice from people like him with more experience. Learn from their mistakes rather than making your own.
Like many have already mentioned here I think this HOA is out of line with a 30 day approval process. I know you didn't ask for this advice but I would seriously considering selling the condo and move on to another non HOA property. There is a pretty good chance you will have to deal with this same issue over and over again unless you can make a good friend with someone on the HOA board.
Another option is don't own rentals that have an HOA. Then you avoid all their BS.