Tenant Prospect Payment to not market my property

Tenant Prospect Payment to not market my property

Member since 2019 · 5 posts · 2 votes

So I have a prospective tenant who has a section 8 voucher.  She won't be able to get a new voucher until July 1, 2019 which is a month and a half away.  She desperately want to moving into my property because it's a 4 bedroom and she qualifies for a 4 bedroom.  The Section 8 process and inspection may run throughout the month of June.   She's paid the full deposit of $1500 so I removed the listing.  I told her that if the housing inspection is not complete or doesn't pass inspection by 5/28/2019, I'd refund her deposit and find another tenant.  

She believes the section 8 process may take run throughout June and they won't pay June's rent anyway because they're already paying the rent at her current residence.  She offered to pay June's rent out of her own pocket without taking possession of the property or signing a lease.  Essentially the $1500 rent payment is a gift so that I won't market or rent the property to anyone else until July.  I won't be giving her the keys or signing a lease for June.  If the section 8 process is is complete by July 1st, 2019, we'll sign a lease and Section 8 will pay the rent going forward.  Is this legal?  Am I at any risk?  How can I document this agreement?  Should I document this agreement?

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  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    7y

    Write it up as a short lease and that renewal for July 1 2019 is dependent on section 8 approval by (insert date).

  • Rental Property Investor · Indiana...mostly · Member since 2019 · 468 posts · 245 votes
    7y

    If I understand what you're saying, it seems to me like she's paying a non-refundable deposit in exchange for you not renting to someone else.  In a sense you are giving up potential rent by not renting to someone else. So it's fair for her to pay you.  She's paying but no moving in because she's confident she'll be approved for Section 8.

    It would be a rare circumstance for me to have removed the listed if I didn't have a non-refundable deposit.  I would've continued to show and get the next person in line in case Section 8 does not come through for this person.

    I would accept her money for June in exchange for me giving up rent that someone else would have paid me if I allowed them to move in on June 1.

    Think about it this way...what if you don't let someone move in in May, and don't let someone move in in June and what if Section 8 takes another month, July, and she's still not approved?  You will have given up several months that someone else could have rented.  What if she's never approved?

    For these reasons, it seems fair to me for her to pay you as long as you're not renting to someone else and holding it open for her.

  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    7y

    Bad idea. Unless your market is really bad and you're really desperate, there's no need to hold a property for more than 7-14 days. After that, the tenant starts paying rent.

    She's already admitted she's still paying rent somewhere else for June so you know she can't afford to pay your rent. I highly recommend you cancel this tenant, refund her money, and find someone that's serious about renting from you.

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  • Rockaway, NJ · Member since 2016 · 2k+ posts · 2k+ votes
    7y

    Absolutely do nto write up a lease for the month, that gives her rights to occupy. instead, write up an "Agreement to Hold" with a holding FEE. Its important not to say its a holding deposit, as deposits are refundable.

  • Patti RobertsonBusiness Member
    Property Manager · Virginia Beach, VA · Member since 2016 · 2k+ posts · 2k+ votes
    7y

    @Scott P. I think there’s some confusion on the timing of when things happen here. If she doesn’t get her voucher until July one you can’t get an inspection this month. The way the process works is first she gets her paperwork she signs a couple places and you fill out a whole bunch of info about the property. You turn that in and then section 8 does their analysis to determine if you’re asking a reasonable rent and if your tenant qualifies income wise for the property. In my market that process takes about 10 days. Once you get approval on the rent amount the next step is to send it to the inspection department. The fastest that happens in my market is about 10 days. If she doesn’t get her voucher until July won the fastest we could possibly move Rhan in any of my cities would be July 20 and more likely July 30. Personally I won’t even show a tenant or unit until they have their section 8 paperwork in their hand. Before that it’s a waste of everybody’s time.

  • Rental Property Investor · Indiana...mostly · Member since 2019 · 468 posts · 245 votes
    7y

    @Patti Robertson and @Christopher Melvin Brandy, It's okay as far I as I know for a person to pay another person to let a house sit empty for a month.  So having the prospective tenant pay $1500 to keep a house empty for June, for whatever reason the payor decides to do this, seems okay to me.

    Do you guys agree?

    I'm wondering if I'm missing something.

    When July 1 arrives, the person who paid $1500 may or may not decide to rent a house from Christopher and that person and Christopher may or may not have a deal with Section 8.  That seems like a separate issue to me.  Christopher has a potential choice to take $1500 and enter into a lease with one person, or he has a choice to take $1500 and leave the house empty for 1 moth for another person to decide if she's able to lease it or not.

  • Member since 2019 · 5 posts · 2 votes
    7y

    I think Andrew has the right idea with the "Agreement to Hold" with a holding FEE.  She's already told section 8 that she plans to move July 1st so they've already started the process of issuing her a new voucher.  I'm pretty sure the process will be complete by July 1st.  I definitely could have have the house rented  before June 1st with other prospects but I have a good feeling about the family.  She already lives in the neighborhood, she has young children that will be attending the nearby school for a few years, and she has a personal friend living across the street.  For these reasons, I think she'll be a long term tenant.  On the other hand, if I had to miss June's rent, I would have went with someone else.  Does anyone know where I can get an "Agreement to Hold" document? 

  • Patti RobertsonBusiness Member
    Property Manager · Virginia Beach, VA · Member since 2016 · 2k+ posts · 2k+ votes
    7y
    Originally posted by @Christopher Melvin Brandy:

    Does anyone know where I can get an "Agreement to Hold" document? 

    I just posted this for you in another forum.  I’ll add it here too for the benefit of other members who may not have seen the other post.

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