Fully Executed Lease Contract Cancelled - What are my options??

Question

Hello,

I am a new agent (we are talking less than a month in). I have rental clients that secured a lease - it was signed by both parties and security deposit was paid. Today, the listing agents calls me and says they have to cancel the contract because the client is getting a divorce and changed her mind.

I wrote her back saying that they have a legal obligation to proceed .... contract will be breached if they do not move forward. My clients really love this place and want to move. I also added that if she absolutely cannot proceed & to avoid legal action, my clients expect three months rent and their deposit back.

She just wrote me back saying the lease was not completed because the LL's husband never signed. I had no idea she had a husband, and I do not think they were intending on bringing him into this.

What are my options and do both owners have to sign a lease agreement? his name was never even entered into the original contract and there was no place for him to sign.

This is my first transaction... beginner's luck! go figure. lol

Thanks,

Katie

Matt Solis · Answer

I’m assuming both the husband and wife’s names are on the deed, and my best guess is that she is correct in saying that both would need to sign the lease for it to be valid. Although, it’s very sketchy that a security deposit was delivered before the contract was actually valid. I’d definitely be talking to my broker, but if it were me, I would probably let it go as it’s not worth the headache to get lawyers involved, as long as you get your security deposit back of course.

Greg M. · Answer

First off, find your clients a new place ASAP. Getting this one is going to be difficult and probably out of the necessary timeline.

As others have mentioned, get your Broker involved immediately. They will know the law and advise you on how to proceed.

Unless Texas has some weird laws on it, the husband would not need to sign for it to be a valid lease. The wife presumably has the authority to enter into a transaction on the property. Not all owners have to sign off on something. Think of it in the absurd. Does the entire Board of Directors of Microsoft have to sign for every purchase from Office Depot? The listing agent is just trying to fool you.

If the wife did something against the wishes of the husband while they are getting divorced, the husband may have a claim against his wife and he can bring that up with the judge. This doesn't void the contract. If the wife didn't have the authority to enter into the lease, that is fraud and given the level of a security deposit, probably a felony in Texas.

I'd let the listing agent know that my clients were extremely unhappy and they plan to file a police report for fraud against the landlord and sue them in small claims court. They are also considering filing an ethics complaint against the listing agent. Whether an ethics complaint goes anywhere or not, the listing agent may put pressure on their client to settle the matter quickly. This is especially if their Broker orders the agent to make it go away.

John T. · Answer

Speak with your broker about this matter.  The broker will probably advise you to agree to cancel the first deal and continue with your main mission, which is to find a rental for your client.

As a new real estate agent, you must understand that the real estate world is a small community.  You need to develop a professional reputation with other brokers and agents.  You will cross paths with them throughout your career and you will need their cooperation.  I would not make threats like calling the police, filing ethics complaints or filing lawsuits.  Your client is free to consult with their attorney and take whatever action they deem is appropriate.

Best advice:  Follow your Broker's advice.

Ryan Kelly · Answer

@Kathleen McCabe I would take this to your broker who can also consult your brokerage legal team. You may need them.

Donna M. · Answer

Just wondering if you checked to see if the property is in both names at the property appraisers office and in the deed?.

William Wright · Answer

I'm not familiar with Texas rental and/general laws, but it sounds like there is no obligation for the husband to sign as long as the application and lease was only signed by your client.  Your broker can offer some advice and other realtors with more experience may be able to guide and/or offer a cost effective attorney for your client if it gets to that point.  Real estate is a team sport for both rookies and the most experienced - a good opportunity to reach out to others and get some guidance. This is also an opportunity to provide value for your client during a stressful situation - you're ability to help and guide her will help build your brand.

Fully Executed Lease Contract Cancelled - What are my options??

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