Breach of Contract to Lease - Demand Letter?

[Adam Perez]

I wanted to share my recent rental experience and seek some advice on how to handle the situation. Normally, I handle the leasing of my properties myself, but this time, as I am in the process of buying a new home and renting out my current primary residence, my long-time agent kindly offered to handle the leasing of my current property free of charge, as it was a contingency for closing on my new home.

On the first day of listing, we received a lot of interest and received two offers. After reviewing them carefully, I decided to go with an offer from a highly qualified tenant. Typically, I request tenants to make the deposit directly to me, but in this case, they sent it to their agent's escrow or potentially the brokerage. I had proof of the wire transfer amounting to $5,300, but we did not receive an escrow letter. I informed the other offer, which was for the full price, that we had accepted another offer but they could remain as a backup.

As the final day to sign the lease approached on May 26th, we reached out to the tenant and their agent at 10 PM, inquiring about the delay in signing a simple lease document via DocuSign. The agent responded in an aggressive manner, stating that their client would sign when they were ready. We emphasized the approaching deadline, but they insisted that their client would not be pressured and decided to back out of the deal. Unfortunately, the other offer had already found another house and was no longer available.

I initially believed that the escrow company would send us the funds for the deposit and the broken contract. However, when my agent contacted the other agent, she responded dismissively, insulting my agent, and instructing us not to communicate directly with her but instead to take the matter up with her brokerage's legal team. I have now realized two important lessons: never accept a deposit that isn't directly deposited into your bank account when holding a property, and never cease showing a property until the lease is signed and the funds are secured.

Although I still have some time before closing on my new home, the setback has cost us both time and momentum. Moreover, I find it difficult to tolerate individuals who lack integrity and sign contracts without recognizing any accountability. I understand that many will advise me to move on from this situation; however, I am contemplating sending a demand letter directly to the prospective tenants (as I have their emails and address from the application). This action seems relatively low effort and low risk, with potential upside. They could simply ignore the letter and discard it, ending the matter there, or they may become concerned and attempt to negotiate with us. The terms of the contract are simple, binding, and clear-cut, falling well within the small claims court limit.

I would appreciate any insights, suggestions, or similar experiences from the community. Thank you for your time and support.

[Richard F.]

Quote from @Adam Perez:

Quote from @Richard F.:

Aloha,

First Rule of Real Estate: Get everything in writing! You have no written agreement with YOUR Agent, nothing with the prospective Renter's agent, no instructions to, or acknowledgement from Escrow. Is it customary for Renters to even use Escrow in your locale? You do not state where you are located, and every jurisdiction is different, but I don't see any hope for getting anything from them, with apparently NO evidence to support that there was a "meeting of the minds".

You can try to take it up with YOUR Agent's Broker, but again with nothing in writing...good luck. You had a strong back up offer,  you should have had a deadline for the first one to sign and return docs, and if they did not, move on to #2. Delays and excuses are solely for the Prospect to continue to shop around for a better deal, on any property.

I have a rental listing agreement with my agent. I have a contract to lease that states it’s going to escrow. It’s customary in my area to use this when agents are involved. There was a deadline for them to finalize the lease. Us pushing them to sign to move to the next offer is what apparently got them to back out.  

 In that case, then what does the contract state regarding escrow? Was there a deadline stated? Consequence if not met? You still might talk with your Agent's Broker to see if the Agent followed policy. It sounds like the Tenants probably had other issues if they backed out for no real reason. They likely would have been very difficult Tenants anyway, so maybe you dodged a bullet.