Can a Landlord rent out his house while it's in a contingent sale transaction?

Question

Question from the other side, appreciate your help:

House owner was trying to sell his house but didn't get good offers so he rented it out to me, we signed a lease and I gave him the security deposit.

Later before move-in, the owner said the house was in a contingent sale which the owner cancelled but the buyer didn't and the buyer fulfilled his conditions and he wants to move forward with the sale

What are my options as a tenant, move in date not reached yet and owner saying sorry go find another place to rent?

Kevin Sobilo · Answer

@Hamada Beeka, since they have said they won't allow you to move in I would ask that they are offering to pay you. If they say nothing then I would do 2 things:

1. I would file a lawsuit and file a lis pendens against the house. That would let the buyer know that the result of this lawsuit could become a lien on the house and prevent them from buying it with a mortgage. That gives you leverage in negotiating. The lis pendens would be the key to me because if the owner isn't offering anything I think they very well would negotiate once a lis pendens is filed against the property.

2. I would find another rental. Either way you need to get moved somewhere else and that will help you justify whatever amount you sue them for.

3. Get a lawyer to help you with this if the amounts are enough or if you need the help to do it.

Nathan Gesner · Answer

I would notify the owner that you want to terminate the rental agreement. Don't involve yourself in this mess.

Theresa Harris · Answer

When were you thinking of moving in?  You said you hadn't decided on one.  Honestly even if the buyer does complete the sale, you are going to have to move again in a year because they aren't going to renew your lease-why not find another place to live?  Tell them you want your deposit back in full plus compensation for them breaking the lease and any extra costs you incurred (eg did you have a cancellation fee for movers-I doubt it as you said you didn't know when you planned to move in).

Bryan Montross · Answer

I know in Maryland our sales contract states that the owner is not allowed to enter into a lease if they are under contract to sell. If they were already under contract prior to you signing, then the lease is probably not valid. There is also a clause that if there is a lease on the property when they enter the contract of sale, then the buyer has to honor the terms of that lease. If that is the case, the buyer would probably drop out unless they are an investor. Regardless, my advice would be to get out and find a new rental in the next two weeks, cash the check that says lease cancellation (keep a copy for sure as evidence they said they were cancelling), and just move on. I wouldn't want to deal with them as a landlord based on how they are currently acting. I wouldn't even push for any other compensation knowing that the compensation is that you don't have to deal with it. Hopefully it all works out.

Hamada Beeka · Answer

I already gave notice to current LL, coming up in 2 weeks, I'm looking for another place now but what if I can't find within this timeframe?

new LL now saying they almost reached an agreement with the buyer to terminate the sale, what proofs/guarantees/paperwork do I ask for if the sale terminates?

Dan H. · Answer

I would ask the LL for some compensation.   Finding a rental takes time and is work.   The LL is in the wrong and should pay for their mistake.

However if he refuses to pay anything for terminating the lease, I am unsure it is even worth the time to consult with a free tenant legal advisor.   The amount you should expect is not large because you have very little damages.

The LL is in the wrong, but you have been minimally harmed (some lost time and effort, maybe application fees).

Good luck

Steve K. · Answer

Typically a seller can't get out of a purchase contract once they agree to sell, but it's also rare for a court to force a sale if the seller just doesn't show up to closing. So it could end up being a drawn out legal battle that I wouldn't want to be involved in as a renter living there personally.

I'm not a lawyer but I don't see any justification for filing a lis pendens and clouding title as someone recommended above. I don't see how you have any claim to title just by having a lease to rent the property. The lis pendens will probably be declared spurious and invalid and be removed. Seller could be awarded legal fees for the lis pendens portion of the case, which you could be held responsible for. They might also countersue you for damages or the judge might just award damages, because if you can't support your title claim then filing a spurious  lis pendens can be considered slander of title. If you're looking to get involved in a legal way, lawyer up now. But yeah, not worth it in my opinion, I'd stay out of it and find a place to rent or buy that isn't on the verge of a sale or potential lawsuit. There may be a clause in the sales contract that the seller can't sign a lease during the transaction and your lease may be invalid.

I'm with Nathan, I wouldn't want to get involved in this mess. I'd cash the check and move on. There are other places to rent. Or even better, find a place of your own to buy if you can, so you don't have to deal with renting and paying 100% interest anymore!

Theresa Harris · Answer

I don't know why you'd want to move in at this point. You knew the house was for sale and he said he took it off the market, but then got it under contract anyhow. Even if he doesn't go through with the sale, he'll likely put it back on the market next spring. At this point, cash the check and move on.

Hamada Beeka · Answer

Looks like Landlord wants to terminate the lease without costs to him, he gave me a check for the security deposit (with memo noted: lease cancellation) and keeps insisting that I cash it

I didn't agree nor imply that I want to terminate the lease and I didn't cash the check

Can a Landlord rent out his house while it's in a contingent sale transaction?

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