Home Owner Wants His Property After Signed Lease with Tenants

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Home Owner Wants His Property After Signed Lease with Tenants

Mark DowsettBusiness Member
Property Manager · Tampa, FL · Member since 2017 · 18 posts · 9 votes

Hi everyone,

I run a property management company out of Tampa, Florida and I have a quick question. I have a client that has just decided to separate from his partner and has asked me to "remove his listing". That being said he knows that we have signed a lease with prospective tenants with the lease being contingent on HOA approval. (This contingency was not written into the lease, but was stated on the HOA rental app.) We would more than likely receive approval/denial this week.

Being that this is the first time I have run into an issue like this I want to make sure that I do everything correctly. Does the lease bind the renters to the property with the owner being SOL or does the homeowner have the authority to take back possession of his home thus making the renters SOL? 

Let me know your thoughts and as always thank you in advance for your responses.

sincerely,

Mark

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Tom GimerBusiness Member
DMV · Member since 2017 · 3k+ posts · 3k+ votes
8y
Originally posted by @Cara Lonsdale:
Originally posted by @Kim Meredith Hampton:

Mark,

I think you are OK since the lease was contingent on the HOA approval. I would let the homeowner know that they need to give back their app fees, deposits, and any other fees that the prospective tenant wishes to seek etc... you have done nothing wrong, just make sure that you have everything documented and try help them find another rental

As to @Shaun C. most HOA/COA's here in Florida make you run your background and sign your lease before they look at the tenant. *** backwards, but we can't change their process

Does the contingency with the HOA allow for a denial for a different reason? I would think that the lease is executed with 1 caveat being the HOA. I don't know if you can recind the lease on the basis of the HOA contingency. It is specific to the HOA. The tenant would have grounds to sue and recapture 2 months rent (at least here in AZ).

I'm with you, Cara.

Pulling this from HOA before they make their decision is a breach.

Lying and telling the tenant that the HOA denied is a breach.

Who knows... tenant might understand and be reasonable and move on with little drama.

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  • Shaun C.
    Royal Oak, MI · Member since 2015 · 257 posts · 230 votes
    8y

    Why do you have a signed lease agreement without approval from the HOA already? Mistake #1.

    0Reply
  • Cara Lonsdale
    Realtor and Investor · Scottsdale, AZ · Member since 2017 · 1k+ posts · 1k+ votes
    8y

    Is the lease EXECUTED?  It's fine that the TENANT signed it, but have YOU, the Owner, or whoever is signing on behalf of the owner signed it?  If not, it is not an executed contract and can be recinded.

    Are ALL the monies received?  If not, you may have an out there.

    If there is a clause making the lease contingent upon the HOA approval, there MAY be an out there too, depending on the way the lease reads.

    IF you have an executed contract AND there is no out with an HOA contingency, AND you have payment in hand, I would lean toward the owner being SOL. His only option at that point would be to offer the Tenant a buy out of the lease.

    1Reply
  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    8y

    Interesting one. 

    What does the lease say regarding landlord failing to deliver premises on commencement date?

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  • Kim Meredith HamptonBusiness Member
    Real Estate Broker · St Petersburg · Member since 2014 · 2k+ posts · 2k+ votes
    8y

    Mark,

    I think you are OK since the lease was contingent on the HOA approval. I would let the homeowner know that they need to give back their app fees, deposits, and any other fees that the prospective tenant wishes to seek etc... you have done nothing wrong, just make sure that you have everything documented and try help them find another rental

    As to @Shaun C. most HOA/COA's here in Florida make you run your background and sign your lease before they look at the tenant. *** backwards, but we can't change their process

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  • Mark DowsettBusiness Member
    OP
    Property Manager · Tampa, FL · Member since 2017 · 18 posts · 9 votes
    8y

    @Cara Lonsdale I appreciate the input! This is what I was leaning towards since everything is executed. Looks like we may needs to look into a buyout. Thank you!

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  • Mark DowsettBusiness Member
    OP
    Property Manager · Tampa, FL · Member since 2017 · 18 posts · 9 votes
    8y

    @Kim Meredith Hampton I appreciate the input! Got to love Florida!!! haha

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  • Mark DowsettBusiness Member
    OP
    Property Manager · Tampa, FL · Member since 2017 · 18 posts · 9 votes
    8y

    @Kim Meredith Hampton Just to cover my bases. Our lease does not indicate HOA approval, but the HOA Application does. Would this cause an issue in your opinion? I appreciate your help as this is the first time that I have run into this type of issue.

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  • Jacob A.
    Tuscaloosa, AL · Member since 2012 · 73 posts · 54 votes
    8y

    @Mark Dowsett

    I would check the local laws but where I am at, the owner in this scenario is SOL. Most states are very stringent on following the lease and executing on the owners end. 

    Check with a local attorney for the proper information. 

    0Reply
  • Kim Meredith HamptonBusiness Member
    Real Estate Broker · St Petersburg · Member since 2014 · 2k+ posts · 2k+ votes
    8y
    Originally posted by @Mark Dowsett:

    @Kim Meredith Hampton Just to cover my bases. Our lease does not indicate HOA approval, but the HOA Application does. Would this cause an issue in your opinion? I appreciate your help as this is the first time that I have run into this type of issue.

    As long as it has it "somewhere", i think your good, but you know those wonderful tenants and HOA's they are the best!!! lol

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  • Cara Lonsdale
    Realtor and Investor · Scottsdale, AZ · Member since 2017 · 1k+ posts · 1k+ votes
    8y
    Originally posted by @Kim Meredith Hampton:

    Mark,

    I think you are OK since the lease was contingent on the HOA approval. I would let the homeowner know that they need to give back their app fees, deposits, and any other fees that the prospective tenant wishes to seek etc... you have done nothing wrong, just make sure that you have everything documented and try help them find another rental

    As to @Shaun C. most HOA/COA's here in Florida make you run your background and sign your lease before they look at the tenant. *** backwards, but we can't change their process

    Does the contingency with the HOA allow for a denial for a different reason? I would think that the lease is executed with 1 caveat being the HOA. I don't know if you can recind the lease on the basis of the HOA contingency. It is specific to the HOA. The tenant would have grounds to sue and recapture 2 months rent (at least here in AZ).

    0Reply
  • Lynn McGeein
    Real Estate Agent · Virginia Beach, VA · Member since 2012 · 2k+ posts · 1k+ votes
    8y

    Does Tampa have an "owner move-in" eviction process? If so, the tenants would likely prefer to walk away rather than move in and await proper notice that the owner is moving in. If not, I'd let the HOA know the owner wants to move back in and that if they prefer the unit to be owner-occupied, they might deny the application? Not sure of legality of that, but I know how weird HOA boards are about owner-occupied versus tenant-occupied, so that might be a way out.

    0Reply
  • Shawn Q.
    Rental Property Investor · Champaign, IL · Member since 2015 · 146 posts · 80 votes
    8y

    Have you had a conversation with the owner about what their intent is? A request to remove the listing can mean many things, so I would have a clarifying call to see what the intent is. I would try to get in an email crystal clear instructions of what your owner is asking you to do. 

    Beyond the legal issue I would also view this through the lens of your brand/reputation as a property manager. If you have a tenant ready to move in (and it sounds like you do) and a HOA that approves of the tenant (sound like you might, or might soon) then you could easily take a reputational hit from the tenant badmouthing your company and/or the HOA doing the same. I would tread carefully, and make sure you have your instructions from the owner in writing and very clear. Anything you do could be subject to court scrutiny so a phone conversation won't provide the best form of documentation.

    0Reply
  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    8y
    Originally posted by @Cara Lonsdale:
    Originally posted by @Kim Meredith Hampton:

    Mark,

    I think you are OK since the lease was contingent on the HOA approval. I would let the homeowner know that they need to give back their app fees, deposits, and any other fees that the prospective tenant wishes to seek etc... you have done nothing wrong, just make sure that you have everything documented and try help them find another rental

    As to @Shaun C. most HOA/COA's here in Florida make you run your background and sign your lease before they look at the tenant. *** backwards, but we can't change their process

    Does the contingency with the HOA allow for a denial for a different reason? I would think that the lease is executed with 1 caveat being the HOA. I don't know if you can recind the lease on the basis of the HOA contingency. It is specific to the HOA. The tenant would have grounds to sue and recapture 2 months rent (at least here in AZ).

    I'm with you, Cara.

    Pulling this from HOA before they make their decision is a breach.

    Lying and telling the tenant that the HOA denied is a breach.

    Who knows... tenant might understand and be reasonable and move on with little drama.

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    2Reply
  • Mike H.
    Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
    8y

    If you have something in writing that was shown to the applicant about the HOA contingency, then it could be said that the tenant was reasonably made aware that they were not yet ok'd to move in. So if the HOA were to reject them, I think you'd be fine with the tenant. Even if the state law were to have some gray area, the tenant isn't going to waste their time and is going to reasonably believe that was a possibility and would simply move on.

    But here's the issue you have right now. The only out you have now is if the HOA denies them. What grounds could the HOA deny these people as tenants?

    It is more than likely that the HOA will accept them which means that will remove the only holdup from them becoming tenants. So regardless of whether the HOA exclusion is enough, the end result is that they more than likely will be approved and then the owner is going to have to deal with trying to get out of the lease.

    What I would recommend to the owner is that they contact the tenants right away and say, "Before we go to the HOA review, we need to pull this unit off the market.We are going to refund your deposits and any application fees immediately." and leave it at that.

    If they ask why, tell them it has nothing to do with them and the house simply can't be rented.

    That might be enough to satisfy the application so they don't pursue the breach any further. If they do bring up some outstanding costs or maybe the fact that they gave notice and now have nowhere to go, I'd recommend the owner make them an offer for their trouble.

    Maybe one month rent?

    0Reply
  • Ola Dantis
    Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes
    8y

    @Mark Dowsett In these scenarios, I think its best to be honest with all parties. Life Happens and people divorce. The tenant shouldn't litigate and the HOA will also understand.

    Transparency would go a long way in this extenuating circumstance. 

    Hope this helps, Mark. Goodluck. Thanks! - Ola 

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