Tenant Says They Had A Verbal Agreement With Prior Landlord

Investor · Laurel, MD · Member since 2014 · 251 posts · 140 votes

Hello all, I took over a property last year and inherited tenants. The lease I have on file for them expires Oct 18 so we went month to month. It was a two year lease. I issued them a lease renewal with a rent increase. They are now saying they had a verbal contract with the prior landlord, who apparently said they had could have a 3 year lease (not sure why when it clearly states 24 months on the lease)

I know verbal contracts can be legally binding but what proof do I have? They could be lying for all I know.

Would love to see what everyone has to add! Thanks

-Tariq

0 Reply

131 views

Most Popular Reply

Nathan GesnerBusiness Member

Moderator

Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

@Tariq B. I wouldn't bother talking to the former Landlord. You have a written agreement and that's what the law will enforce. Tell the tenant the written lease stands, period.

The DIY Landlord Book4.7248 Reviews

Website View Page

9 Reply

See this reply in the discussion

30 Replies

Jump to latestLatest

Sort by

Charlie MacPherson
China, ME · Member since 2014 · 3k+ posts · 4k+ votes
7y
@Tariq B. Two points:
1. My understanding is that verbal contracts in real estate are not binding. See: Statute of Frauds.
2. If they had an agreement with the former landlord, they should enforce it with him. You are not a party to any such supposed agreement.
7 Reply
Sylvia B.
Rental Property Investor · Douglas County, MO · Member since 2014 · 1k+ posts · 1k+ votes
7y
Written contracts trump verbal every time.
5 Reply
Terrell Garren
Rental Property Investor · Concord, NC · Member since 2016 · 1k+ posts · 3k+ votes
7y
Why not just add an addendum to the current M2M lease for the rent increase? If they disagree, give a 30 day termination notice. This allows you some flexibility if the relationship worsens w/o waiting another 12 months to deal with it.
4 Reply
Tariq B.
OP
Investor · Laurel, MD · Member since 2014 · 251 posts · 140 votes
7y
@Terrell Garren practically they are saying they are not on a month to month because they had a verbal agreement with the prior landlord. The written lease states 1 OCT 16 as lease start date for 24 months. When I went to raise the rent and offer a new lease they then all of a sudden had a 3 year verbal lease with the prior landlord.
0 Reply
Mary M.
Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
7y
Ask the prior landlord? If that fails, then see if you can meet in the middle.... Ie if the increase if $50, see if they would be happy with $25. It is a LOT easier to keep a good tenant then have your space empty during the winter :)
1 Reply
Sam Leon
Investor · Fort Lauderdale, FL · Member since 2012 · 1k+ posts · 465 votes
7y
Did you have an attorney that handled your closing? Usually when you purchase a property an inheriting tenants it is SOP to request from the seller to provide a signed estoppel letter from each tenant confirming how much deposit they have paid, how much rent they are expected to pay, how current is their rent, what amount is owed by tenant to landlord, or landlord to tenant, any agreement verbal or otherwise outside of the lease if any...each tenant has to sign such a letter precisely to avoid after the fact agreements from being claimed.
May be your attorney has the paperwork? If you used an attorney and they didn't obtain this I wouldn't use them again in the future.
2 Reply
David L.
San Francisco, CA · Member since 2013 · 15 posts · 3 votes
7y
You should be able to get to the bottom of this by reviewing the tenant-related documents in the disclosure materials and by contacting the former landlord. Depending on how tenant-friendly your jurisdiction is and how good the tenants are, it may make sense to just keep them for another year, but varies on the details.
0 Reply
Jacob Villalobos
Whittier , CA · Member since 2013 · 176 posts · 96 votes
7y
Tell the tenant you can only go by the legal written contract.
https://www.floridabar.org/public/consumer/tip012/
1 Reply
Wesley W.
Rental Property Investor · The Vampire State · Member since 2013 · 2k+ posts · 2k+ votes
7y
Ask the tenant to produce a signed executed contract showing that agreement. Tell them you'd be happy to abide by such an agreement made prior to your ownership. If not, you'll be offering new lease conditions. And they can take it or leave it.
Try going in to a car dealership and asking to buy that new Ford F-150 for $5000 because Joe, who doesn't work there anymore, verbally agreed to it...
2 Reply
Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
7y
@Tariq B. I wouldn't bother talking to the former Landlord. You have a written agreement and that's what the law will enforce. Tell the tenant the written lease stands, period.
The DIY Landlord Book4.7248 Reviews
Website View Page
9 Reply
John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
7y
I agree that the written contract is what a judge or magistrate is going to consider.
1 Reply
Anthony Wick
Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
7y
Doesn't matter what the tenant said. Don't even bother with justifying it or "investigating" it. Print a copy of the written lease, give it to them along with the written notice of rent increase. If you want to be nice (I like to be nice), then explain to them that you can only go by a written agreement, and ask if they intend on staying or giving notice to move. If it appears they will not be cooperative then I would not give the option to renew their lease. I would give notice for them to move out.
0 Reply
Jim Pfleging
Investor · Vassalboro, ME · Member since 2016 · 11 posts · 4 votes
7y
@Tariq B. I’d like to have a verbal agreement with Bill Gates to give me $10 million. But so would. Of course they have a verbal agreement when you Increase the rent but it is non-binding especially since you are unaware. If you had a verbal agreement or was aware and maybe if it was memorialized in text or email then maybe. I don’t use leases. It’s difficult to extract payment from a lease breaker and a bad lessee has crazy leverage. These folks should go. On a side note. If I inherit tenants and it appears I would keep them, I get a whole new packet. If they look difficult when InspectIng, have it vacated as a condition of sale.
0 Reply
Andrew B.
Rockaway, NJ · Member since 2016 · 2k+ posts · 2k+ votes
7y
@Tariq B. verbal agreements can and do get enforced in court. this is why it is so important to get a signed estoppel agreement when taking over an inherited property. if you have one, default there. if you do not have one, get one from now on. for your current situation, the vetbal agreement should not hold up. this is because contract law typically stipulates that you must have a written agreement for the transfer of real property or for agreements which last for 1 year or more. this is not a situation that a verbal agreement should apply to, even if the old landlord did offer it (obviously its BS). of course, confirm with your local laws as this can vary by state
3 Reply
AMY N.
Rental Property Investor · Bay Area, CA · Member since 2018 · 2 posts · 2 votes
7y
@Tariq B. From my understanding, the length of the lease terms is separate from the rent increase. So, if the written lease has a term of 1 yr, 2 yrs, or 3 yrs, it is a contract to stay for that length of time. The rent stated on the lease would be the agreed rent for the beginning of the term. Now, some cities may have rent control that limits the rent increase In dollars or percentages. Rent control may also limit the frequency of those rent increases - typically to once a year. A rent hike every two years should be expected to keep up wIth inflation. I review my tenants’ records and typically raise their rents every 18-24 months. Since our property is under rent control, the increases are minimal, averaging $40-$60 per year. My tenants have never complained (at least, not to my face) since they are paying less than the current market rate. Back to your case, when you have a new lease with new terms and new rent, it starts the clock again. If the rent increase is a reasonable amount at fair market rate, I would explain that other homes in the neighborhood are in the same prIce range. Always check with your city and state laws regarding verbal agreements. All the best!
0 Reply
Heather Schmidtknecht
Rental Property Investor · Winona, MN · Member since 2018 · 87 posts · 90 votes
7y
@Jim Pfleging -- you don’t use leases at all?
0 Reply
Mary M.
Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
7y
So i am continuously amazed at how hard core some folks are. Sure we as landlords need to stick to the lease etc. However, why would you not at least ask the prior landlord? Goodwill with tenants is a good thing.
So, if it were me , I would ask prior owner and if that was not possible then think about if the tenant is important to you. If you feel you can fill that space quickly then maybe it is worth it to push it.
I always weigh the financial hit I would take in any situation.
I am a small owner tho and i self manage and I have high end units. So YMMV
0 Reply
Jim Pfleging
Investor · Vassalboro, ME · Member since 2016 · 11 posts · 4 votes
7y
Originally posted by @Heather Schmidtknecht:
@Jim Pfleging -- you don’t use leases at all?
Essentially a month to month rental agreement. You could call a month-to-month lease technically.
The paperwork is essentially the same. But both parties have the option of terminating the agreement with 30 days notice.
Don’t get me wrong. I work very hard at keeping the tenants happy. Good tenants are always hard to find. But anytime have a big headache when taking over property, especially going into a rental arrangement, then that is a red flag for me.
1 Reply
Heather Schmidtknecht
Rental Property Investor · Winona, MN · Member since 2018 · 87 posts · 90 votes
7y
@Jim Pfleging — I’m okay with month-to-month leases most months of the year, but I live on the WI/MN border and like to have a lease for the winter months... as I don’t want an open unit in the winter and I also don’t think people generally choose to move in the winter months.
0 Reply
Austin Mountain
Property Manager · Lancaster, PA · Member since 2016 · 72 posts · 75 votes
7y
Tenants lie
2 Reply
Ned J.Pro Member
Investor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes
7y
You have a signed lease in hand....and the old landlord has no legal ties to the property in any way....doesn't matter if they had any verbal agreement or not...... that died when the property was sold. Even if I took the time to contact the former and they said "yeah, I did tell them that", I don't care.....they don't own it anymore....they aren't my boss to run MY property.
Yes a verbal contract can be binding in some cases....but not with a FORMER owner when you have a written lease in your hand for YOUR property
Tenants lie....plain and simple.
You have a written lease that has expired and become M2M...... sign the new lease with the rent increase or get out. Plain and simple. If you want to negotiate and "meet in the middle" with a tenant that is probably lying to you, then go ahead and start that precedent
There is a way to handle this professionally with respect and curtesy and still be very firm. You can be "hard core" and still be very professional and not an a-hole, so that you retain a tenant with a good relationship. Its how you handle the conversation to get to the end you need. You want to keep the tenant, but this is their first test of what a pushover you may be or whether you play hard ball.
You have a signed lease that is now M2M...any verbal discussion with the former owner is dead and irrelevant.
0 Reply
Joe SplitrockPro Member
Moderator
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
7y
@Tariq B. shut this down quickly. The only contract you have is the written one, which is what transferred with the property. Hold firm, it is only when people sense weakness that they push back. Give them two options:
1. Pay the new rate effective XX date.
2. Move out of the property.
What if the old landlord told them they could buy the property from you for $1000? What if the old landlord told them they could paint all the rooms pink? What if the old landlord told them they could smoke in the property? They are dealing with you now, not the old landlord. Step up and take control.
1 Reply
Genail Anderson
San Diego, CA · Member since 2013 · 14 posts · 3 votes
7y
Check the language of the lease. Most include a provision that states any modifications must be in writing.
0 Reply
Roemeo Barnette
Realtor · Clarksville, TN · Member since 2018 · 26 posts · 13 votes
7y
@Tariq B. Hello Tariq in your future investments make sure you always get an estoppel agreement prior to signing at closing. This will negate the issue you have now and it will allow you to see everything the landlord promised the tenant, If any. Hope this helps
1 Reply
Account Closed
Rental Property Investor · Central, FL · Member since 2016 · 950 posts · 821 votes
7y
it’s florida. Give notice as required by the statute. Include a statement of the rent increase and that you will only accept full payment of the new rent. When they don’t pay post a 3 day to pay or quit and that will be enough to get them either on board with your new ownership or out the door. Either way you win. This is about training tenants, like a puppy. This thing we all do is also a business. Go to Starbucks and say you have a verbal agreement with the last shift that you get 25% off. Watch the funny millennial laugh at you.
There’s a difference between being nice and rewarding good behavior (again puppy training) and getting taken advantage of. Right now you are in the getting taken advantage department.
Good luck and welcome to the fun filled adventure that is REI, bet you wish you had just bought S&P stock today but tomorrow you'll be glad you didn't.
0 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.