Broker wants commsion after lease ended

What is the name of your state (only U.S. law)? Arizona.

I used a broker find a tenant for my condo. The broker could only set up a 10 month lease contract with the tenant they found. The tenant wasn't sure how long he wanted to stay. The broker took their total commission up front when he signed the lease. He stayed on a few months after the end of the lease. The broker contacted the tenant to resign a new lease but he declined and said he did not want to sign another lease. I took the risk of having him as a tenant on a month to month basis. After a few months, he asked to have the monthly rent reduced significantly or he would go rent elsewhere. I allowed the rent to be lowered to keep him. His rent doesn't cover even half the mortgage or the utilities and HOA dues that I pay for the property. Now, a year later, the Broker is sending me letters saying they want their 10% commission for the time I have had the Tenant since the lease ended! They don't have an active lease with my tenant or myself, do I have to pay them?

Have you and the broker entered into a referral agreement in writing setting the terms of your mutual agreement?

Why are you PAYING to have this tenant? Find somebody who will pay enough so that you aren't losing money.

'Why do I have tenant' is not the problem, the broker is

Ahh... I would love to have a better tenant. As you may have heard, there's a recession going on, and here in Arizona, its a 'renter's market. This is a 3 bedroom 3 bath, fully furnished, and the renter is only one man, who only stays in the condo 2 or 3 weekends the most. He is not using the kitchen or other rooms in the house, only the Master Bed & Bath area. I agreed to the lower rent because there is no wear & tear on the property. But when I agreed to this lower rent, I didn't know the Broker wanted more money for doing nothing! I had called the agency the first time they sent a letter, and talked with one of the owners by phone who felt sorry for me and said he would let it go. Now the owners brother has decided he still wants to get the money out of me. I looked at the contract and I guess the term they are using is 'holdover' in relation to why they think they have a claim. I did not know 'holdover' was a real estate term and was unaware I might be liable for future payments.

Standard Form uses the term 'holdover'. Not a Real Estate word to me.

Badbrains said:

Have you and the broker entered into a referral agreement in writing setting the terms of your mutual agreement?

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Yes, on the standard ZipForm called "Exclusive Right to Sell/Rent" I thought they were liable only for the actual Lease Term, not for anything that happened after the lease ended.

Sounds to me like you are contractually required to make this payment. If you don't know what a term means in a contract, don't sign it. Or, if you DO sign it, then be prepared to suffer the consequences of your ignorance.

Arizonagal said:

Yes, on the standard ZipForm called "Exclusive Right to Sell/Rent" I thought they were liable only for the actual Lease Term, not for anything that happened after the lease ended.

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The AZ Zipform I found online says:

With respect to any holdovers or renewals of rental, regardless of whether this Listing has expired, Owner agrees to pay a commission of 10.000%.
Note:The 10% was a fill-in.

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If yours has a similar clause, then you likely owe for the renewal.

carefully read the language of the entire agreement you have with the broker, but it sounds like you are on the hook for it.

there may be a termination clause written in by default, but since you have a zip form you may be stuck since you did not give yourself a 30 day out in writing to sever ties with your broker, and cannot break it until your resident vacates the premises.

However, your broker may be your best friend in this situation if you can agree to a modification of terms in writing that is in the best interest of both of you.

My recommendation since your existing resident is in a month to month/holdover, then you could:

1) give notice to your existing resident of a rental increase with proper notice as outlined by your state and mark up the rent to offset your loss with the broker.

2) notify the resident of notice to vacate or agree to new terms of a roommate occupancy lease in which you want to lease out the other rooms of the house and lease each room so you can meet your mortgage. You may have to rewrite your lease for individual occupany and may need to consult your attorney on the language and find out if it is legal in your area to do this and as it is now considered a shared housing, with a communal environment. (living rooms/bathrooms/kitchen, etc. if your house is set up for this.

This is common on large homes or mansions that have mutiple rooms for lease, but everyone shares equally the rest of the house and must maintain equally.

Good luck!

Broker Commision

HA! What good ideas you have. You just may have something there. I think I will go the the broker and ask him how I can get his money for him out of the tenant he brought me, since I sure don't have it! You have been very helpful. I have to deal with this tomorrow, so I 'll let you know how it goes. Thanks very much!