Is my lease with my tenant still valid?

[random01]

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

Hello everyone,
I have a property management company in Indiana who has violated the mgmt agreement in several ways. In accordance with their management agreement I have exercised my right to terminate their services immediately without the need for a 30 day notice.

My question is: since the lease agreement with the tenant lists their name, not mine, and also states that payments are to go to them... does that termination of their services void my leases as one of my tenants has claimed? The tenant has claimed that since my name (the owner) is not on the lease agreement, nor is my name listed as the person to whom the rent should go to, my 1-yr lease agreement become void and wants to renegotiate.

Certainly firing a mgmt company for willful violations should not require me to forfeit every single lease that they setup for us....

Any knowledgeable info would be appreciated, and on Monday I'll be in touch with my attorney, but who can wait until then.... thanks.What is the name of your state (only U.S. law)?

 

[Alaska landlord]

This is no different than if you had a property manager that signed all your leases and then quit or was fired. The management company was working in your behalf and all transactions were authorized by you. Any lease signed prior to your terminating their contract would be valid. I would be more concerned about wanting to have an opportunist as a tenant. You know this guy would jump at the chance to stick it to you at any moment. I would not be renewing his lease but would consider offering him an out.

 

[random01]

I was just informed by my tenant that he had the lease agreement reviewed by an attorney and that according to him it is between the mgmt co. and him. Of course I`m going confirm this with my own attorney but it is an interesting statement on his part if he did in fact have it reviewed by an attorney. Anyone else able to guess which side this will turn out on???

 

[BL]

A management Co. is NOT the landlord/owner .

The Co. is an Agent so to speak .

The lease can be signed by the tenant and management Co. personnel on your behalf , as was mentioned .

That's why LL's hire management , to rent and manage properties .

 

[random01]

And what can be said of the following statements (which sounds relatively convincing):

"I have had an attorney examine the lease (which is pretty standard) and he has advised me that the lease is indeed between [prop man co.] and myself."

"it contains no language concerning transferability or assignment to another party..."

"your name does not appear anywhere on the lease... additionally if were are to follow the stipulations within the lease, per section 1, I am to make all payments to [prop mgmt co.]"​

As I mentioned, I am certainly not interested in being forced into these circumstance, I want to make sure any change is done by my choice, not because my property manager violated my mgmt agreement. The mortgage on this property is currently in a default status due to business transactions not going in the direction we needed them. So despite the fact that my mortgage contract with my lender is completely separate from my lease agreement with my tenant, my mgmt co has decided they are going to withold my rent from me. Now I have not even been able to pay the insurance premiums, nor HOA dues on my homes. They've given no law to back up their ability to do so and of course a property in default status can be brought curent up till the last day. And since it remains my responsibility, so does the liability which they have intefered with because I do not have the rental income generated from my asset to make the payments.

Also, after providing my mgmt company with a letter back on the 20th of Dec informing them that their services have been terminated immediately in accordance with their mgmt agreement for violations, days later they are still talking to my tenant as if they still represent me. They want to cancel the lease agreement also because otherwise they may be liable for having rented the property to this tenant knowing I had trouble with the mortgage at the time, and refused to inform the tenant when I told them we could not do a 1-yr lease, they were negligent in that manner.

So they think that if they can return the deposit and cancel the lease that they are off the hook and I have to deal with a tenant in my property who will refuse to sign a new lease or pay rent in January although the 2-yr old home is in excellent condition. They end up leaving me with a tenant in my property who will not pay. I've informed my mgmt co that as of Dec. 20th their services were terminated and that they no longer have any agreements which they can cancel (they are now trying to claim that we are mutually ending this agreement). Not that they have the ability to cancel my lease agreements even if they did represent me much less return a security deposit to what is now "my" tenant. Neither do they have the right to move any of my funds as they no longer have legal authority to do so.

So those are some of the additional details surrounding my dealings with this mgmt company.

All of your feedback is greatly appreciated, thanks!

 

[ecmst12]

Regardless of anything else, he doesn't get to live in your house rent free. If he doesn't pay rent 1/1, serve a pay or quit and follow through with eviction if he still does not pay.

 

[Obfuscate]

Ethical Issues

Seems like a bit of an ethical issue here. Basically, you're trying to get paid for a property you're not making payments on. Probably not illegal, but definitely unethical.

You're screwing the mortgage company, but you're complaining about getting screwed.

Sounds like a case of bad karma.

 

[random01]

The debate over whether its ethical is a different subject when we're talking about contract law. I understand your point completely, don't get me wrong. My family has been through a lot over the last year. Being in this position is not where we'd prefer to be.

My inability to pay the mortgage company at the moment results in significant hits to my credit and being responsible for any deficiencies if it were to go to foreclosure. It doesn't change the fact that this property is still my asset or the fact that the tenant has a habitable home in exchange for rent.

And because a landlord has significant problems it's hardly a matter of "screwing" the mortgage company. We're trying to survive this economic mess, everyone gets hit in different ways. Does it make it right to compound our already delicate financial situation just because we've already been hit hard before? We all have contracts/agreements, and breaking them results in consequences. We're feeling those consequences already, we're going to feel them for next several years with our credit.

I haven't chosen not to pay my mortgage just because it's with Indymac Bank... if the tenant feels they can "not pay" just because I have problems then everyone with an IndyMac loan should stop paying because Indymac had troubles. It just comes to the agreements and what each is obligated to. Indymac didn't send out notices saying "we're in trouble" you're not obligated to pay your agreed upon loan anymore. Or "since we can't meet our obligations it would be unethical for you to keep paying us or for us to accept you payments any longer...since we can't pay our obligations"

I understand the arguments, I do, but sometimes you are in the position you are in. It doesn't mean that all of your assets become void just become you're in trouble. We need everything we're entitled to in order to pull out of this.

 

[Obfuscate]

Have you been totally honest with the tenant? You mention that you didn't want the prop. mgmt. company to sign a 1 year lease (I'm guessing that would be due to the default situation), did you offer the tenant a 6 month lease?

Another issue: it sounds like you are trying to hold the tenant to the 1 year lease, aren't you concerned that the tenant will come after you for damages if the lease is broken due to the default? If the lease is considered valid, you are legally on the hook for all costs the tenant incurs when/if they have to find another property due to any foreclosure.

You mention that the property is in default, was this the case when the lease was signed? If so, a case could be made that a fraud was commited when the lease was executed as there was no reasonable expectation that you could fulfill your obligation. This would also be true if the mortgage was in serious arrears.

Seems to me that it may be in your best interests to throw out the lease and go month-to-month with the tenant. If they won't go for it, cancel everything and have them vacate the premises.

 

[random01]

I have been honest with the tenant in all my communications with him. However, prior to my direct communications, the mgmt company was the one who handled everything.

The mgmt co. informed me that they signed a 1yr lease ... I didn't know my previous tenants were gone... I informed the mgmt co. 30min later that they need to go back to the tenant and inform them that we can't do a 1yr but the max was 6mo. Two days later one of the main reps from the mgmt co. told me it couldn't be changed because it had been signed already. I got upset with them (thinking that they just locked me in to a 1yr with the same issues Obfuscate mentioned).

Then I looked back at my mgmt agreement and realized that it states they have the authority to "negotiate" the leases but they must be "authorized by us". Yes, the property was in default, they knew I was having trouble with it and refused to give the tenant that information prior to signing and on the day they signed after I told them to tell the tenant.

So in this case I know the prop mgmt co. is on the hook for not providing the tenant info they had before and after. Next they didn't get authorization from us. However... I want to make sure I'm not the one with the largest issues at stake (anymore so than the property already being in default at the moment).

The prop. mgmt company has since withheld transferring my Dec. rents to me. So I terminated their services on Dec 20th. They have refused to return my security deposits, rents and all paperwork associated with my properties. Days later they may have returned the tenant's security deposit after they were terminate as our representatives.

If my tenant has any issues with the one year lease it should go back to the negligence on the part of the mgmt co. Also, I want to make sure I don't have a tenant in my property who may not pay Jan rent, and who also has his security deposit leaving me with no means to cover damages in the event there are any. I just want to remain in control as I should be.

There is sufficient evidence that the mgmt co. was negligent in many ways, including fraudulently claiming to represent us days after their services were terminated (their comments are documented in an email from the tenant).

So I have no Dec rent at this moment and no Jan payment at this point, and potentially no security deposit either while a tenant is in my property. I have an attorney reviewing documentation at this moment and complaint forms in the works. I also served the tenant with a Notice to pay rent or quit so I have the ability to take legal action if he doesn't pay Jan rent.

That's the current status. I believe the mgmt co. has a serious predicament that they've put themselves in. The mgmt co. of course will not communicate with me at all.

The tenant has some valid complaints against the mgmt co., they withheld information that would have helped him make an informed decision. I would simply provide the tenant with what ever documentation he needed to collect for damages from the property mgmt co. They have made a complete mess of the situation.

 

[Obfuscate]

Seems like you're in a precarious position. If you sucessfully enforce the lease, you will be on the hook for any damages due to the default.

I don't know, if it were me, I'd probably try to get out of that lease and try to take up any issues with the mgmt company. At least that would remove any potential financial liability you may have. I guess it depends on how "judgement proof" you are.

 

[random01]

I'll have to review my circumstances and find out if which direction is worth pursuing.

Thanks for the info. I appreciate the feedback.

 

[random01]

Also, what are your thoughts on the mgmt co. leasing my property knowing there were issues, then refusing to inform them of my ability to only do a 6mo lease? Then they told me it could not be changed when the mgmt agreement clearly states that they only have the ability to negotiate and we authorize. The tenant could be liable to me if he breaks the lease early because a property in default could be brought current at any time. I could be liable to him if I lose the property. But the mgmt co. could be liable to either of us for negligence.

Then if the prop mgmt co. fraudulently claims to represent us days after they received the termination agreement... how bad of an act is that on their part. And what if at that point they also returned the security deposit (when they no longer had the authority to touch our funds)?

thanks

 

[Obfuscate]

What is the name of your state (only U.S. law)? I'm a Southern California guy.

The way I see it, if you enforce the lease, all the liability, as it applies to the tenant, will fall upon you. At that point, any issues related to the lease being terminated will be between you and the tenant.

If the lease is terminated by the prop. mgmt. company, the tenant would have to pursue any litigation against the prop. mgmt. company, as would you.

 

[random01]

In regards to the property mgmt co. What right do they have to cancel a lease? They would need my consent, but only if they were still employed by us which they no longer are. They certainly can't terminate something they no longer have control over as they initially tried to....

The state is Indiana by the way.