I hope to use this article to help those involved in real estate in some constructive way. If you are an owner of property offered for rent, or a broker in the real estate business, this article is intended for you.
Two instances in the last thirty days are examples of a similar kind of fraud that cost owners time and money. In the first, a guy working together with someone he presented as his wife, called a real estate agent to look at a house for rent. The agent showed the house and ushered them out, asking them to provide information that would qualify them to rent the house, expecting to see them again the next day.
This couple went online to produce a document that looked like a lease, on stationary that appeared to be that of the broker. A signature was placed on the document as if it were that of the broker, and after dark the couple took occupancy of the house. This couple knew what all lawyers and brokers know. The Governor has signed an order which prohibits courts in Florida from evicting tenants. The sheriff cannot remove occupants of property who are there under a lease, without an order of court. The sheriff can’t presume a lease was forged.
Imagine the surprise of this poor agent when she went back to the house and found her prospective tenants living there. This rental agent had done exactly what she should have done, only to find that now the owner must continue to pay mortgage payments on a house that will pay no rent, that the owner cannot sell, and now he can’t even get into and make sure the house is being cared for.
The other example happened at the same time, and took advantage of the Governor’s order to local courts in exactly the same way. A person approached a real estate sales agent to buy an expensive house in a local neighborhood with a pool, a nice yard, and an owner anxious to sell. The buyer showed the broker a commitment to finance (issued by an online very quick mortgage company) and gave the agent a check as an Earnest Money Deposit. The “buyer” negotiated occupancy of the house right away by payment of the first month’s rent in cash. As an added twist, he even gave the broker a phone number of his last landlord for the agent to confirm that he was an excellent tenant. Before he signed, the homeowner called the number and was assured that the “buyer” had been exactly that, a good tenant.
Within several days the EMD check (now in the hands of a closing company) had bounced. The buyer gave reasons that the check had bounced, and it was replaced-with a check that soon also bounced. The closing was delayed because adequate information had not been given to the mortgage company, and the loan was declined. The “buyer” proposed other mortgage companies to the closing company, and each of those loan applications was also declined. By that time, the tenant had been in the house for over a month, Covid-19 was clogging the court system, and the owner needed to sell his house because he had already closed on another one. Amidst the mess, the owner learned that the “buyer” had been in fact evicted from his previous rental home at exactly the same time as he was signing a contract to buy this one; he had given the bogus phone number of a buddy who gave the buyer a stellar reference when the agent called.
In spite of the Governor’s orders, the Courts operated responsibly. Both these examples were ended, after weeks of pain for owners and agents, by orders to the sheriff to move these people out. Both tenants were experienced and accomplished. Both had done this before, and both will do it again. Every rental agent knows that there is no such thing as a good court case against a bad tenant. You won’t recover money. You will only keep from losing more.
For years, the real estate industry has understood the down side of letting anyone occupy a property before closing. There are many practical business reasons not to do that even if everyone is honest. In a real estate sale, be cautious of anyone seeking to occupy before closing. In a residential tenancy, do not be misled by appearances, quality of the car the applicant drives, or the price of the home. A tenant must qualify, and he or they must sign the lease. No one should get into a house until the agent has verified that all deposits are genuine.
Every one of us has to wake up every morning and pledge we will not be suspicious of everyone we meet. But we must go to work and forget the pledge that we just made, and be as careful as possible with every step.
Mike Chesser is President of Chesser & Barr, P.A. and Old South Land Title, Inc., both in Shalimar, Niceville and Crestview. He is Board Certified in Real Property and Local Government Law and can be reached at firstname.lastname@example.org. All articles are indexed and can be found online at www.chesserbarr.com/blog/.