Vacation rental's deposit rule crosses the line

Rent it Right

By Inman News Feed
Add Comment Add Comment | Comments: 0 | Posted Dec. 15, 2011

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A contingency, on the other hand, is a condition that, if not satisfied, destroys the deal. For instance, a sale might be contingent on a buyer obtaining financing at a particular rate.

In your situation, you might have made the sale contingent on the removal of that particular tenant. If the clause was clearly written to specify that the deal would not go through without his removal, in theory you'd have the right to back out of the sale.

So, if you obtained a warranty that the tenant would be gone, and he's still there, what are your damages? It would seem to me that you could sue for the cost to bring an eviction lawsuit, because that's what you have to do to obtain the benefit of the warranty.

In addition, if the tenant remains on the property post-sale and continues to fail to pay the rent, you might be able to collect that, too (another aspect of the warranty was the promise that your rent stream wouldn't be lessened by this particular tenant).

On the other hand, if the promise was a contingency, you could undo the sale (probably not what you want). A well-drafted contingency clause would give you a choice of remedies, which would include suing for damages instead of destroying the sale.

Now, suppose the seller's promise was merely oral? Here you're in trouble. Most sales contracts specify that all promises, representations, agreements and so on are contained in the contract. The reason for this rule is to prevent conflicting or additional issues from entering from the sidelines, especially understandings reached in conversations.

Proving the substance of these agreements usually ends up with a "he said, she said" contest, and they're very difficult to sort out. The contract warns you: Get everything you agreed to into this document, or forever hold your peace.

So unless your seller will admit that the promise was made and agree to stand by his word, you'll be the one paying court costs and lawyers' fees.

Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of "Every Landlord's Legal Guide" and "Every Tenant's Legal Guide." She can be reached at janet@inman.com.

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