New Management Company Takes Over Before Previous Lease Agreement Expires

[drinkingwater]

My question involves landlord-tenant law in the State of: California
I am: tenant with family of 4 (including myself) with kids in school

DETAILS:

Tenant living in residence 2+ years (has signed two yearly lease renewals with Management Company X, current lease expires in 9 months).

All existing lease agreements have been signed with Management Company X (referred to as 'X' going forward).

'X's D.B.A. (landlord name on lease agreement) expired last year, no longer wants to manage property and does not want to acknowledge existing lease agreement.

'X' signed current lease agreement after 'X's D.B.A. expiration (according to public records).

'X' is now operating under new D.B.A. name using same address as 'X'.

'X' still receiving and cashing rental payments under expired D.B.A name 'X', forwarding payments to 'Owner'.

'Owner' is not actual owner of property. Actual property owner remains unknown.

'Owner' asks Management Company Z (referred to as 'Z' going forward) to manage property and receive rental payments.

'Z' wants tenant to immediately sign new monthly lease agreement with 'Z'.

'Z' does not appear to have real estate license nor legitimate D.B.A.

Tenant does not wish to sign new monthly lease agreement with 'Z' and wishes to live in property until current lease agreement with 'X' expires in 9 months.

All prior rent payments have been sent to 'X' and all rent payments have been on time.

Tenant has not violated terms of lease nor has tenant damaged property.


QUESTIONS FOR FORUM:

1) Is the original lease agreement signed by tenant and 'X' still valid?

2) Is tenant required to enter into new lease agreement with 'Z'?

3) Can tenant request real estate license information from 'Z'?

4) Is 'Z' potentially liable for operating as management company without a real estate licence in California?

5) Is 'X' potentially liable for signing current lease with expired D.B.A.?

6) Is 'X' potentially liable for operating under expired D.B.A. (accepting, signing and depositing checks under name 'X')?

7) Is 'X' potentially liable for breach of lease agreement? *See (1) below

8) Is owner of expired 'X' D.B.A. still responsible for fulfilling terms of current lease agreement? *See (1) below

9) Is 'Owner' potentially liable for claiming ownership of the property when they are not the actual owner?

10) Can tenant legally enter into lease agreement with 'Z' when lease agreement with 'X' has not expired? *See (1) below

11) Can tenant send rental payments to 'Z' without risk of inadvertently breaking contract with 'X' ('X' would no longer be receiving rental payments)? *See (1) and (2) below

12) What should tenant do to ensure existing lease agreement with 'X' is upheld?

13) 'Z' is asking tenant to fill out new Application to Rent form (California). Tenant already filled out this form for 'X'. Is tentant required to do this again for 'Z' since they are already renting the property?

14) Is the actual property owner's name and address required to be printed on lease agreements in California?

15) 'Owner' claims to have posession of original rental deposit given to 'X' by tenant. Who is legally responsibe for the deposit amount in this case?

16) If tenant agrees to enter into new lease agreement with 'Z', what should the tentant request from all parties involved in order to protect tenant? For example, should tenant request from 'X' a release of contract from 'X', or formal agreement between 'X' and 'Z' to have 'Z' carry out remainder of agreement, etc. The current lease agreement requires this to be done via U.S.P.S. *See (2) and (3) below

17) What advice can you give tentant regarding correspondence with all parties involved ('X', 'Z', 'Owner' - as well as the legitamate owner should that information become available)?

18) Are there any other questions I should be asking (as tentant)?

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From current lease agreement with 'X':

(1) Waiver, Amendment, Modification. No waiver, amendment or modification of any provision of this Agreement will be effective unless in writing and signed by the party against whom such waiver, amendment or modification is sought to be enforced. No waiver by any party of any default in performance on the part of the other party under this Agreement or of any breach or series of breaches by the other party of any of the terms or conditions of this Agreement shall constitute a waiver of any subsequent default in performance under this Agreement or any subsequent breach of any terms or conditions. Performance of any obligation required of a party under this Agreement may be waived only by a written waiver signed by a duly authorized officer of the other party, which waiver shall be effective only with respect to the specific obligation described. The acceptance of rent by the Owner shall not waive his right to enforce any term of this Agreement. Time is of the essence.

(2) Entire Agreement. The parties acknowledge that this Agreement expresses their entire understanding and Agreement, and that there have been no warranties, representations, covenants or understandings made by either party to the other except such as are expressly set forth. The parties further acknowledge that this Agreement supersedes, terminates and otherwise renders null and void any and all prior Agreements or contracts, whether written or oral, entered into between the Owner and the Tenant with respect to the matters expressly set forth in this Agreement.

(3) Notices. All notices, demands or consents required or permitted under this Agreement shall be in writing and shall be delivered or mailed via U.S Postal Service to the respective parties at the addresses set forth above or at some other address as such party shall specify to the other party in writing. Any notice required or permitted to be given by the provisions of this Agreement shall be conclusively deemed to have been received on the day it is delivered to that party by U.S. Mail with Acknowledgment of Receipt or by any commercial courier providing equivalent acknowledgment of receipt. The service of any notice on one Tenant shall be a service of all occupants.

[SChinFChin]

Here's some answers:

1) YES. If you sign a lease with a landlord, it is normally valid for the entire lease term even if the property is sold to a new landlord, or if a new management company comes in. I bought and sold properties with tenants in place, and the new landlord operates via a lease assignment.

2) NO, you can, but there is no legal requirement. I'm a LL, and I have taken over properties with former tenants in place, while I have not usually ask for new applications and new lease, there may be a benefit to the new LL, as I have no idea what or some of the former tenants are. I worked in companies where a new company takes over, and they generally ask for new employment applications to be filled out, people grumble about it, but if you think about it, if they don't do this, the former employers information may not be complete, so they wind up responsible for things that they have no idea.

3) You can request information, but generally real estate license issues are between the owner and the property management company, and state laws govern. It should not concern you. It is enough for the owner to tell you as the owner, XYZ management company is put in charge. I have gone for a real estate license here in NY State, and here a license is required if I manage the property for someone else for a fee. However, I owned properties through one entity, I set up another to manage MY OWN properties which I have done, and because I am not managing for others, my IN HOUSE management company requires no license. It is not uncommon to have in house PM firms. Also, if a son or daughter is appointed property manager for an elderly owner, and does it for no fee, there is also no legal requirement for a license here either. Only if you manage for others, and for a fee, is a brokers license, and in my state, a bond required.

4) If "Z" meets the requirements for NOT having a license, then he can legally operate, and if not, it the LL's problem as a principle is responsible for his agents. States require licenses and bonding because PM's have collected rents, ran off with it, and the LL winds up holding the bag. Tenants on the other hand has no problem because if you can show you paid the rent, even if the LL did not receive it, it's not your problem.

5) DBA's don't generally expire. However, legal entities may not have paid their fee, and may not be up to date, but if you signed contracts in good faith, they should be in effect, and any damages you can still go after the landlord. Entities can always pay their back fees and get re-instated.

6) Answerd above.

7) NO.

8) The owner is always responsible.

9) That is not an legal issue for the tenant. There are all kinds of exotic holding entities that even real estate brokers are not familiar with. Properties can be held in long term leaseholds as an example, but the "fee simple" title can be held by someone else. At one time, when real estate development got real hot in my city, the rail road sold all the air rights over their tracks and 50 story office buildings were built over it. The rail road still has the deed, and ownership of the buildings is via a long term leaseholds. The most famous of these is "Rockefeller Center" in NYC where Columbia University has the deed, and was prohibted from selling it when the land was gifted to them, so all the buildings above it are on leaseholds. Tenants are free NOT to rent from ayone without a deed they don't understand, but Rockefeller Center is not legally required to discuss its ownership arrangements with tenants.

10) Here you have a point. You should recieve a new lease, and a release of the old lease from the LL. It is called a "Release of Lease" form.

11) If there is a release, then you are not breaking any rental arrangements. However, if they insists that you now owe on two leases for the same apartment, then that is fraud, and may be in violation of local housing ordinances.

12) Nothing here, unless there is a provision in the lease, the original lease has not expired.

13) Here, the LL is trying to do the right thing, as he should have the most up to date information on his tenants. In fact, LL's should get annual updates for cases of emergency.

14) Haven't checked this one.

15) If you have this in writing, that should be sufficient.

16) As I said above, you should have a signed "release of lease" from the landlord, and since the leases are assgined, the new lanlord get the release from the new LL.

17) Do everything in writing, but keep everything friendly.

18) None at the moment.

[drinkingwater]

Thank you for your responses SChinFChin!

One more question:

I was under the impression that a lease assignment is only used when the tenant who is renting the property wants to transfer the entire interest that the tenant has in the property to a third party. Can a lease assignment also be used by the owner of the property to assign the existing lease to the new management company?

[SChinFChin]

Thank you for your responses SChinFChin!

One more question:

I was under the impression that a lease assignment is only used when the tenant who is renting the property wants to transfer the entire interest that the tenant has in the property to a third party. Can a lease assignment also be used by the owner of the property to assign the existing lease to the new management company?

Both landlord and tenant can assign.

Tenants generally can assign a lease with the landlords written consent, that is standard phraseology in leases, and that is how business sales takes place, commercial leases are assigned when a business is sold to a new owner. In the sale of a rental property, the seller (the old landlord) assigns the lease to the new landlord, but in this case, it does not require the tenant's written consent.

In the sale of a rental property, the new landlord generally requires an "estopple letter" signed by the tenants confirming the rents, any past due rents, and deposits held if any.

One of the pitfalls I might add with tenants assigning leases to a new tenant, in both commercial and residential leases, and also if the tenant has a guarantor, the assignment does not terminate the tenant and his guarantors obligation as it is unlimited and unconditional. Generally the tenants and guarantors are shocked to hear they are still on the hook when a subtenant (the assignee) fails to pay the rent, and the original tenant and his guarantor is then stuck. That is why when I sold my business, I paid extra to have the landlord draw up a new lease, give me a release of lease, so I don't have to hear anything about the new tenant not paying.

[SimplyTheBest]

Can a lease assignment also be used by the owner of the property to assign the existing lease to the new management company?

Depends on whether the Mgmt Co. is taking the position as LL instead of LL Agent. I have seen this arrangement between LL and Mgmt Co go both ways.

[SChinFChin]

Thank you for your responses SChinFChin!

Can a lease assignment also be used by the owner of the property to assign the existing lease to the new management company?

It's possible, I read your question more carefully, and as the other poster mentioned, there's a lot of possibilities.

I owned condos as rentals, and in a space of a few years we went through several management companies. Usually, we get a letter, and says starting from this or that date, mail your checks to so and so who's the new management company.

As I said above, the issue does NOT concern you. In our case, two of the management companies just dropped us because we complained just a bit too much about slow service in snow removal, hallways not cleaned enough, and it took forever to get burnt out lighbulbs changed leading to "safety issues".

The last management company did not like the fact that someone had the nerve to squawk that taking two weeks to change lightbulbs were too slow, and exercised their right to cancel us on the grounds that "the complex of 104 units is a bit on the small side for their operations". They dropped us like a hot potato, so we just found ourselves a new management company.

You can always check with the prior management company to make sure there is no fraud involved in the change, that the correct party receives the payments, but the contractual arrangements between the owners and the mangement company is no concern of yours. I once had a mortgage for a rental, I still owned the property for nearly 30 years, but the one mortgage had gone through 4 different banks, each time it was assigned to a new bank when the prior one was bought out or gone bust. My concern was just to make sure the payment got there, not if the new bank got a legitimate assignment from the old one.

This is unless of course, if you're Donald Trump, then you'll say "show me the papers".

[CPO_MK]

11) Can tenant send rental payments to 'Z' without risk of inadvertently breaking contract with 'X' ('X' would no longer be receiving rental payments)? *See (1) and (2) below

Did you receive advance written notice of the material change to the lease regarding the change in management companies and to whom you should pay your rent? If not, then I would take all the documentation and information you have to an attorney before either stopping payment to the original manager or starting payment to the new one, just to make sure you're not the unintended victim of a scam (rare due to the level of elaboration required but does still occasionally happen).

13) 'Z' is asking tenant to fill out new Application to Rent form (California). Tenant already filled out this form for 'X'. Is tentant required to do this again for 'Z' since they are already renting the property?

They can ask you to do it, but they cannot charge you a new fee (since you already have a valid lease so a screening at this point is unnecessary and they have no reason to conduct one), nor can they change the terms of your lease because of it. Technically - assuming it's written into your lease specifically that they can increase the security deposit or the rent during the lease - they could increase either of those, but only if it's specifically permitted by the lease (otherwise it's assumed legally to be not allowed). Of course if they screen everyone and then selectively raise rents/security deposits, you might have a case regarding equal application, but that's another discussion for another time.

14) Is the actual property owner's name and address required to be printed on lease agreements in California?

No. All that's required are the name, address, and phone number of the authorized manager, as well as for the owner OR an agent for the owner who is authorized to receive legal notices for the owner. It may be written into the lease OR posted conspicuously in the building.

15) 'Owner' claims to have posession of original rental deposit given to 'X' by tenant. Who is legally responsibe for the deposit amount in this case?

When one manager/owner transfers interest as landlord in a property to a new manager/owner, then they must either a) refund security deposits to the tenants (after any authorized deductions), who must then pay the amount of any security deposit required by the new landlord, OR b) transfer the security deposits to the new landlord who will then process deductions/refunds at the actual termination of the tenancy. Unless you receive notice of deduction or refund, you can safely assume that the deposit has been transferred as most landlords opt for this to make it simple (plus the penalties/remedies are generally between the two landlords; the new landlord can't charge you to cover the deposit that the previous landlord maliciously didn't transfer).

Take a look at this website from the CA Department of Consumer Affairs; it has a lot of good information that you may find useful. http://www.dca.ca.gov/publications/l...ok/index.shtml

[HHM88]

I have a case where my leasing office was bought by a different company too Here in Tulsa, Oklahoma.
I only signed 6 months, beggining Dec 8th with the previous owners.
It expired in May 8th, apperantly under much confusion i made another payment on june 8th which was taken by the new leasing property manager, it is now july 6th and she is demanding rent again, this time with a late fee attached to it because It wasn't paid on the 4th?! haha...
She also said we are not doing a new contract until august 1st... (when she assumes my lease is up)?
#1. DO I have to pay this month again? or who do I contact to help me in this case, and if I don't pay, how long do I have to move out.
#2. What about the $759 I payed on June???? Can they really just take that money? I'm pretty sure this new property manager is lost.

[CPO_MK]

This depends on several things.

1) What state are you in? Each state has their own laws, and while some are substantially similar, there are some technical differences in a lot of them that can make a big difference.

2) Under your now-expired lease, what day of the month was your rent payment due? If it was due on the 8th, then generally speaking it would continue to be due on the 8th after the expiration of the lease. While some states allow for automatic lease renewal, most states convert expired leases to month-to-month, using the same terms as the expired lease, if a new lease is not signed.

3) As I said before, every state is different. In CA, any changes to the rental agreement MUST be made in writing with proper notice, generally 30 days advance notice for month-to-month tenancies or leases. This includes changes to the date the rent is due, changes in who accepts the rent, changes in when a payment is considered late and the amount of any associated late fee, etc.

4) Again in CA, if a landlord accepts rent then there is a rental agreement between the landlord and the tenant for the period of time covered by the rental agreement. If your normal monthly rent was $759, due on the 8th of each month, the new landlord did not issue you a notice with proper advance notice of an increase in rent or a change in when it was due, and the new landlord accepted rent on the 8th as normal after the expiration of your previous lease, then you have a month-to-month agreement with the current landlord under the same terms as your expired lease. The new landlord also cannot demand that the rent be paid earlier in the month or charge a late fee before the end of any grace period that may be written into your lease (as is common in most states, ranging anywhere from 3-10 days usually).

5) You can move out at any time, provided you give proper notice to the landlord. Since you are currently on a month-to-month periodic rental agreement (assuming there is no automatic lease renewal), you need only provide 30 days written notice to the landlord of your intent to move. You can serve this notice at any time, even mid-month, and you can leave before the end of the 30 days if you wish. You will, however, be responsible for rent up to and through the full 30 days, unless the landlord rents the unit to a new tenant AND accepts rent from them, in which case you are only responsible for the portion up to the date for which the new tenant began paying rent - ex: you serve your notice on the 15th, you move out on the 30th, and the new tenant begins paying rent for the 4th onwards even if they haven't moved in yet; in this case you're responsible for rent up through the 3rd).

You really need to read your previous lease carefully and research the laws specific to your state. If you're in CA, I would strongly suggest you visit this site: http://www.dca.ca.gov/publications/l...ok/index.shtml

Also, for the future, please start a new thread instead of posting a new issue on someone else's thread (especially one this old). Thank you.

[HHM88]

Thank you for the promp response.
I am in the state of Oklahoma.
The 6 mo. lease begun on Dec 8th to May 7th according to my contract, but my payments are due before 9Am on the forth of each month as state in the contract as well.
Since I have a new property manager which I asume she mistook and told me my lease expired on June and she send me a letter saying my lease actually expired on June 7th? So I payed that month on the 4th to stay the month of June.
So now I got a letter with a late fee because I din't pay for July.
I'm just concerned everything my property manager is doing is proper procedures and not trying to find a way to get mo' money out of me

also what I found insteresting was that they are willing to take two more payments but the letter that stated my lease was up on June 7th, also had prices mentioned which were substationally higher than what I'm paying now, I'm confused as why they are doing price increases in August, what happened to the 1st leasing consultant stating my rate will not go higher at the moment of signing?