In a rental transaction rendering possession is the equivalent of the closing on a sale. Unfortunately, rentals pose somewhat greater difficulties and risks for the real estate agent because:
- there is no “closing agent” to be held responsible if some piece of paperwork is missing or mishandled
- rental transactions are often plagued by last-minute panics
- the State has imposed certain regulations which make disbursals complicated
- many area Realtors are ignorant of the law controlling disbursals
In order to minimize complications in these low-profit/high-risk transactions the following rules apply:
- You may not give possession/surrender keys unless we have ALL move in funds due to the owner and Buy the Beach Realty Group. All tenant funds must be cleared funds for the transaction. Any funds received from a cooperating brokerage MUST come from an escrow account (the words “Escrow Account” or “Trust Account” pre-printed on the check) or in cleared funds.
- If you are the listing agent, you should provide written disbursement instructions to the cooperating agent (the “selling” agent) in advance. If your instructions are not followed (agent or tenant show up with incorrect payment amount, payee, etc), do not release keys until you have the correct amount, payee, etc.
- You may not give possession unless you have obtained a copy of the condominium approval for the file. Under no circumstances may you rely on the “word” of the tenant that he/she has been approved.
- you must bring a Walkthrough & Tenant Acknowledgement form and have the tenant execute it
- the walkthrough form should list all keys, parking access devices and other items turned over to tenant. Be prepared for move in– have all keys, double check document, etc.
- you are personally responsible to perform the walkthrough inspection with the tenant (leaving a form to be signed or keys to be picked-up is not acceptable)
- all documents relating to the transaction must be fully signed and readable before you give possession
- you must provide the tenant and/or the landlord with a readable, executed copy of the lease and memo (if any) and walkthrough form.
- take pictures and/or video to document the condition of the property at move in and send copies to the respective parties in the transaction. We do not need printed pictures for our files.
- When performing the walk through, do not make promises of repairs, etc. You are documenting the condition of the unit, which may mean a repair is needed, but it is not putting together a to-do list.
- make sure the tenant has the landlord contact information and that you gather the tenant’s contact information for the landlord
- After commission has been collected, the tenant’s prepaid last month’s rent & security deposit need to be sent to the owner. These are typically in the form of cashiers checks or money orders. You are responsible for ensuring that these funds make it to the owner. If you are sending them by mail, get a tracking number (USPS Priority Mail is a cost effective method). You don’t want to be responsible for cleared funds that get lost in the mail that cannot be tracked.
The items you will have the most trouble with regards the money. It is important that you understand that you will be under endless pressure from the other side to let the tenants move in and then settle the disbursal later on. This is bad business since the real leverage you have to make the other agent do his/her job or make the tenant or landlord sign the papers you need signed is that you have the keys! Once you put the tenant in possession you will find it harder to reach that eager, available agent and hard to collect those last few vital initials. Your landlord (employer!) has the right to expect that you will have collected his/her funds, verified that they are correctly calculated and produced a legally enforceable lease in order to earn your commission. So do I. Once the tenant has possession, your landlord will have an expensive and difficult time forcing the tenant to finish the transaction.
No commission will be paid on any rental transaction in which you, either as selling or as listing agent permit the tenant to move in without having cleared funds and a complete signed lease. If you are listing agent, you are responsible to know the funds are good before you grant possession even if the Selling agent is another Buy the Beach agent. If you later obtain the funds and/or missing signatures or initials, your commission will be reduced by $100 or 50% whichever is higher.
If you have some truly rare circumstance where you think these rules need to be waived, read all of this again, slowly and change your mind. If you can’t, call me personally (and in advance, not while everyone’s in the lobby fuming at you) and I will see what can or should be done to help.