Problem with new landlord - changing mind

[Grantnz]

Hi,

I am writing for my partner regarding his business and commercial lease.

He owns a business already that is operating and was securing a lease for a highly sought after area for his second store. He met with the real estate agent at the premises and was informed there was one other party interested, however could proceed and take the lease without waiting for this other party to view the property.

One thing led to another and it was agreed by email that he would sign the lease and take possession this coming Friday. Further negotiations took place and it was agreed the owner would offer 6 weeks initial free rent, with a lease of 3 years with right to renew for 3+3+3

It was stated by the real estate that the owner was happy for him to have the lease and prepared the agreement to lease. He received this lease agreement at 4pm today signed and returned it, then at 6pm the real estate thanked him for the offer to lease and said the landlord has decided to see who offers the best offer and if we wanted to re-submit an offer that needed to be done by 5pm tomorrow.

We have clear emails stating the owner had accepted my partner to lease the store, it was the landlord that offered the 6 weeks free only today, then a sudden change of mind at 6pm tonight.

Can they legally do this, it is a very sought after location. The property is the only commercial property in the area and my partner was intending for it to be a convenience store which would save the community a 15-20 minute drive to the nearest store.

Can someone help with advice?

[Rosco]

This is obviously a legal question, so your lawyer or lawyers on PT might help further.

My guess, is that your lease agreement hasn't been signed by both parties so isn't binding.

Ross

[Grantnz]

ah okay even though we have it in writing they accepted us as a tenant? Surely a verbal contract is binding, more so because we have it in writing from the real estate agent. Is there a separate forum for lawyer questions?

[Rosco]

From a landlord perspective, I've had lots of 'we are going to sign and go ahead', then never goes ahead because the tenant has found something else. I never rely on a lease until it is signed and sometimes even until the deposit is paid.

Agree - verbal should be enough, but often its not. Is it worth the legal fees to chase? and the hassle? Plus are you guaranteed to win? I think there is something in the law that real estate transactions need to be in writing.

Hopefully one of the lawyers will comment on here and this place in the forum should be fine.

Ross

[Grantnz]

From a landlord perspective, I've had lots of 'we are going to sign and go ahead', then never goes ahead because the tenant has found something else. I never rely on a lease until it is signed and sometimes even until the deposit is paid.

Agree - verbal should be enough, but often its not. Is it worth the legal fees to chase? and the hassle? Plus are you guaranteed to win? I think there is something in the law that real estate transactions need to be in writing.

Hopefully one of the lawyers will comment on here and this place in the forum should be fine.

Ross

Thanks ross, will wait and see if someone else gives some insight and thank you for comments so far. Certainly is worth fighting for if you knew the location. We were wanting to pay the deposit today and was just waiting for the account number to pay it too. This has taken us by surprise.

[Ivan McIntosh]

From a landlord perspective, I've had lots of 'we are going to sign and go ahead', then never goes ahead because the tenant has found something else. I never rely on a lease until it is signed and sometimes even until the deposit is paid.

Agree - verbal should be enough, but often its not. Is it worth the legal fees to chase? and the hassle? Plus are you guaranteed to win? I think there is something in the law that real estate transactions need to be in writing.

Hopefully one of the lawyers will comment on here and this place in the forum should be fine.

Ross

Property transactions do need to be in writing, but there is nothing wrong with email as a form of writing, and there are also various means of getting around the no writing problem, such as estoppel arguments resulting from expending money in reliance on verbal promises (ie one party is stopped from denying the existence of a contract because the other party has predictably spent money or otherwise changed their position in reliance on their promises)....not that I would necessarily agree that there is no writing here.

If you've negotiated with an agent acting for the landlord and agreed terms, then the actions of the agent in writing up an agreement to lease in their role as acting for the landlord and sending it to you could be enough to constitute an offer, which your mate accepted by signing and returning.

The devil is in the detail....is there language and disclaimers in emails and terms that nothing is binding until signed by both parties, for example? There are also the practical costs of lawyering up as Rosco points out. Worth investigating, I would have thought.

[sidinz]

the actions of the agent in writing up an agreement to lease in their role as acting for the landlord and sending it to you could be enough to constitute an offer

Thanks, for this bit, Ivan. I'm not a lawyer, but my gut instinct was along those lines.

[andym15]

Was there any legal binding paperwork in place? if so surely this cant happen

[Beano]

From a landlord perspective, I've had lots of 'we are going to sign and go ahead', then never goes ahead because the tenant has found something else. I never rely on a lease until it is signed and sometimes even until the deposit is paid.

Agree - verbal should be enough, but often its not. Is it worth the legal fees to chase? and the hassle? Plus are you guaranteed to win? I think there is something in the law that real estate transactions need to be in writing.

Hopefully one of the lawyers will comment on here and this place in the forum should be fine.

Ross

I (landlord) have been in this situation many times too where tenants said they would sign but did not.
Unless the deposit is paid and the agreement signed i would not treat it as a agreement at all

[Davo36]

then the actions of the agent in writing up an agreement to lease in their role as acting for the landlord and sending it to you could be enough to constitute an offer

Really? Surely the agent is drawing up the Tenant's offer to the Landlord. The tenant then signs it, the landlord then gets to consider it...

[Ivan McIntosh]

Really? Surely the agent is drawing up the Tenant's offer to the Landlord. The tenant then signs it, the landlord then gets to consider it...

That's one possibility, sure, and it would be more likely in most circumstances. The reason I raise the other is because from the original post it sounds as though they have already been back and forth with the landlord via the agent until they arrived at terms agreed by both parties, before the agent created the agreement to lease that reflected those agreed terms. It's not like the tenant created their own offer to see what the landlord thought of it....it is suggested they've already done that. I wouldn't be at all surprised to find careful language that makes it clear nothing is binding until written agreement to lease is signed by both parties, but I would check it....stranger things have happened.