We own a home in Missouri and were going to rent it out to this couple. They had signed a years lease and were to move in Jan 1st 2008. They were told that the house would be cleaned and ready for them on that day. They wanted it to be cleaned and ready before that so they offered to clean it themselves. They had not paid any deposit nor rent when we heard from the mortgage company that we could not rent it. They are saying they want 1,000.00 or they will take us to court and sue us. Can they do that?

Hello RJ:

This has nothing to do with tenant laws. This is contract law. Certainly, they weren't going to clean YOUR house for free. If they did, and couldn't move in, then you owe them whatever it would have cost you to have it done.

Plus, you may be liable for damages due to your breach of the lease. Seems to me that you think because they didn't pay anything yet, that it's not a valid lease. Nope, the fact that they signed it and ACTED upon it, makes it valid.

These people may be out on a limb and have to move into a hotel because YOU made a mistake. YOU are going to have to pay for YOUR mistake.

If they only want a $1,000, I'd take it.

excon

Yes, if you legally can't rent to them, you will have to pay for all of their damages. 1000 seems very very cheap to get out of this.

But how did your mortgage company even find out you were going to rent it out??
Also where in the mortgage does it say you can't rent it out, is this a real mortgage or a contract for deed?

I have never seen a real mortgage where a person can't rent out the home they own and have the deed for.

Who told you, you couldn't rent it? I agree with Chuck, I can't see a mortgage company being allowed to prevent a rental or even wanting to. You need to investigate that further.

But if you told the prospective tenants they can't move in, you breached the lease and owe them damages. I would immediately nail down this morgtage business and maybe they can still move in.

Hello again:

An owner occupied home is financed at a lower interest rate than an investment property. Therefore, an owner who accepts this type of financial arrangement can't rent his home or he risks his loan being called.

That may not actually happen in this market. However, I wonder why the OP even asked his bank. What they didn't know wouldn't have hurt him.

excon

That was my main question, who even told the lender, you send them a check each month, not ask them or talk to them about the home.