Landlord Confused by Agent’s Rent-Up Procedures

For Antigo Times 

Reader Question: We rented our home to a couple who gave us a month-and-a-half for security. They also paid their real estate agent a month’s rent. Their agent split the month's rent with our real estate agent. However, we didn’t get a month’s rent before our tenants moved in. They took occupancy on the fifteenth, and our agent is telling us that we will get our first month’s rent on the fifteenth next month. Something doesn’t seem right about this. Where is our first-month rent? Can you please explain all this?

Monty’s Answer: Without reviewing the contracts, it is not possible to know what has transpired. Here is a likely scenario:

1. You signed a contract when you hired the agent and agreed to pay them a fee for locating a tenant. It appears you agreed that the first month's rent was the agent's commission. The second month's rent and future months will go to you, the landlord. You can verify this by determining the total compensation you agreed to pay in your contract. The contract states the amount you agreed to pay the agent and when the fee was payable.

2. The second contract is the rental agreement between you and your tenant. Compare the amount of rent the tenant paid to see that it matches the amount the agent would earn in the fee agreement.

Your story is unusual because your tenant paid the rent to their agent, instead of paying you or your agent. Typically, the listing agent pays the tenant’s agent their fee from the tenant’s first-month rent. When a real estate agent accepts deposits from tenants, they go into a trust account. Then your agent disburses funds from the trust account. If you are correct that the buyer's agent split the rent they collected from your tenant directly with your agent, does your contract relieve you from paying your agent under your contract? Is the tenant’s security deposit now in your personal account or is it in your agent’s trust account?

It appears there is a lack of communication between you and your real estate agent. You need to ensure the contract language matches the actual events. Consider speaking to the agent's broker to seek understanding and resolution. If you achieve no clarification, then seek legal assistance. Additionally, you can complain to state regulators if you learn the agent took questionable shortcuts.

Richard Montgomery is the author of "House Money - An Insider’s Secrets to Saving Thousands When You Buy or Sell a Home." He advocates industry reform and offers readers unbiased real estate advice. Follow him on Twitter @dearmonty, or find him at DearMonty.com