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I have a rental agreement with a vacation home. This agreement…

I have a rental agreement...
I have a rental agreement with a vacation home. This agreement was emailed to me by the home owner, unsigned. I signed it and sent it back. It states the following: "There will be a 7 day hold on the above date until the signed Rental Agreement is faxed and returned with the deposit required. After the signed Rental Agreement and deposit is received, your reservation will be confirmed and a copy of the final Rental Agreement will be mailed to you. In the event this does not happen the date will become available for rental." I emailed a scanned signature on 2/20. I mailed a check for 50% of the rental fee on 2/21 and it arrived on 2/24. On 2/25 I found out I had to cancel this trip and notified the owner via email. Am I bound by this paperwork? He never signed it. I never got a confirmation of reservation and the check has a stop payment on it. What are my legal commitments?
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Answered in 5 minutes by:
2/29/2012
ScottyMacEsq
ScottyMacEsq, Attorney
Category: Landlord-Tenant
Satisfied Customers: 18,161
Experience: General practice attorney
Verified

ScottyMacEsq :

Thank you for using JustAnswer. I am researching your issue and will respond shortly.

ScottyMacEsq :

Does the agreement say anything about cancellations? Is the owner trying to hold you to this agreement? And when were the dates that you were trying to rent the property for?

Customer:

The rental dates are 5/5/12-5/19-12. It states the following concerning cancellations: "Cancellations 60 or more days prior to the arrival date are refundable less a 20% service charge, if the villa is re-rented for the date of this reservation. No refunds will be issued within 60 days of arrival, under any circumstances unless the property is re-rented and a 20% service fee applies". I fear he is going to try to hold me to this agreement that is why I am trying to figure out whether or not we even had a fully executed agreement since all communication was within the 7 days and he never signed any documents.

Customer:

Also, please know that the check has a stop payment on it and I just got a call from the bank the he did try to cash it, which tells me he plans on holding whatever power he may or may not have.

ScottyMacEsq :

One other thing... did you or he actually fax this, or was it by email and mail communication only?

Customer:

He emailed the agreement and I signed and scanned it and emailed it back. Then sent it with the check via usps. He has not sent anything back to me with his signature. So NONE of the paperwork has his signature.

ScottyMacEsq :

Thank you. First of all, it appears that the 7 day hold period is not a period for cancellation, but rather a period where the owner cannot rent the property to anyone else. Now in terms of contract law, for a contract to be valid and binding, there has to be (1) an offer, (2) an acceptance of that offer, and (3) consideration. Consideration is not an issue here. The promise to pay in exchange for the promise to rent is going to be the consideration. The main issues are whether there is both an offer and acceptance. Typically in situations like this, the offer is sent to you, and you accept it. The acceptance is effective the moment you put it in the mailbox (this is literally called "the mailbox rule"). So it's not dependent upon when he receives it, etc... unless the contract specifically says otherwise. And once accepted, the offer cannot be rescinded.

ScottyMacEsq :

I really don't think that the 7 day period is a way to "win" your argument, because that's merely the time period that you have to keep the property from being listed again.

ScottyMacEsq :

In regards XXXXX XXXXX signing the contract, he actually doesn't have to sign it at all to hold you to the contract. ONLY if the contract specifically says that the contract is not effective until both parties sign it would he actually have to sign it, but he could say that he signed it immediately after receiving it from you, and before the cancellation.


And it appears that the 7 day hold period is not a period for cancellation, but rather a period where the owner cannot rent the property to anyone else. Generally speaking (unless the contract says otherwise), an acceptanceAnd it appears that the 7 day hold period is not a period for cancellation, but rather a period where the owner cannot rent the property to anyone else. Generally speaking (unless the contract says otherwise), an acceptance
ScottyMacEsq :

If the contract said that it would be good only upon your receipt of the completed final contract would your cancellation before that fact give you an "out".

ScottyMacEsq :

Now the reservation being "confirmed" is a potential argument, in that you did not receive confirmation of the reservation before you tried to cancel.

Customer:

So, he could force me to pay this? All of it or just the 50% deposit that was due?

ScottyMacEsq :

He could try. But again, you can claim that the fact that you cancelled before the reservation was confirmed by him would allow you to avoid the contract. You could claim that this is a "condition precedent" (fyi, that's pronounced pree-SEE-dent, not PREH-suh-dent). In short, for the contract to be binding, he would have to confirm the reservation with you, and the fact that he didn't, might give you an "out".

ScottyMacEsq :

Now he might try to go after you for this amount. Can you tell me if the contract has any "forum selection" clause for a lawsuit?

ScottyMacEsq :

And what was the amount of the rental?

Customer:

There is nothing about lawsuits or where a conflict would have to be resolved. Payment schedule: $3685 (50%) due upon reservation (that is what was sent and stop payment put on). $3685 due 60 days prior to arrival. That is all is says

ScottyMacEsq :

To be honest, I would say that the odds that a court would find a fully executed and binding agreement would be against you. Note that I have no dog in this fight, so I have no reason to steer you wrong. If I were defending the contract, my best arguments would likely be the "condition precedent" argument above, and the fact the rental agreement was never faxed. Yes, it's a technicality, and some judges might overlook it, but others will hold the drafting party to the strict letter of the agreement. Failure of a specific term on their part would relieve all of your subsequent obligations. That's why you often see contracts that cover ever conceivable method of conveyance, including, but not limited to, mail, courier, in person delivery, facsimile or other electronic document transmission, etc... The fact that the owner limited it to one method of communication and did not provide for any others (when he is in control of the terms of the agreement) would arguably give you a way out. But again, that's the best argument that I would have to show that there was no agreement. The 7 day hold isn't for acceptance, cancellation, etc... but rather just to take the property off the market for that time period. The signature by him is not required (lots of cases have addressed this issue). In short, if you wouldn't be able to convince the court that there was a failure of a condition precedent or failure the term of offer/acceptance (i.e. the fax) then a court could easily hold that this is a valid agreement.

ScottyMacEsq :

Now then you would need to consider the likelihood of recovery... That is, if you don't pay, he can try to collect by sending you nasty demand letters, or sending this to a collection agency (expensive) or even filing a lawsuit against you (most expensive). Without any choice of forum clause, he would have to sue in your state.

ScottyMacEsq :

Can you tell me if the agreement provides for attorneys fees to the successful party upon a suit?

Customer:

For which amount? the 50% that was due or the total?

Customer:

No there is nothing in this agreement about legal anything or suits of any sort

Customer:

this guy owns a consulting and design company so he probably has legal help

Customer:

but that said, they didn't help draft much in this agreement

Customer:

And, he did try to cash the check which had a stop payment so it will be returned to him. and I've told him that it will be returned (said for insufficient funds)

ScottyMacEsq :

It could be the total amount due. The deposit was not the entire agreement, but the actual lease amount was. But again, he would have to sue in NC, without the prospect of recovering attorney's fees, so it would be very expensive for him to do so. Another thing is that he would have to show that he attempted to "mitigate" your damages (by listing the property online for other renters). If he can rent the property for the same price, he can't come after you for anything, because he's made "whole". He can't get a "double recovery". He can only come after you for his actual damages, to make him "whole" (i.e. in the same or similar position he would be in if you had not breached in the first place).

ScottyMacEsq :

And you probably wouldn't be on the hook for any bank fees relating to the check if you told him before the fact to not deposit it. If he did so anyway, that's a superseding cause, and would be a "failure to mitigate your damages". He knew that this was a distinct possibility, so he should be on the hook for that charge.

Customer:

so I guess I have to wait and see what he does. Is there a timeframe for this? I guess I need to look into 'cancel for any reason' trip insurance just in case he tries to come after me... geez...

Customer:

bank charge for stop payment was only $20

ScottyMacEsq :

The timeframe would be the statute of limitations on breach of contract actions. So it would be a few years that he could bring a lawsuit. But he would have to bring one after the date that the property was supposed to be rented, so he could show that he attempted (unsuccessfully) to re-rent the property. If he brings one before that time, you can bring up the defense of failure to mitigate damages, and win.

ScottyMacEsq :

Another issue that he would have to consider: NC is one of the 4 states that don't allow for garnishment. So even if he were to pay the money and expenses to sue, and get a judgment, he would have a difficult time to collect on that judgment.

Customer:

what do you mean by that?

ScottyMacEsq :

By what?

ScottyMacEsq :

(I told you two things, so I want to make certain I address what you're asking)

Customer:

when you said that he would have a difficult time collecting on the judgement because of some nc thing

ScottyMacEsq :

You live in North Carolina, correct? The owner is in NJ and the property is in the USVI, correct? I want to make certain that I got this right...

Customer:

yes, that is correct

ScottyMacEsq :

As a NC resident, he would have to comply with NC laws in regards XXXXX XXXXX on a judgment. Garnishment is where they can go after wages or other assets like that. NC doesn't allow that in unsecured judgments for contract actions. So someone considering whether they would sue you or not would also have to consider their likelihood of recovery. A judgment itself is not worth anything. It's just a piece of paper. So even if he gets a judgment, that doesn't mean that he will actually get a penny from you. Because NC doesn't have garnishment, he couldn't get it that way.

Customer:

and trip insurance will do me no good as you have to show payment (cancelled check) to get a % back and if he can do this after the fact and no check went to him I'd have no reimbursement. And I have no way of knowing what he plans on doing since he has over a year to decide....

ScottyMacEsq :

That's true, but as a practical matter, if he doesn't take action this year, he probably won't.

Customer:

so, in otherwords, if for me to have to pay him under my financial circumstances required me to cash in retirement investment $$, then he couldn't do that (NC won't force me to cash that in to pay for a judgement)?

ScottyMacEsq :

That's correct. Most retirement assets are exempt from judgment anyway. So even though you could be liable, and he could get a judgment against you, that doesn't mean that you're going to have to pay him anything. And that would play into his calculation whether or not to sue in the first place.

Customer:

what harm would it do to me if i had a judgement against me? i've never had issues like this before

ScottyMacEsq :

Probably not any. The reason is that they would likely do this at small claims court, if anything, and that (not being a court of record) would not show up on your credit report.

ScottyMacEsq :

Hope that clears things up a bit. If you have any other questions, please let me know. If not, and you have not yet, please select the "accept" button. If you have already clicked "accept", or if you will in the future, please let me know so I can track these for my own reports and customer satisfaction stats. Thank you, XXXXX XXXXX good luck to you!

Customer:

so, net, net.... let me make sure I have this correct: He could have grounds to sue me for the entire rental amount plus the 20% 'service charge' for a total of $8844 (includes USVI taxes). He could send nasty letters which I would have to hire and attorney to respond to and if he decided to go to court and push this, it would HAVE to be in NC and even if he did win, since I don't have $8844 laying around and would have to cash in retirement money, he would get nothing. Is that right?

ScottyMacEsq :

Since you didn't buy anything, you wouldn't be on the hook for the taxes. Otherwise, that's pretty much correct. I don't know your retirement situation, but most retirement funds, etc... are exempt from creditors.

Customer:

So, I need to find out if my accounts are exempt from creditors?

Customer:

Could he try to go after savings accounts?

Customer:

to get partial payment

Customer:

or should i say 'judgement'

ScottyMacEsq :

This is way outside of the scope of the original question (contract liability), and I'm not supposed to answer follow up questions (for instance, re: asset protection, etc...) because of JustAnswer terms of service. Like I said, most retirement accounts are exempt, which would implicate his willingness to sue in the first place, and why I brought it up.

ScottyMacEsq :

I don't mean to sound rude, but answering questions outside the scope of the original one can get me in trouble with this site.

Customer:

ok, so bottomline, even if he sues and wins, he would get nothing....

ScottyMacEsq :

Probably.

Customer:

as he would have to sue in NC

ScottyMacEsq :

Again, I can't say for certain, but that's most likely the outcome.

Customer:

so, just to be sure, he'd have to do all of this here in NC

ScottyMacEsq :

Yes. Venue would almost certainly be NC if he didn't choose it in the contract in the first place.

Customer:

Yes, nothing on the contract

ScottyMacEsq :

Hope that clears things up a bit. If you have any other questions, please let me know. If not, and you have not yet, please select the "accept" button. Please consider the extra effort (>1 hour) spent on your question when considering whether to give a bonus. If you have already clicked "accept", or if you will in the future, please let me know so I can track these for my own reports and customer satisfaction stats. Thank you, XXXXX XXXXX good luck to you!

Customer:

thanks it was helpful

ScottyMacEsq
ScottyMacEsq, Attorney
Category: Landlord-Tenant
Satisfied Customers: 18,161
Experience: General practice attorney
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