Can a person sign a lease as a lessor if they do not own the property being rented?

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Can a person sign a lease as a lessor if they do not own the property being rented?

We were considering buying a property as an owner finance. The owner said we could move into the property for a couple of months and see if its really what we wanted. We had asked a friend of ours if they wanted to rent the basement which they did, so we signed a lease. Within the first week of living in the home we had plumbing problems, mold problems, and carbon monoxide problems. We decided not to buy the home. Now we wish to vacate the premises and the other party does not, so now they say we are obligated to uphold the lease. Is this true?

Asked on December 7, 2011 under Real Estate Law, Missouri

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Yes, you can be held liable by the friend who does not wish to move out, under two theories:

1) Even if you don't own the property, if you had a lawful right of possession--which it sounds like you did;  you indicate that the owner had told that you could move into and use the property, so you had a right to possess it--you could then lease or sublease to another person.

2) Even if you did not have a lawful right of possession, if you represented to the friend that you did and he/she could move in and rent from you, and that representation was plausible and reasonable for the friend to rely on, then if the friend did in fact rely on that representation and incur costs and inconvenience in moving in (and possibly give up opportunities to live elsewhere), then the fact that the friend took action to his/her detriment based on your representation could make that representation binding.

From what you write, you could be liable under both theories above.


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