What If My Occupant Has a Fake Lease? – Strategies For Dealing With Fake Tenants in Maryland

What If My Occupant Has a Fake Lease? – Strategies For Dealing With Fake Tenants In Maryland. Every now and then, property owners will contact me because a stranger (or sometimes friends ore even family) has moved into their property and created a fake lease agreement. This post discusses strategies on how to deal with this situation. You can click the point in the table of contents section to navigate to the part that is most relevant to you.

Table of Contents

1. Most Common Situation, and Other Situations Explained
2. Post a Notice To The Premises Asking Them To Contact You
3. Demanding a Copy of The Lease
4. How To Figure Out If a Lease Is Fake
5. Why Consider Offering a Cash For Keys Agreement
6. Never Give Cash Before Receiving The Keys
7. Escrow Agreements 101
8. Contacting The Police/Sheriff To Find Out Who They Really Are
9. Contact The Former Owner To See If It’s Real
10. Legal Demand Letters
11. Actions For Possession
12. Actions For Monetary Damages
13. What If They Really Are a Good Faith Tenant? – The Protecting Tenants In Foreclosure Act Quick Brief Overview
14. What If They Were Scammed?

Most Common Situation, and Other Situations Explained

1. The most common situation this occurs Is when an investor purchases a bank owned property (also called a Real Estate Owned or REO property). There will often be squatters inside that claim to have a lease with the former owner. As far as we know, we don’t know who these people actually are. They could be using fake names.
2. Other situations – A stranger just moves in out of nowhere. A family member or friend creates the fake lease.

Post a Notice To The Premises Asking Them To Contact You

So, one of the first orders of business is to attempt to get into contact with the occupants. One of the best ways to do that is to post a notice on the premises asking them to contact you. Ask them for a copy of the lease. You can incentivize the occupants to contact you by offering a cash for keys agreement or warning them of legal action if they do not contact with X number of days.

Demand a Copy of The Lease Agreement

So, you’ll need a copy of the occupants lease agreement. In many cases, you won’t have to ask for it because the professional tenant scammer will proudly present to you a copy of their fake lease agreement.

How To Figure Out if a Lease is Fake

There are a number of red flags I like to look for.

🚩Lease looks very unprofessional.
🚩Ridiculously low rent amount due or no rent due at all.
🚩Owner signature on lease does not match signature on publicly available documents.
🚩Date of the lease is after the foreclosure occurred.
🚩Former owner was dead at time of lease execution.
🚩I can “feel” it (This takes experience).

Why Consider Offering a Cash For Keys Agreement?

In a perfect world, fake tenants will be evicted within 2 – 3 weeks after taking legal action against them for possession. Unfortunately, we do not live in a perfect world and it can often take many months to get the property back. Due to the pandemic, court wait times have doubled or tripled. Each month thet goes by represents cash you could have been paid. For that reason, it may be more cost-effective to offer a cash for keys agreement to the occupants.

Never Give Cash Before You Receive The Keys

Perhaps I’ve seen too much in my lifetime. I’ve seen a case where a tenant refused to vacate after receiving the cash. For that reason, I recommend using agreements where the tenant does not receive the cash until after they have vacated. A good tool for this is 3rd party escrow agreements.

Escrow Agreements 101

Fake tenants, being the master scam artists they are, will often not want to put themselves in a position where there is a possibility that they will not receive the cash after they have vacated. In order to address that concern, I tend to use 3rd party escrow agreements where an attorney (i.e. myself) is responsible for holding and disbursing the funds after the tenant vacates. I believe there are 3rd party escrow companies that will carry out this function if you do not want to use an attorney.

Contacting The Police To Find Out Who They Really Are

In many situations you will not be able to identify who the occupants really are. Sometimes they will give you a fake name or just outright refuse to speak with you.

If you contact the police and tell them you have unidentified squatters on your property, they will not carry out an eviction. However, they have been willing to visit the property and gather the personal information of the occupants. They may even show the Sheriff copies of the lease agreement that they refused to show you.

Contacting The Former Owner

Assuming the Former owner is alive, you can always track them down and contact them. I’ve used social media and paid people look up tools to track people down. You can also pat a bit more to have a process server attempt to track him down.

The former owner may very well tell you that the former owner is fake. You can use him or her as a witness at trial if it gets to that point.

Legal Demand Letters

Often, fake tenants with fake lease agreements will not listen to the current owner of the property. A demand letter from an attorney may encourage them to move on. It may not, but it’s worth a shot.

Actions For Possession

In most cases the proper cause of action is a wrongful detainer action. In a foreclosure purchase, it may be possible to intervene in the foreclosure case and file a motion for possession in the case.

Actions For Monetary Damages

Unfortunately, some Judges are not willing to award monetary damages in possession actions. If that is the case, you’ll need to file a separate civil suit for monetary damages. The amount of the claim can start with the fair market rental value of the property for the time they stayed, and then go up from there.

What If They Really Are a Good Faith Tenant?

Assuming it’s a foreclosure, The Protecting Tenants at Foreclosure act kicks in. If the tenancy is month to month or at will, then the owner must provide a 90 day notice to terminate prior to filing a holdover action. Assuming it’s an annual lease, the 90 day notice only applies if they intend to occupy the home as their primary residence. Otherwise, the you’ll become their new landlord and need to honor the lease.

Assuming they become your new tenant, then they are responsible for paying the rent and following the lease terms. If they do not, then they subject themselves to a failure to pay rent and/or breach of lease action.

What If They Really Were Scammed?

Everyone and then people really do fall victim to the scams and rent from someone that they thought was the landlord, that really wasn’t. Unfortunately for them, this does not give them the right to possess the home. You can attempt to work out an agreement for them to leave or file an action for possession against them.