Promissory Estoppel Examples in Real Estate
In the world of contracts, a promise can become an enforceable part of a contract if it causes one of the parties to change their position in a substantial way because of it. Even though these promises made might not be written in the physical contract, they are considered promissory estoppels. False promises can therefore be taken to court and the promise can be enforced for its market value. In real estate, this is often seen during the negotiation phase of a mortgage or in the enforcement of a lease. A landlord might promise to fix a water heater if a tenant will sign a lease, but then not fix the water heater at all. A property owner might offer someone a percentage of a home's sale to complete a repair, but then never sell the home. In each instance, the injured party would be entitled to compensation because the promise was left unfulfilled.
Why Are Promissory Estoppels Important To Know About?
The courts treat a promise as a verbal contract. They have the same weight and power as a written contract from a legal standpoint. If a tenant or potential buyer of a home takes specific actions because they were given a promise by a landlord or a current property owner, then this is often enough evidence to support the existence of the verbal promise. From a rental standpoint, the condition of the security deposit becomes one of the biggest places of dispute when it comes to promissory estoppels. If a property manager were to tell a tenant to not worry about cleaning up a property upon moving out, then the tenant would likely leave the property in whatever condition it happened to be in when they moved out. Under a standard written lease, portions of the security deposit could be withheld to prepare the property for a new tenant. This changes because of the promise made: “You don't have to worry about cleaning up the property to move out.” The contract stipulations have been verbally modified by the property manager and created a specific behavior from the tenant. Any cleaning charges would then become the liability of the landlord or property manager. Some courts might even consider “cleaning up” to include repairs.
It Is Always Important To Watch What Is Said
Words come back to haunt landlords and property managers more often than not and it is usually in simple ways. Sometimes something as simple as a “yes” to a question a tenant has is enough to create promissory estoppels. If a property owner doesn't allow pets and a management company tells a pet-owning household that they should apply for a lease on that property, then it could be ruled that pets must be allowed and compensation could be awarded for denial of this. A tenant or a buyer does not need to take possession of a property to be awarded a promissory estoppel. As long as one party endures a cost of time, labor, or money because of a false promise made by the other party, then compensation may be legally due. Promissory estoppels also work both ways. If a tenant makes a promise that causes a landlord or property manager to take specific actions, then compensation could also be due. This doctrine has been in US law for generations and for good reason: a false promise could be used to create favorable contract conditions for one party and not the other. By making sure everyone stays honest, fair compensation can result more often.
There are five basic types of real estate investments properties: Residential – single family homes to rent or rollover Commercial – Apartments and office buildings Domestic vacation – In the US:... More
A well-written real estate ad will get a property owner more calls, faster rentals and potentially higher rents. Here are some of the elements of a perfect internet rental ad: Descriptive words –... More
The Fair Housing Act was first adopted in 1968 and covers most housing in the United States. In 1988, the U.S. Department of Housing and Urban Development increased its power to enforce the... More
When it comes to writing a lease, every state and locality has its own set of rules and regulations. Nonetheless, there are certain general guidelines which you should follow to protect your interests... More
Depreciation is one of the nicest aspects of owning a rental property. Over the course of 27.5 years, you can take out the true value of your investment until you completely recover the amount you... More
Most people let a third-party manage their IRA, but this doesn't have to be the case. A self-directed IRA might not be very well known, but it is an effective way to build up a nice nest egg for a... More
There are plenty of bargain-priced homes on the market right now, both in urban neighborhoods and suburban areas. While a low price can make snatching up properties enticing, it is important to... More
Selling a rental property with tenants may be very straightforward; having a tenant in place can make for an unpleasant selling experience. Most real estate professionals will recommend allowing a... More
Whenever you realize a profit from a rental property, then you will need to pay taxes on any gains that have occurred. Sometimes you can deduct losses that you take from the sale, but a lot of this... More
Professional licensure requirements in the United States are intimidating to many novice property managers. Many times, if a property manager is working for a larger company, the company will make... More