SCAM: Prepaid Rent for Unspecified Use
By LC on Nov 14, 2007 in Real Estate Scams
A prospective tenant offers to lease a low rent building for even lower rent, but offers to prepay for a year. They are firm on an broad use clause that may only stipulate “sales and storage of retail merchandise.” In this case it was a freestanding building, the landlord was desperate for a tenant, and the prepaid rent was attractive. He agreed to the deal for a 1 year lease with a 1 year option to renew. When asked for financials, the tenant agreed to provide them if the option was exercised, but not upon lease execution as the rent would be prepaid for one year. The landlord made his second error by waiving the financials and credit information.
The tenant’s actual business is disposing of items that cannot be easily or legally disposed of elsewhere, such as tires, paint, refrigerators, batteries, computers, and even asbestos. They approach storage yards, small businesses and residences and offer to haul the items away for a very reasonable price, much less than what a hauler licensed to transfer these items to approved disposal sites would charge. The customer, who in many cases does not realize that the liability of improper disposal is attached to them as well, agrees.
The scammer tenant dumps the items in the leased premises. If the landlord inspects the space, he maintains that the items are sold and will be picked up shortly. After the lease year is up the scammer disappears, but the toxic and problematic items remain with the space and the building owner must find a disposal site for them which can be egregiously expensive.
Although any tenant can disappear, pre-qualifying procedures should always include a credit check and financial statement review and verification, regardless of the lease term. A specific use clause should always be included in the lease. Here’s the simple clause we’ve used for years without problems:
ARTICLE 3
USE
Tenant shall use the Premises solely for _______________________
and shall not use or permit the Premises to be used for any other purpose.
On Dec 21, 2007, pchef said:
Great information! Keep sharing us with more scams!