Do I have to return the money?
With the postponement of the 2020 Masters, many homeowners are asking, "Do I have to return the money?" As a realtor, my answer will be what it always is..."What does your contract say?" I pulled our Masters rental folder out of the file cabinet today and reviewed past contracts. One was ambiguous. Another stated that they (the agency) followed GA Real estate laws and put the funds in an escrow account until the money was given to the homeowners...but then didn't fully spell out cancellation policies, another said that the funds either needed to be refunded due to cancellation or applied to the next rental, and finally a very clear one stated that after Feb. 1, all fees were due and no refunds would be given. (Good job, Par 3 Rentals.)
So, the first line of inquiry will be in your contract. I certainly don't have every contract out there in my file. Nor are my contracts all up to date as they span decades. But clearly, there is an issue at hand. If your contract clearly states that you don't have to refund the money, you don't. Legally. But if you have a long-term renter? I might consider working with that renter in either refunding or placing a firm hold on your home for them for the rescheduled time. If your contract is ambiguous? I'd contact the agent and see what your legal footing is.
But we already spent the money.
Yes. I know. Many people have. In the future we will all be more careful to have specific clauses in our contract for how things go. We will put money in escrow until the clients arrive. But that's so hard. It costs to rent. Yes. It does. I do see that many of the agents specify that if money is due back to the renter, their fee is not refundable. We may need a clause that says you can get only a percentage back in the event of a cancellation....thereby allowing homeowners to prepare for the rental and not lose preparation money spent for that year.
We are all in a new world with the pandemic. I currently have a home on the market that has rented well for Masters in the past. I've cautioned potential buyers who focus on that NOT to count on a rental every year in order to pay their mortgage. It's not a good plan. Many things affect Masters rentals...Easter, politics, and pandemics. Masters should be the icing on the cake, not the mortgage payment. (I may have lost a few ready to roll buyers with my honesty, but it just cannot be the way one pays for a home.)
If you've already spent the money and it is due back, there will be some hard planning ahead. Of course, try to work with your client and assure them that your home will be available to them for the 2020 Masters, once rescheduled. If that is unworkable, speak to the agent in charge (unless you have rented person to person) to see exactly what is contractually binding. If the contractual agreement is ambiguous, you don't want to open yourself up to a lawsuit. Do what you can to avoid that. A lawyer can look over your contract and tell you the precise terms and how that relates to Georgia real estate law and your particular situation.
In the future, I think contracts need to be clearly written to reflect Georgia real estate law, need to come with clear and concise measures on how, when, and if refunds will be made and at what point renters begin to see incremental refund adjustments. In the big picture, we are all learning that there is no sure thing. Best to err on the side of financial caution and put funds into escrow, using them only as a thoughtful and legal contract allows.
Stay safe. This too shall pass. It's a learning thing for all of us.
Laurie Easterlin is a realtor with Keller Williams (LaurieErealty.com), a home stager and professional Masters preparation specialist. To learn more about her services, please visit: Staged2aTee.com