Predatory Arbitrage Leases: Don't be Blamed for Failed Business Endeavors of Arbitrage Lease Companies
By Tyler S. Stine
Rental arbitrage companies are companies that lease properties from owners on long-term basis and then sublease them to third parties, typically on a short-term basis. This arrangement allows the owner to receive increased rents vs. a traditional long-term lease but avoids having to hire a property manager or handle all of the work and risk that comes with personally managing a short-term rental property.
Recently, one of Provident Law's clients was solicited by a rental arbitrage company to lease their property to them to manage as a short-term rental. Provident Law's client, seeing the potential for the convenience, agreed to this arrangement. Shortly after the arbitrage company began to operate, the HOA approached Provident Law's client notifying them that short term rentals are not permitted under the community's CC&R which had recently amended to restrict short term rentals.
The owner attempted to work with the arbitrage company to terminate the lease agreement, but rather than being reasonable, the arbitrage company stopped paying rent to the owner and continued to conduct rentals on the property which forced Provident Law's client to retake possession of the property by changing the locks.
After that, the arbitrage company sued the property owner for violation of the Arizona Residential landlord-Tenant Act, breach of lease, and unjust enrichment. Click link below to see how Provident Law's Attorneys Christopher Charles and Tyler Stine leveraged their legal experience to secure the dismissal the claims filed against their client and recovered an award of their attorneys fees and costs against the opposing party.
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