Location: Arizona
We are leasing a home in a residential area to someone who had said they were a single parent looking to move there for the better schools. We had them sign a contract for a 1 year lease. Everything had been fine so far, we have a property management company we use as well and at the 6 month inspection they sent us photos of the place. The management company missed the red flags, but when we saw the photos it was quite obvious no one was actually living in the house and they had turned our house into a daycare center. There was no furniture in the house, clothes in the closets everything was daycare toys, play pens, cribs etc. We started digging and found their business website and our home address on google being advertised as a daycare.
Our lease contract strictly states it's for residential use only, the hoa does not allow this as well, and our home owner insurance surely doesn't cover us if something went wrong. We pointed this out to the property management company, and told them to give them the 10 day notice to comply. After a slew of lies and admitting there's another adult "living there" that he failed to add on the lease, they stated they will not stop, because the business brings in too much money for them.
They offered to pay 200 dollars more in rent if we allow them to stay, the property manager is recommending we compromise. Am I over reacting to this, or is the liability risk pretty major for me?