First of all I think your friend should be the one asking the question, because some of your recounting of the events are not clear.
I do believe your friend (or you, through their explanation to you) misunderstood about the "warranty" (which you called insurance). The agency (company) does not provide a warranty on a home. An agent may sometimes provide one as a closing gift on a sale, but not on a rental.
Perhaps your friend misunderstood what the agent told him/her, that as an owner he/she could purchase a warranty, but honestly I don't believe any of the warranty companies issue one to the landlord to cover a rental property (I could be wrong however).
But if I understand correctly...
1) The house was listed for sale AND rent through the agent.
2) The house was rented to the tenant, with the agent providing the standard leasing agreement (with an option to buy??)
3) The owner still had the house on the market for sale, even after the lease was agreed to, and then the owner withdrew the "sale" listing agreement and just continued with the rental agreement and the tenant moved in.
4) The original lease is now up for renewal, and the original "rental LISTING agreement" has a clause that if it is re-rented/sold to the same tenant, the owner must pay the agent a commission again. It probably said something like this:
" Should there be a renewal of the lease.......an additional commission of ___ will be payable to the broker by the landlord, at commencent of the new term."
"Should there be a sale or exchange of the property between the tenant and the landlord, a commission of ___ will be due from the owner/landlord at passing of title"
NOT that this is legal advise, but IMHO if #4 applies, then I do believe that your friend owes commission to the agent for the renewal. Your friend entered into a legal contract when he/she signed the rental listing agreement. Withdrawing the "sales" listing does not absolve your friend of their obligation if the agent found a tenant while it was listed for rent and is now renewing the lease with that tenant.
I suggest two things:
First, have your friend call the BROKER/MANAGER of the agency, not the agent, and explain the situation calmly and in detail to see if this can be resolved amicably.
If there is no agreement on how this is to be handled, then have your friend contact an attorney about his/her legal obligation to the agent as far as renewal commission if concerned.
Hope that helps
Once the home was rented, I would assume the house was withdrawn from the market - as it was no longer for sale.
Unless the agent was being paid as a property manager, she was no longer a party to the relationship - it was a landlord, tenant relationship, and there was no reason the agent should have been involved in any issues that arose between those parties.
If a home warranty was offered by the agent - this should have been in writing, and the warranty should have been produced right from the start......if it wasn't - then shame on everyone!
Most home warrantys can cost in the range of $500 - this is a lot for an agent to offer on a rental.....perhaps there was some miscommunitcation about this between the parties.
When you say the owner cancelled the contract.........the house was no longer listed - so what was cancelled?? Your friend was riding out the listing agreement, as the cloc was ticking, while the home was rented. If the lease is almost up, then any listing contract would most likely have ended by now, or is soon to end..
Once the listing agreement expires, there is no longer a relationship or an obligation to that agency or agent.
Now....if your friend agreed to the requirement that the renewal must go through the agent..........he made that decision. He really needs to be accountable for the decisons he made....unfortunately, even the bad ones.
If he wants to renew without following the terms of the lease he already agreed to, he should seek legal counsel!
If he wants to list with another agency and find a new tenant, I don't see any reason he can't do that, providing his listing agreement expired.
Just out of curiousity..........according to the lease, .Is the agent entitled to another commission upon renewal?
Is the tenant interested in buying the home?
I am not a Lawyer, and I wouldn't deign to give legal advice; but this sounds ludicrous.
I would suggest a lawyer or legal aid.
Good luck and may God bless