Get out of lease with 'stop payment'?

Rent it Right

By Inman News Feed
Add Comment Add Comment | Comments: 0 | Posted Jun. 16, 2011

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Rent it Right

Janet Portman
Inman News™

Q: When I was transferred to another city, I went ahead to look for an apartment. Time was short, so I applied for the first place I saw. I gave them first month's rent and a deposit, and they said I'd get the place if my credit checked out. It did; then I discovered that I could have gotten a much, much better apartment for less had I looked further. Could I have gotten out of the first place by placing a "stop" on my check? --Todd D.

A: Your question illustrates the risk of not taking your time when searching for a place to live. When you are new to a town especially, and aren't familiar with the neighborhoods and rental scene, you'll be operating in the dark if you make quick decisions. Thorough preparation -- using online rental sites and talking to people who are longtime residents -- will always pay off. While you search, staying at an extended-stay motel or hotel is a good option.

I'm afraid that your wistful "if only I'd stopped the check in time" regret is misplaced, however; it wouldn't have done you much good. What happened here is that you apparently not only applied for an apartment, but also agreed to rent it if your credit met the landlord's criteria. The money you put down was a holding deposit, to be applied to sums due under the eventual lease if you passed inspection. Landlords should refund the deposit, or at least a good part of it, if the tenant doesn't pass the final screening.

Holding deposits are quite a mixed blessing. A holding deposit requires the landlord to rent to the tenants if they meet the landlord's criteria. They're a good thing for renters who are certain that they want the rental and don't want to take the risk that a more attractive applicant (better credit, longer rental history) will come along and edge them out of the running. But renters who change their minds must be willing to walk away from the deposit. Typically, the landlord keeps the deposit as compensation for lost rent (for the time the rental was off the market while the landlord was checking out the would-be tenant).

Issuing a "stop" notice on your check would not do you any good, and it could expose you to legal action. Stop notices are properly used when the check writer has discovered a fraud or other facts that makes the deal or the contract unenforceable.

For example, if you give a seller a check for merchandise that you never receive, or that is seriously defective, you'd be on solid ground to tell your bank to stop payment. Simply put, when the seller has not followed through with his end of the deal, the buyer can do the same (by withholding payment). That can be accomplished by suing for the return of the purchase price or, if you act in time, stopping the bank from processing the check.

Buyer's remorse does not qualify as a good reason for stopping payment. If you had stopped the check, the landlord would have had a good claim against you, based on a simple contract theory: He followed through on the deal, and you did not. Your conclusion after the fact that the deal was a bad one for you is not relevant.

But I can imagine sharp readers saying, "Wait a minute. Didn't you say that if the tenant backs out of an offer, the landlord keeps the holding deposit to compensate him for having kept the rental off the market? A security deposit plus a month's rent is surely more than would be called for!"

Yes, indeed. Had you decided to forego this rental and take the better one, you would have had a good argument to get at least some of that money back. You could have argued that the landlord was entitled to compensation only for his actual damages, such as the value of his time spent checking you out, and the market value of the rental for the days it was sidelined while your application was under consideration and until you backed out. That sum would surely not have approached several months' rent (one month's rent plus a deposit, which is typically a multiple of the monthly rent). Of course, you would have to file a lawsuit to get your money back.

Q: Our city has passed an ordinance that restricts the parking of recreational vehicles on not only the street, but on private property! We can't put them in front of our homes, and must hide them behind a fence if they're in a side yard. Is it legal for the city to regulate how I use my property like this? My tenants have just bought an RV that they can't park and now want to get out of their lease. --Dean T.

A: Your city legislators may have been concerned about parking; permanently leaving a large RV at the curb will lessen the number of parking places for residents and guests. Wide RVs can also narrow the amount of space left on the street for cars to pass, especially if another wide body is parked right across the street. Aesthetic concerns may have played a part, too. These vehicles can block views, and although many folks consider their RV a thing of beauty, an equal number will not share that sentiment (perhaps unkindly, the law refers to the aesthetic motivation as a desire to avoid "blight").

American courts have traditionally given cities and states wide leeway when it comes to such laws. It's important to remember that they are written by the Legislature, one of the three branches of government, along with the judicial (courts) and the executive (like presidents, governors and mayors). As we all learned in elementary school, these three branches are co-equal. So, courts generally don't meddle with the wisdom of legislative decisions unless they are obviously arbitrary or unreasonable, lacking any relation to public morals, health or welfare.

Knowing that the deck is somewhat stacked against you, you'll want to do a bit of homework before deciding to challenge this ordinance. Find out what was said and done when the city drafted and studied the ordinance. What reasons were advanced for its passage? If the city had reasons like those mentioned above, and if the actual restrictions are reasonably related to furthering those ends, you may have a tough time fighting it.

As for your tenants, I think they're out of luck. Before buying their RV, they had an opportunity to make sure that they could store it. You aren't responsible for warning them in advance that, should they consider buying such a vehicle, they should know that it can't be parked in front of the rental. But in the future, you might tell applicants about this restriction, so that no one is unpleasantly surprised.

Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of "Every Landlord's Legal Guide" and "Every Tenant's Legal Guide." She can be reached at janet@inman.com.

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