Lease-breakers off the hook if landlord markets unit for sale?

Rent it Right

By Inman News Feed
Add Comment Add Comment | Comments: 0 | Posted Dec. 22, 2011

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Rent it Right

Janet Portman
Inman News®

Q: We had to break our lease and move when I lost my job. My landlord decided he'd put the house on the market rather than try to rerent, so of course it's going to be very hard to find a replacement tenant. If he never finds someone willing to take this rental, does this mean I have to pay rent for all the remaining months on our lease? --Geoff and Cathy S.

A: In most states, landlords must make reasonable efforts to rerent after tenants break a lease without a legally valid reason. Assuming this rule applies where the property is located, what's the legal effect of your landlord's decision to attempt to rerent while also attempting to sell the house?

A judge looking at this situation might approach it like this: Is it reasonable for the landlord to advertise a home for rent that is also on the market?

As you've suggested, most renters will shy away from a situation like this, justifiably fearful of repeated open houses, staging attempts, and the disruption of getting a new landlord once the home is sold.

Your landlord might also try to place a clause in the new lease that will allow for termination if the new owners want to live there; or the landlord might simply offer a month-to-month rental agreement rather than a lease (such an arrangement allows for termination with relatively little notice). If would-be renters have any options, they'll look elsewhere.

Some judges might conclude that offering a home for rent that is also on the market does not qualify as a "reasonable effort" to rerent. This doesn't mean that the landlord can't do it, but if he finds no takers he won't be able to sue you for the entire remaining rent.

Instead, the judge would try to estimate how long it would have taken the landlord to rerent a home that was not also for sale; and you'd be wise to be ready with some evidence on this subject (such as testimony from a property manager who's familiar with the renting scene in your area).

If a not-for-sale home like yours would've rented in, say, a couple of months, your responsibility for rent should end after that time.

Landlords who chafe at this result might do well to consider whether an empty house, unencumbered with tenants, might not only show better and more easily, but also command a higher price. Potential buyers who might want to live there won't have to deal with incumbent renters, who will not only occupy the home until their lease is up, but may not take such good care of the property during that time, too. Maybe what's lost in rent can be made up in convenience and price of the sale.

Q: My tenants left in the middle of the lease, when they moved to another state for work. I had collected two months' rent as a deposit, and they left with no unpaid back rent or damage. Our state gives landlords 21 days to itemize and return the deposit, so at the end of that time, I sent them a letter explaining that I was keeping the entire deposit due to their lease-breaking and how I haven't found a replacement, despite advertising and dropping the rent.

They are challenging my use of the deposit, saying I can keep it for unpaid rent only as of the day the deposit had to be itemized and returned. I still haven't been able to get new tenants. Are they correct? --David C.

A: I suspect your tenants are correct. Most security deposit laws specify that the money can be used only for damage beyond ordinary wear and tear and for unpaid back rent. So, for example, if tenants pay rent on the first of the month, leave on the 30th and don't pay for the next month, they will owe you rent as of the first of the month. If your state requires you to itemize and return the deposit within 21 days of moving out, then on the 21st day, your tenants will have accrued 21 days of unpaid back rent. From the deposit of two months' rent, you can take only 21 days' worth, and you must return the rest.

Now suppose that, despite your reasonable efforts, you haven't been able to rent the property for another few months. All that time, your original tenants have been racking up unpaid back rent. But now, you must go to small claims court and sue the tenants to get it.

How inconvenient, you say, and I suppose it is, when the rerenting process has been unavoidably slow, as you suspected it would be. Your tenants are long gone and it's hardly worth your while to try to find them, go to court, and then attempt to collect. And it sure must be irritating to have to send money back to tenants who broke their lease.

But when market conditions point the other way -- when reasonable rerenting efforts can land a tenant within a month or so -- limiting landlords' use of the deposit to only accrued back rent will prevent them from keeping the entire amount and, in effect, collecting double rents for a period of weeks or a month.

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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