breaking a lease before tenant's move in

[ESTHER MORAN]

tenants signed lease they were to move in on march 1st
they decided they don't want to move. i'm i required
to give them all their money back as far as the first month
rent and security deposit.

 

[LL]

Says who?

 

[djdj]

YES you are......IF you dont start advertising immediately for the apartment, at the same rental as they were going to get!

YOU have a duty AS A LANDLORD to mitigate damages and to rerent asap...there is plenty of time to get tenants in by March 1st...IF after you have taken ads in sundays and the daily paper and other ways sign on lawn etc.

AND you have made yourself available to show the property, then after you have done what you can do to rent it by march 1st...if you cant then you would be entitled to march's rent.

And if they sue you in court you will have to prove you really did try and re rent the place.

The only legal item you can deduct for is the cost of the advetisements to re rent the place.....and you are not entitled to the security either.

 

[LL]

If they sue you in court THEY will have to prove you really didn't try and re rent the place in good faith.

You can generally use both the first month's rent and the security deposit to satisfy the unpaid rent until all of the rent obligation on their part is satisfied.

In addition to advertising costs, you can deduct any expenses you may have in trying to mitigate the rental loss that they are potentially causing, including the cost of your time to show the apartment, check-out a new tenant and negotiate a new lease, plus mileage, tenant-screening fees, telephone expense, copy costs, etc. You have to work as hard as you usually do to get tenants, but you don't have to work harder to cover the default of these tenants.

Under such circumstances, I usually advertise the unit for the same rental as they had contracted for, OR BEST OFFER. In the event that I rent it for less, or I have to promise the new tenant anything that I did not promise to the defaulting tenant, the defaulting tenant is responsible. If you offer the unit at a substantial discount, you can usually get a new tenant quickly and the defaulting tenant has to make up the difference. You are responsible for acting in a good faith attempt to re-rent the premises, and thus mitigate your loss.

[Edited by LL on 02-15-2001 at 03:36 PM]

 

[djdj]

Yes you can add for tenant screening, or if YOU pay for a cedit check, and other expenses.....

If you re-rent it at a lower price as LL suggests, you can decuct the difference for the rental period, if you were going to offer the old tenants a year lease at $800 and the New tenants at $775, you could deduct the $25 a month or $300 from their first months rent, and refund the difference..

BUT the tenants would have a good case if you re- rented at say $650 and tried to keep ALL of their rent and security, becuase it would be bad faith to rent it to some one at $650 and expect the old tenants to make up the $150 a month difference.

I hope you didnt run out and spend all that money, now did you?

 

[LL]

I disagree that a $150 discount would show bad faith in mitigating the loss. I do $250 and $300 discounts often. In fact, if I don't re-rent an apartment within a couple of weeks, I will immediatly invoke the discount offer, so as to get the matter settled and a new tenant moved in within 30 days.

$250 x 6 months = $1500, and that represents a month's rent these days. I am allowed to consider the inconvenience to me caused by the tenant's default, and allowed to bring the matter to a close quickly.

I am also allowed to take the best offer that I receive, including those willing to move in without an extra month's notice. Do you doubt that there are some perspicacious bargain hunters around?

 

[djdj]

I do see your point......and it is valid.....

But here in NYC i cant imagine anyone giving a discount because apartments are so in demand, that you could rent out the same apartment 5 or 10 times in one day,if its anything close to decent...and at full price

Heck during the last 2-3 years during the dot com boom,and Our mayor making this a SAFE CITY... people were BIDDING MORE then the advertised price for apartments here!

So I was just using a lower rent figure for the area she might live in.....

Also you may be able to get away with that in CALI, but here a tenant would try and sue for "unjust enrichment of the landlord".

And you would have to prove you could not re-rent it at the same rental, and that you did not rent it at a substansial discount to say...a family member, a drinking buddy, your mistress etc.

I think its just a little protection for the tenant from a landlord who could really take advantage of the situation.

[Edited by djdj on 02-15-2001 at 12:37 PM]

 

[LL]

Sorry again, dj.

Where did you get that "And you would have to prove you could not re-rent it at the same rental, and that you did not rent it at a substansial discount to say...a family member, a drinking buddy, your mistress etc. "

We don't know where Esther Moran is, but in California the law says that landlord is entitled to the amount by which the unpaid rent which would have been earned, exceeds the amount of such rental loss that the LESSEE PROVES could have been reasonably avoided. So it is the tenant's responsibility to prove that the landlord could have reasonably done substantially better (in California, at least). In NY, do you have a statute that deals with this?
Who has the burden of proof?

By the way, you said earlier that "If you re-rent it at a lower price as LL suggests, you can decuct the difference for the rental period, if you were going to offer the old tenants a year lease at $800 and the New tenants at $775, you could deduct the $25 a month or $300 from their first months rent, and refund the difference.. " Can the landlord get future damages from the tenant, i.e., damages for rent loss that hasn't occured yet? In California, yes. What about NY?

My mistress has the same right to rent the apartment at the discounted price as anyone else.

You are correct, of course, that the conditions of the local rental market, and the place of the premises in that market have a lot to do with it.

I got a vacation notice last Friday that a tenant is being transferred and will be leaving. I have been getting about 4 calls a day about the unit, but they are all garbage. I don't have to take just any tenant in trying to mitigate my loss. I can be as selective as I usually am.

These are all relections on the general problem of tenants breaking their lease. Remember that "mitigate the loss" means to make the loss less severe, not to erase it. When you give advice to tenants who want to break their leases, you should make them aware that there are legitimate costs and risks involved in just walking away.




[Edited by LL on 02-15-2001 at 03:33 PM]

 

[djdj]

actually we are both right.........the law really is the same here in NYCity, but the application of it here is different because of the incredible shortage of housing, so that ANY discounted rent would be looked upon by a Judge as SUSPICIOUS.

Now of course when we were in a recession 10 years ago, you saw almost every landlord offer some discounted rent.

Maybe your market is not as tight as ours and dont have a lot of people that have lots of available money, who are really desperate...

Dont forget we have something like tens of thousands of college students too who dont or cant live in the dorms, but want to live close to school,

We got very lucky for a 2 br for $950 a month and we are 15 minutes from Midtown Manhattan and a great View of the city AND a great landlord who has a second home in NY state and he goes up there for 2 or 3 weeks a month...

You can rest assured i wont do anything to screw this great deal up....LOL

[Edited by djdj on 02-15-2001 at 04:56 PM]

 

[LL]

Sorry again, dj.

My research reports tell me how L.A. has a tremendous housing crunch; that immigration into L.A., including from New York will further increase that crunch by huge amounts during all of the next decade, and maybe longer, while increase in the housing stock is less than 30% of the increase in population. Meanwhile, since the third quarter of last year, New York housing vacancies have increased slightly and prices have softened a little. A look at the freeways during the middle of the day will tell you something that most of us already know: that there are an awful lot of people in L.A. who don't work and have lots of money. Retirees, entertainment industry personnel, Iranians, rich Orientals who prefer California to home, aerospace engineers who invested in computer stocks, computer scientists who run their own dot.com's, my wife, etc.

The only argument that may have any credibility is that it may be very easy to rent out an apartment on short notice. That being the case, the landlord won't have to offer discounts. But if he does, the tenant will still have to be the one that proves that the landlord could have reasonably avoided a rent loss. And the landlord can defend against that. Including future damages.

 

[djdj]

Thanks LL i like this ... you are an experienced landlord, and if you wanted to stand before a judge and defend giving someone a discount, you probably will win,

But the court cases i see and read about here discounting is a very very rare occurance Because everyone, even judges know it doesnt happen.

And that really is the answer to the persons question, yes they can discount the rent to get tenants in fast and take the difference out of the rent and security, but certain places like here....the tenants are quick to sue, and for you to prove it in court... after all its only $35 to file in small claims court.

 

[LL]

California is more civilized.

Even the price of filing in small claims court is $20 (discount).

But what about Esther Moran?
Can she discount the rent to get someone in quickly, charge the discount to the ex-tenant and defend herself in court?

She didn't share with us where she is, but I bet that she can.

[Edited by LL on 02-15-2001 at 09:41 PM]