Can a landlord terminate a lease before it begins?

Question

My husband and I are landlords in California. We have a tenant that signed a lease agreement and gave us a security deposit. After seeing and committing to the property they are now making several demands, cosmetic and not functional, and we are trying to rent the property "as is". We have offered to terminate the lease and return the security deposit if the property does not meet their needs but they are declining since they have already made arrangements to move out of their current residence. Are we legally allowed to terminate the lease without a mutual agreement as long as we return the security deposit? Any advice you can give on this matter would be greatly appreciated.

Theresa Harris · Answer

You can tell them no and offer to terminate the lease. As they don't want to terminate it, then tell them they viewed it and knew what it was like.  It would be different if they moved in and found out the oven didn't work.

Chris London · Answer

@Alexis F. What specifically are the tenant demands?

Nathan Gesner · Answer

If the lease agreement has not started yet, you should be allowed to terminate the agreement, refund the money, and move on.

My lease is very clear, in more than one clause: they were given an opportunity to inspect the rental before they applied for it and before signing the lease. They accept it in "as is" condition with no promises of additional cleaning, repairs, or improvements unless agreed to in writing as part of the lease agreement. As long as you were honest in your advertising, it's their responsibility to inspect and verify it meets their needs.

To prevent this in the future, I highly recommend you add a clause similar to this one below and make tenants initial it before signing the lease. This will cut the legs off any argument they make:MOVE-IN CONDITION. Tenant acknowledges the rental was represented through marketing materials designed to attract applicants for in-person inspections. Tenant was given the opportunity to inspect the rental prior to signing this Agreement. Tenant elects to accept the property in its current condition and/or they are waiving their opportunity to inspect, at their own choosing and for their own convenience. Landlord shall not be obligated to clean, decorate, alter, repair, or otherwise improve the rental, either before or after the execution of this lease, unless agreed to in writing as part of this Agreement.

Alexis F. · Answer

Hi Jaron,

Thanks for the feedback. We don't have an "as is" clause but will be sure to add that in the future. Thanks for the tip! Would this clause fall under that:

• 1.                   CONDITION OF PREMISES.  Tenant stipulates, represents and warrants that Tenant has examined the Premises, and that they are at the time of this Lease in good order, repair, and in a safe, clean and tenantable condition.

Account Closed · Answer

This is all great advice. I've signed 3 leases as a landlord, and I have not included such a clause. Luckily, I have not had major issues after tenants moving in (just a misaligned door, or broken oven gasket, etc.), but I may look into adding a clause like this in the future.

Jaron Walling · Answer

@Alexis F. This is dependent on the lease both parties signed. What are the demands? Do you have an "as-is" condition written in the lease? Here's an example of mine below:

Tenants have been given the opportunity to inspect the rental and accepts it "as is" without any expectation of additional cleaning or improvements. Landlord will clean and repair gutters, downspouts, and trim trees when necessary.

If not present in the lease you could be legally obligated to let them move in. It's in everyone's best interest to except the condition of the unit. Looking for another rental is difficult and time consuming. If they walked the property you could argue they knew about everything, but I'm not a lawyer and offer no legal advice.

Dwayne Poster · Answer

I shudder when I see ‘as is’ in a tenancy agreement. It’s a condition the judge, if called upon, can roll in either direction. I do, or have done, a tenant walk through, or waive, and document condition. This also serves on the vacate side to deduct damages. Claiming damage becomes a legal challenge with ‘as is’ language. I understand they exist, but not in my portfolio.

The question of termination is dependant on your local tenancy regs, but common language is that the landlord will provide, and the tenant will pay.

Greg M. · Answer

No, you can not unilaterally terminate the lease. Would you be OK with a tenant signing the lease and then saying they changed their minds?

There is nothing that says you need to make changes to the unit with or without that clause. Cosmetic is personal opinion. Say no. Depending on what is "not functional" it may or may not need be fixed. They would have a expectation that the dishwasher works and if it doesn't, it needs to be fixed.

Andrew Frowiss · Answer

You should defer to what your Lease says. If the Tenants signed the Lease and it says they are accepting the property "as-is" then they can't force you to make a bunch of unnecessary repairs. If it's a safety issue, appliance isn't working properly, or something critical then you need to address it. If it's just cosmetic issues they have with the home then they really should have asked prior to signing the Lease. I'm not a Lawyer and am only offering my thoughts on the topic, not legal advice.

If you signed a Lease you should follow through with it.

Joe Splitrock · Answer

@Nathan G. I don't think it is legal in any state to unilaterally terminate a lease after signed and the tenant paid a deposit. Even if you include a clause in your lease to allow this, courts have ruled that a bilateral contract that can be terminated by one party is not binding and can be terminated by either party. So even if a landlord includes a "landlord can cancel" clause, that simply means the tenant can cancel at any time. You can modify or cancel any contract if both parties agree, but it sound like the tenants do not want to terminate in this case.

@Alexis F. the "Condition of Premises" clause you referenced would cover this. This clause is acceptance of condition by the tenant. Minus any special agreements that you will improve something, it is assumed the tenant is getting the property in current condition. The exception would be maintaining habitability, such as running water and heat. You should maintain safety such as repairing broken steps. It is also assumed you will perform general maintenance to keep things in working order, unless specifically stated that the tenant is responsible for certain items.

It is pretty common when people move in to have small requests either repairs or small improvements. We often end up doing a couple little repairs. For things that fall in the improvement category, we offer options to the tenant. I had one tenant that wanted new ceiling fans. He agreed to pay for the fans and I agreed to install them. He is one of our best tenants and never requests anything. I am ok with doing little things that make the property more comfortable for my tenants.

You can work through the issues. Forcing cancellation on them, especially in California, could land you legal trouble.

Can a landlord terminate a lease before it begins?

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