Tenant wants to terminate lease mid-way with probable cause in Philly

Tenant wants to terminate lease mid-way with probable cause in Philly

Developer · Philadelphia, PA · Member since 2014 · 96 posts · 26 votes

I am looking for advice for how to proceed if a tenant wants to terminate a lease midway into the leasing agreement without probable cause to leave. This is for an owner occupied duplex. Tenant in question occupies 1st floor. 

The tenant sends a 48hr notice to landlord saying that they would like to leave the premise and can be out of the house by the 1st of the month (rent is due on the 1st of the month). The tenant wishes to move out because they are having problems with their heating system. The homeowner adopted the lease and tenant at closing in September. Tenant has been occupying unit since May and has a one year lease in place. Upon signing her lease agreement, her then landlord told her not to worry about gas utility and to only pay electric. Since tenant moved in during spring, she never had a reason to utilize gas (stove is electric) until a few weeks ago when cold weather started to set in. The house is heated through gas so there is obviously some sort of source for gas for that unit. Tenant notifies landlord that heating is not working in the bedroom only. Handyman comes in and does some work and says it’s fixed. A few days later, tenant comes back and says that gas still does not work in the unit. Landlord attempts to purchase parts and labor insurance for water and heating tanks for the entire house (two units). While attempting to secure an insurance plan, landlord discovers through gas company rep that no account exists whatsoever for the specified unit therefore was unable to purchase the plan. The gas company further notifies landlord that if the gas company finds out about this, they will come out to the unit and cut off gas immediately because the tenant is utilizing their service without a service agreement or contract in place.

Landlord/homeowner was under the impression that the tenant was paying all utilities with the exception of water. Apparently, this was not the case. Landlord has no idea where the heat source is coming from. Tenant wants to assign blame to landlord because she “did not know” anything about this. Bottom line: landlord tells tenant that if she wants her heating unit fixed, she has to sign up for an actual gas account because if not, the gas company has every right to cut her off for having used it without permission. Landlord believes that previous homeowner lied or misled tenant to believe that she would never have a gas bill when it actually seems like he did something (perhaps illegally, not sure) and gave tenant some sort of hook-up to make it appear that tenant does not have a real gas bill. This was only called into question because tenant is now seeking repairs for one of heaters not working. If she cannot provide proof of an account, gas company will not come fix the issue.

Tenant thinks that landlord is being unfair and thinks landlord wants her to pay more money when in actuality; the landlord is just going by what’s written in the lease and gas company protocol. Tenant does not want to pay “another bill” so is choosing to leave under her own reasons. The landlord cannot be held responsible if tenant did not read carefully before signing previous lease with original landlord or asking the necessary questions.

Now that the tenant wants to leave by Monday, what is the penalty for giving only 48hrs notice? Landlord told tenant that she has to give a 30 day notice in writing if she plans to leave. Tenant still has about 5-6 mos remaining in lease. Landlord is still expecting a rent check from tenant on Dec 1st. I spoke to another homeowner in Philadelphia who mentioned that if a tenant wants to leave without probable cause that puts the landlord at fault that they would have to pay all of the money remaining in the lease (5-6 months worth of rent) because the landlord left the unit in good living condition. Is this proper protocol in the state of Pennsylvania? Has anyone had a similar issue? If this is proper protocol, how does one go about requesting such funds? Landlord has done everything within their power to fix heating issue for tenant but tenant refuses to call gas company. In other words, tenant would rather pay a much higher rent elsewhere than take on one additional bill from gas company. 

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Upper Darby, PA · Member since 2014 · 8 posts · 4 votes
11y

Keep in mind that landlord tenant law in PA may spin out a little different in Philly county. The law is the same, the judges and parties are not.  Philly landlord tenant court is certainly a unique version of small claims court. :-)  I was a mediator there during and after law school.

First this is not legal advice - just my required disclaimer.  But my suggestion to you is that although the law allows certain remedies for you, the practical solution might be different.  In a normal situation where the unit is fully habitable and everything is working, it is true that the landlord could put the tenant on the hook for the remainder of the lease -- subject, of course, to the landlords diligent efforts to mitigate damages (i.e. lease the unit to someone else).

However, there is obviously some question here about a) whether the heat works and b) who has the responsibility to pay for it.  In cases of loss of heat, my opinion (from watching lots of cases) is that judges in housing court here are not forgiving of landlords who do not provide working heat for tenants regardless of the cause.  Her not signing up for an account (if that was required in the lease) is another issue since there is a question of whether even if she had the account her radiator/whatever equipment may not be working. 

In either case it doesn't much matter.  Practically speaking, because of the other possible breaches going on with this tenant, it would be better to take her up on her offer to move, keep last month's rent if you have it, check for damages and return the remainder of the security deposit if any, and just move on.  The reality is that even if you spend your time and money to get a judgment (supposing you win, of course) you will likely never see any money.

In addition to having a buy out/early termination clause (which was your initial question) in your new lease, we also have a clause in our lease that states if the tenant is unable to get service from PECO/PGW/etc. at the outset of the lease, then the entire lease is cancelled and tenant has to find a new place.  Then after you lease, follow up with appropriate utility to be sure that the tenant has moved service into his/her own name.  I say this because my suspicion is that even if she wanted to get a PGW account, she may not be eligible if she has back bills etc.

See this as a blessing in disguise.  If she does have that many folks and pets living on the property, letting her and her accompanying drama go at her request is basically the definition of the perfect situation.  It allows you to really get in the unit, clean it up, get a better lease, and your own tenant that you screened yourself.  

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  • Involved In Real Estate · Jacksonville, AL · Member since 2014 · 8 posts · 4 votes
    11y

    Jessica,

    You've given a lot of information here.  Even after 51 years experience managing my own rentals, I'm not sure there is a definite solution here - only one that is negotiated.  You might consider what I have done for many years:  I use a document I created years ago that made this subject a part of the lease . . . it offers 2 options for a Tenant to buyout early.  When a Tenant signs my lease, the Tenant has already agreed to how the lease can be ended early.  Basically choice #1 Tenant pays rent til another tenant is found or #2, pay a one-money buyout a week before departure.  This does not apply to the active duty U.S. Military.  At last account they only need give 30 days notice (and I'm all for our fighting men & women to have that right).  And finally . . . I've always gone by the old adage that "a good understanding goes a long way in preventing a misunderstanding".  I hope this helps you.
       

  • Involved In Real Estate · Jacksonville, AL · Member since 2014 · 8 posts · 4 votes
    11y

    Jessica,

    I failed to mention a couple things . . .

    I'm a new member - you're my first post.  But my experience goes much deeper.  Forgot to mention I'm a top rated Landlord in Alabama.  I've managed and maintained my own residential rental property for the past 51 years.  We've been running smoothly for many years now.  Just about time to retire. Ha!

  • Involved In Real Estate · Nashville, TN · Member since 2014 · 70 posts · 26 votes
    11y

    Jessica,

    I have experience in Alabama also, and it sounds like Eric is giving you great information.  I would only warn you to research and understand your local landlord-tenant laws.  These laws vary by state and you would not want to base your decision upon anything that is done in another state.  You occupying the other unit in the duplex may also change how you could handle the situation.  You may want to seek competent legal advise from a local attorney versed in local landlord tenant law.  The cost of competent advise would be cheap when compared to making a mistake that violates the local laws.

  • Investor · Appleton, WI · Member since 2012 · 1k+ posts · 464 votes
    11y

    look at the lease which should clarify the the majority of your questions. If I had this circumstance I would have verified that the utility was in the tenants name soon as I took ownership. If she wants to leave, she would be responsible for rent on the property until you find a new tenant or the lease runs out however you have to make full effort to rerent the property. 

  • Developer · Philadelphia, PA · Member since 2014 · 96 posts · 26 votes
    11y

    @Eric Love Thanks for your insights. The lease was was created before I acquired the property and to my knowledge does not have a specific clause or process of how to go about terminating an early lease--it only mentions how to proceed once a leasing agreement has ended. For your option #2, what is the one time money buyout amount? How do you determine that amount? Furthermore, how do you ensure that the tenant will oblige at all? The tenant wants to leave with their deposit in hand--which isn't going to happen. She allowed her two adult children and two grandchildren to occupy the unit with her even though they were never listed on the lease. She also a pet which is strictly against the terms of the lease. I always said that I would never made these issues a big deal as long as she continued to pay rent on time and not be a problematic tenant. Could I request to keep the entire deposit for her violating the lease by having a pet and her family having lived there since July-ish? She told me it would be short term but they were receiving mail there and everything and definitely doesn't look short term. 

    Hello @Matt Leavell thanks for that. I do have an inquiry to an attorney and I do expect to hear back by tomorrow. I just wanted to reach on here in the BP forum to see if someone had any quick or additional advice for me. She sent this notice to me on Saturday morning and I did not want to wait two entire days until my attorney was available to respond to her request to leave the property. 

    @Kyle Hipp Thanks Kyle. I did take a look at the lease and as far as I know, there is so specific instruction on what to do if tenant or landlord wishes to end lease early. There are only instructions on what to do when lease has ended. So your saying that I can hold her liable for paying rent  because she signed the lease even though it does not have rules for how to handle mid-lease terminations? How would I go about presenting that to her? I would guess via a certified letter of course but I feel like she would just scoff at the whole idea because she is complaining about having to take one gas bill, let alone having to continue to pay rent which is much higher than any gas bill. 

  • Investor · Appleton, WI · Member since 2012 · 1k+ posts · 464 votes
    11y

    you would have to reference your state or city statutes in order to see the legal guidelines on how to proceed in cases where the lease is silent. Basically I would tell the tenant that you are on a lease until april 30th 2015 and are responsible for trent until then. If you choose to leave, provide me with proper notice and I will immediately market the property to fill the unit. Until then you pay rent. If not I will take legal action and I will win...

  • Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
    11y

    The landlord has a duty to provide a unit that is habitable. A reliable heat source needs to be in place to meet the habitability requirement. Seems to me the owner of the property should have a service agreement in place for all utilities for all of their properties. During vacancy the unit can revert back into the owner's name so there is not a disruption of service. This also avoids disconnect and reconnect fees each time a unit is turned over. 

    If the owner wants to require the tenant to pay for the utilities, that can be arranged by the tenant establishing their own accounts with the utility companies, or the owner billing the tenant for the usage. If the tenant is to assume responsibility for paying for the utilities, then that understanding must be established at the time the lease or rental agreement is signed. A written agreement will usually prevail over a verbal agreement. 

    In this scenario, since the tenant claims there was a verbal agreement with the previous owner whereby the previous owner assumes responsibility for paying for the natural gas and the previous owner was acting on that promise, then the prudent and ethical thing to do would be to honor that previous agreement. If it is written in the rental agreement that the tenant is responsible, then try to negotiate a solution with the tenant. Remember the previous owner has already established precedent by not requiring the tenant to set up an account with the natural gas company. Although the tenant hasn't used the heating system until now, she was using the hot water system all along... both which run on natural gas, as I understand it. So I would side with the tenant on this one.

    Also, the new owner suspects something out of the ordinary was done by the previous owner. Perhaps even tampering with the house mechanicals. There is no excuse for the new owner not to have an inspection of the property done to check all systems are working properly and safely.

    The owner has needs that can be met by establishing a gas service account, such as: providing necessary service on her/his heating equipment; getting and maintaining proper insurance; keeping the unit with a working heating system (furnace and hot water heater) to meet habitability requirements; providing a means to keep the unit at appropriate heat levels to prevent damage to the building; and to give incentive for the tenant to stay, thereby saving the tenancy, demonstrating good will and ultimately saving money in the long run.

    If it were I, I would negotiate a solution with the tenant that would include me paying for the natural gas for this lease period with the understanding that at the time of the lease renewal the responsibility for paying for the natural gas would shift back to the tenant and be clearly documented in writing with the signatures of all parties.

  • Developer · Philadelphia, PA · Member since 2013 · 1k+ posts · 902 votes
    11y

    Let's be real. She's probably judgement-proof. All you've got is her last months rent (hopefully) and her security deposit. If she doesn't want to live there anymore, you're not likely to force her to stay. I'd say if you get her out without any damages that'll be in your favor. I'd tell her she can go and you'll do your best to get the unit re-rented ASAP but she's responsible for the down-time on the unit. Stress to her that you've got 30 days to get her security deposit back to her and once your handyman (or some other fictitious person) walks the unit and reports back to you on necessary repairs you'll be sure to mail the balance of the deposit to her. Make a big deal about getting the correct forwarding address to get her deposit back to her. 

    Get her out as quickly and painlessly as possible. She's already made up her mind she's moving and she's likely paid up for another place to start on the 1st (notice she gave you 48 hours which lands on the 1st). She's probably gone now.

    Then, get the gas company or a licensed HVAC company in to determine what needs to happen to get the gas/heat situation sorted. Put it in your name and get the gas on. Sign up for the landlord cooperation program. Re-rent the unit and return any monies due the previous tenant. 

    She's on the hook till you get the unit re-rented. Hopefully your lease states that you can use her security deposit for unpaid rent as well. I wouldn't count on nor bother to try and get another dime from her. Take what you're legally owed from what you have of hers, sort the gas/heat situation out, re-rent the unit. You're making this much harder than it has to be. 

  • Real Estate Agent · Falls Church · Member since 2012 · 2k+ posts · 1k+ votes
    11y

    @Jessica F. The short answer is to consult a legal professional, these are the type of things you dont want to handle in the wrong way, and expose yourself to liability.

  • Involved In Real Estate · Jacksonville, AL · Member since 2014 · 8 posts · 4 votes
    11y

    Jessica,

    I believe seeing the attorney tomorrow is a wise move.  Since your lease and lease-related documents came from a previous owner of the rental, I strongly suggest you have them reviewed by your own attorney.  As several stated or implied earlier, operating from a lease not entirely legal is at best unfair to a tenant and very dangerous for the Landlord.  As Landlords in the U.S., we all must comply with the law . . . local, state and federal.  As to your questions on my options for ending a lease early:  1) my lease's "one-money" buyout (#2) is a sum-certain amount which ends a lease prematurely.  The Tenant pays the amount and is no longer concerned with how long it takes for me to lease the unit again.  I arrived at the amount of 3 month's rent, with no buyout available for the first four months of the lease, because the timing gets me paid until we again reach our area's peak leasing season.  Sometimes I lease within 3 months, sometimes not.  After many years, I have broken about even with this method.  My option #1 is that the Tenant and I both attempt to find an "approvable" new Tenant.  This option is not "sum certain".  The Tenant could be out in a matter of days with little to no extra cost, or we could go to the last day of the lease and not find a new Tenant.  With either option the Tenant will have paid me in advance a $150 administration fee, and have agreed to later pay an amount equal to 1/2 the Security Deposit.  After all, time and expense occurs also for the Landlord in dealing with an attempted early-out.  And finally, how do I get the Tenant's cooperation?  I lease only, and I mean only, to the most qualified Applicant who will have "skin in the game".  That phrase could mean several things:  a credit score they don't want damaged by breach of contract or . . . . a first class leasing history they do not want tarnished or . . . the one I like most, having the degree of personal integrity that makes them want to do business in the manner in which they [and I both] agreed.  In closing, sometimes it's best just to "call it a day" with a difficult Tenant.  That may be where you are standing now.  Take your licks.  Learn your lessons.  And make it a focal point of your leasing program to never, ever . . . make the same mistake twice.  

    Good Luck!!

  • Real Estate Agent · Orange, NJ · Member since 2011 · 23 posts · 13 votes
    11y

    I agree with Troy, cut your losses. Use your time with the attorney to go over the lease so that it handles this kind of situation in the future. Get the gas account in your name (or LLC etc.) and have it transfered to the new tenant. Get your handyman to get the heat working on the first floor. have him explain the system to you including periodic maintenance.

  • Developer · Philadelphia, PA · Member since 2014 · 96 posts · 26 votes
    11y

    Thanks for the advice everyone! I will be taking all of this into consideration to ensure it does not happen again. 

  • Upper Darby, PA · Member since 2014 · 8 posts · 4 votes
    11y

    Keep in mind that landlord tenant law in PA may spin out a little different in Philly county. The law is the same, the judges and parties are not.  Philly landlord tenant court is certainly a unique version of small claims court. :-)  I was a mediator there during and after law school.

    First this is not legal advice - just my required disclaimer.  But my suggestion to you is that although the law allows certain remedies for you, the practical solution might be different.  In a normal situation where the unit is fully habitable and everything is working, it is true that the landlord could put the tenant on the hook for the remainder of the lease -- subject, of course, to the landlords diligent efforts to mitigate damages (i.e. lease the unit to someone else).

    However, there is obviously some question here about a) whether the heat works and b) who has the responsibility to pay for it.  In cases of loss of heat, my opinion (from watching lots of cases) is that judges in housing court here are not forgiving of landlords who do not provide working heat for tenants regardless of the cause.  Her not signing up for an account (if that was required in the lease) is another issue since there is a question of whether even if she had the account her radiator/whatever equipment may not be working. 

    In either case it doesn't much matter.  Practically speaking, because of the other possible breaches going on with this tenant, it would be better to take her up on her offer to move, keep last month's rent if you have it, check for damages and return the remainder of the security deposit if any, and just move on.  The reality is that even if you spend your time and money to get a judgment (supposing you win, of course) you will likely never see any money.

    In addition to having a buy out/early termination clause (which was your initial question) in your new lease, we also have a clause in our lease that states if the tenant is unable to get service from PECO/PGW/etc. at the outset of the lease, then the entire lease is cancelled and tenant has to find a new place.  Then after you lease, follow up with appropriate utility to be sure that the tenant has moved service into his/her own name.  I say this because my suspicion is that even if she wanted to get a PGW account, she may not be eligible if she has back bills etc.

    See this as a blessing in disguise.  If she does have that many folks and pets living on the property, letting her and her accompanying drama go at her request is basically the definition of the perfect situation.  It allows you to really get in the unit, clean it up, get a better lease, and your own tenant that you screened yourself.  

  • Hanford, CA · Member since 2013 · 5k+ posts · 1k+ votes
    11y

    i have a break lease clause that I enforce. I definitely recommend this for the future. This has saved me SO much heartache. Honestly in my markets break leases occur often. 

  • Developer · Philadelphia, PA · Member since 2014 · 96 posts · 26 votes
    11y
    Thank you for your response. Please see my comments in bold below.

    Originally posted by @Elesha S.:

    However, there is obviously some question here about a) whether the heat works and b) who has the responsibility to pay for it.  In cases of loss of heat, my opinion (from watching lots of cases) is that judges in housing court here are not forgiving of landlords who do not provide working heat for tenants regardless of the cause.  Her not signing up for an account (if that was required in the lease) is another issue since there is a question of whether even if she had the account her radiator/whatever equipment may not be working. 


    The lease explicitly says that the tenant (not the landlord) is responsible for ALL utilities including costs to get such utilities activated. It is not necessarily a question of whether the heat works or not. It does work in the majority of the unit except for the bedroom heater which is not working. My handyman even came in and took a look and bled the heater and did a few other things but tenant still complained a week or two later of it still not working so she does have full working heat. Now that one out her four heaters are not working, I have no choice but to call PGW to come out and fix it the problem heater in the bedroom. However, if they come out and find that there is no associated account number or contract with them, I cannot be held liable for PGW cutting off her service because the tenant failed to do their due diligence with the previous landlord and the person who originally created her lease. I would also hope that a court would not hold me liable for something that really is out of my control as it is not my responsibility to handle the maintenance of utilities for tenants. 

    I still tried, however, to fix the issue for the tenant by offering to call PGW and have them fix the issue or take a look at the issue to see if they could find a root cause. The tenant barked about having to possibly take on a new bill or having her existing gas in the remainder of her home shut off so she declined. 

    In either case it doesn't much matter.  Practically speaking, because of the other possible breaches going on with this tenant, it would be better to take her up on her offer to move, keep last month's rent if you have it, check for damages and return the remainder of the security deposit if any, and just move on.  The reality is that even if you spend your time and money to get a judgment (supposing you win, of course) you will likely never see any money.

    Unfortunately, it is just not that simple. The tenant pays well below the value of the unit that she rents (old landlord was a family friend who gave her a big discount) so I do not generate income from her rent and am still responsible for paying remaining balance of rent each month. I would have to have the necessary funds to do any repairs or upgrades prior to re-renting the unit that would not fall under the responsibility of the security deposit which are funds that I do not have right now for other financial reasons (long story). In other words, keeping her on the lease (at least for the present moment) further buys me time to accumulate necessary funds for additional repairs. 

    In addition to having a buy out/early termination clause (which was your initial question) in your new lease, we also have a clause in our lease that states if the tenant is unable to get service from PECO/PGW/etc. at the outset of the lease, then the entire lease is cancelled and tenant has to find a new place.  Then after you lease, follow up with appropriate utility to be sure that the tenant has moved service into his/her own name.  I say this because my suspicion is that even if she wanted to get a PGW account, she may not be eligible if she has back bills etc

    I will look to include a clause like that in the future lease but again, as of right now, tenant does not have working heat in majority of the unit--just not on paper (i.e. PGW acct). 

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