Investor · Carlsbad, CA · Member since 2012 · 73 posts · 34 votes
I have a tenant who's moving out early. However he signed the lease to next March. So legally he is responsible for the remainder of the lease. The lease which is a standard CA rental lease also says the Landlord may withhold lost Rent from the security deposit. So does what mean I can legally keep all his deposit? If I can fill the rental quickly, do I need to refund the remaining depsoit after subtracting lost rent, cleaning, and other costs?
I'm pretty new at this, so any suggestions are appreciated.
Flipper · Carlsbad, CA · Member since 2011 · 115 posts · 20 votes
14y
Jim Q,
If he moved out because of deployment, just have compassion and return his deposit in full, (other than a small cleaning fee). Don't waste your money on calling an attorney. If this ever goes to court, the judge would most likely rule in favor of the marine. When you rent to someone in active military, there is always the risk of deployment. Personally, I would thank him for his service, and wish him the best and return all monies, unless he left the place a mess. If he left it a mess, you better document it with photos and only debit him the actual cost of repairs.
Yes, I do understand that it's not always easy to get a quality, stable tenant in Oceanside. Just screen the new tenant good and you should be fine.
Residential Landlord · Chicago, IL · Member since 2012 · 356 posts · 81 votes
14y
Unfortunately, you can't keep the security deposit for your inconvenience. You may only apply it to your valid costs as you mentioned. AND you have to itemize any deductions from the security deposit with the check for the balance (if any). The length of time varies but in IL we have to do so within 30 days.
Landlord · Seattle, WA · Member since 2010 · 3k+ posts · 1k+ votes
14y
Depends on your state laws and your lease agreement. It is possible you can keep some or all o the security deposit when a tenant breaks the lease. In my state you must make a good faith effort to find a new tenant. Once a new tenant is found you have mitigated some of the possible loss.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
14y
My lease specifies an "improper lease termination fee" that is equal to the deposit. You move out early (though not much of an issue, since I only do month-to-month) and I charge you the fee. That's in addition to my actual expenses (repairs, cleaning), costs to re-rent the place (PM fees, advertising), and lost rent. I've verified with my lawyer that's legal here in CO. Don't know about CA.
Investor · Lexington, KY · Member since 2012 · 18 posts · 4 votes
14y
There is no way ,in practice,they would have the audacity to
take the matter to court to collect on the deposit even if you live
in a state that would allow that.
Always include a termination clause in your lease,
I would suggest making it a harsh penalty and lighten
it up most of the time so you will come off as generous.
West, MI · Member since 2012 · 674 posts · 182 votes
14y
Originally posted by Justin Manley:
There is no way ,in practice,they would have the audacity to
take the matter to court to collect on the deposit even if you live
in a state that would allow that.
Always include a termination clause in your lease,
I would suggest making it a harsh penalty and lighten
it up most of the time so you will come off as generous.
I would watch that we have been sued over the deposit on these instances and lost one.
Investor · Carlsbad, CA · Member since 2012 · 73 posts · 34 votes
14y
Thanks for all the feedbacks. I think the consensus is unanimous that it's better and safer to just return the deposit minus reasonable costs, even when the renter breaks the lease.
Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
14y
Jim Q You can deduct all the things you mentioned in your original post, including the rent you didn't receive from the time the tenant broke the lease and moved out to the time it takes you to re-rent the place (provided you make reasonable efforts to find a new tenant). Note that you don't have to stop the clock on the rent when you get ANY applicant. You are allowed to do your normal screening and find a QUALIFIED tenant. In other words, you don't have to take the first person that comes along. You can deduct lost rent up and to the time you find a tenant who meets your normal standards to rent to. Good luck.
Orlando, FL · Member since 2009 · 2k+ posts · 282 votes
14y
Originally posted by Jon Holdman:
My lease specifies an "improper lease termination fee" that is equal to the deposit. You move out early (though not much of an issue, since I only do month-to-month) and I charge you the fee. That's in addition to my actual expenses (repairs, cleaning), costs to re-rent the place (PM fees, advertising), and lost rent. I've verified with my lawyer that's legal here in CO. Don't know about CA.
I have the same clause in my lease, but in practice, does it work? Have people actually paid the fee? Couldn't someone just not pay the rent at the beginning of the month in which they're going to break the lease?
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
14y
Bienes Raices, it does work. If someone's going to break the lease and move out, they typically just disappear. They usual owe me some amount of rent. But they don't wait until the end of the month to disappear. So, they would typically owe some rent, any damages, unpaid utilities I get stuck with (water), and the lease breaking fee. I never expect to collect anything from such a tenant, so, while that all adds up to more than the deposit, the deposit is all I actually expect to get.
Specialist · Cleveland, OH · Member since 2011 · 1k+ posts · 852 votes
14y
Jim,
I would just tell her to sign off and give it to you or you will pursue her for the difference in rent from the time she left until the time you re leased the unit. She should be more than happy to do that.
That is the correct answer, now what i would do. I would personally just keep it and tell her to sue me. LOL!
Investor · Hampton Bays, NY · Member since 2009 · 907 posts · 258 votes
14y
I have found that in many cases being fair with people has worked to my advantage however when you come across the the occasional professional dead beat, they tend to know the law better than you do so make sure your lease is written with adequate protection based on your states requirements.
Investor · Carlsbad, CA · Member since 2012 · 73 posts · 34 votes
14y
I agree with most of the points here. But I've learnd that when it comes to litigation, what the judge thinks is "fair" is often way more important than what the lease says. Most renters I've seen don't read the whole lease agreement (6 pages of 6-pt font) line by line. The judge may agree with them that the lease is too complicated or too restrictiive. Unlike the renter, the landlord has more to loose if sued and lost, it's better to be on the safe side and just be "fair".
West, MI · Member since 2012 · 674 posts · 182 votes
14y
Originally posted by Jim Q:
I agree with most of the points here. But I've learnd that when it comes to litigation, what the judge thinks is "fair" is often way more important than what the lease says. Most renters I've seen don't read the whole lease agreement (6 pages of 6-pt font) line by line. The judge may agree with them that the lease is too complicated or too restrictiive. Unlike the renter, the landlord has more to loose if sued and lost, it's better to be on the safe side and just be "fair".
This sums it up, the judge makes the call, does not matter how right you are, they decide, game over, I have a judgement on my credit to prove it.
Orlando, FL · Member since 2009 · 2k+ posts · 282 votes
14y
Originally posted by Jon Holdman:
Bienes Raices, it does work. If someone's going to break the lease and move out, they typically just disappear. They usual owe me some amount of rent. But they don't wait until the end of the month to disappear. So, they would typically owe some rent, any damages, unpaid utilities I get stuck with (water), and the lease breaking fee. I never expect to collect anything from such a tenant, so, while that all adds up to more than the deposit, the deposit is all I actually expect to get.
OK so if I'm understanding this correctly, the best way to do this is to define a month penalty for breaking the lease, and then just keep the deposit (assuming it's equal to one month's rent) if they disappear?
Flipper · Carlsbad, CA · Member since 2011 · 115 posts · 20 votes
14y
Jim Q,
Hello neighbor... I also live in Carlsbad!
Ok... here's how the CA law reads (no legal advise given). You are entitled to loss of rents/damages, HOWEVER you must make an attempt to rent the property for the remainder of the lease. Keep copies of ads or MLS data showing that you made full attempt to re-rent it. Any vacancy time can be deducted from the security deposit. Any remainder of the sec deposit must be refunded to the tenant in a timely fashion. You must itemize the costs deducted when sending any refund to the tenant.
Now, if you are unable to re-rent the home for the same price, the tenant can actually be liable for the difference, however, I wouldn't suggest taking it to court. Since I'm a Broker here in Carlsbad, I'm sure you will have it re-rented soon, as our rental market is very strong and you might have a hard time convincing a judge that you made full efforts to re-rent it.
Good luck... hope you get it rented real fast! And if it were me, I wouldn't send the full security deposit back. I assume you've lost at least a couple weeks. Deduct it! (Again, not legal advice).
Actually, I guess I should ask "why did he break the lease"?? Job Loss or issues with the property itself? Either one of these issues could possibly change your right of allowing you to deduct for any rental loss. And of course, if there was a job loss or health issue involved, compassion should be considered.
Investor · Carlsbad, CA · Member since 2012 · 73 posts · 34 votes
14y
Donna Smolinski
Hello back! Isn't the weather just perfect here?
I put in back on the market the second day he moved out, and already showed a few times. The rental is actually in Oceanside, so I'm very selective -- been burned more than once.
Does the reason for breaking the lease really matter? He is a marine who got a order to deploy overseas. We didn't have a military clause in there either. So he is legally responsible for lost rent/cost. But I told him that I would refund his deposit minus all that.
Now the question is that I think the CAR Lease says I need to refund within 21 days. But what if the place is not rented in 21 days? Am I allowed to hold the deposit longer than 21 days in this circumstance?
I'm not a realtor and doesn't have LLC or S Corp to protect me either. And I manage all my rentals, so I need to be really careful not getting into trouble with the law. Thx.
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
14y
You have to be very careful when dealing with service people when they get deployed. As Ryan suggested, contact an attorney so that you understand how to proceed.
Rental Property Investor · Winslow, ME · Member since 2008 · 826 posts · 281 votes
14y
A quick note: In Maine anyway the lease is treated as "one price" so if someone moves out 3 months early on a 12 month $500 per month lease, they're skipping out on a $1,500 commitment. Now Maine law also says landlord has a "duty to mitigate" which means "we can't just deliberately leave the place vacant for 3 months, we have to try to rent it." IF we truly try, but cannot, then the tenant is indeed contractually responsible for the unrented portion of the 12 month lease. This strikes me as very intuitive and I'm willing to be alot of other states have similar statutes.
I have heard of a huge mgmt. company getting fined for actually including a "lease termination fee" -- they had to pay back millions of dollars.
I have "rolling 1 month leases" which automatically renew on the first of each month. This allows me to have the best of both worlds of tenancy at will and add lease verbiage as well.
Flipper · Carlsbad, CA · Member since 2011 · 115 posts · 20 votes
14y
Jim Q,
If he moved out because of deployment, just have compassion and return his deposit in full, (other than a small cleaning fee). Don't waste your money on calling an attorney. If this ever goes to court, the judge would most likely rule in favor of the marine. When you rent to someone in active military, there is always the risk of deployment. Personally, I would thank him for his service, and wish him the best and return all monies, unless he left the place a mess. If he left it a mess, you better document it with photos and only debit him the actual cost of repairs.
Yes, I do understand that it's not always easy to get a quality, stable tenant in Oceanside. Just screen the new tenant good and you should be fine.