I need some advice ASAP, please!
I cross posted in the Landlord Forum as well in hopes of getting more eyes and advice.
Moderator Note: Do not post duplicate posts in multiple forums
Background bullet points:
- A couple move into a unit on August 14, 2017.
- Tenants broke up in October, she moved out. (side note-she requested her pet deposit back and since the animal had done no damage, I returned it, with HIS permission)
- HE requests her off the lease but wouldn't sign a new lease; issue subsides
- HE requests to sublease the unit-I do not sublease; issue subsides
- HE states he is moving in with his new girlfriend and wants to break the lease. I have a $500 early termination penalty in the lease agreement. Tenants are still responsible for the unit rent until a new tenant is found, or until the end of the original lease, whichever is sooner. I communicate all of this to HIM.
- HE moves out May 1, 2018. I begin receiving communication from HER.
- THEY decide (or she is told by him) that SHE will be responsible for the rent until a new tenant is found.
- During the middle of July, she decided she will pay out the remainder of the lease and be done with it. I collect $645 for the remainder of her lease through August 14, complete a walk through and return her security deposit in full.
- August 1, 2018, a new tenant begins paying rent.
Today, I received a text from HER stating that she drove by the place and saw there is a new tenant and would like her August rent back.
ME: Since I was able to rent the place out on August 1st, I will return $145 ($645 from August rent paid minus the $500 penalty).
HER: Even though I didn't terminate early, it's still a $500 penalty?
ME: You did terminate early. Your lease was through August 14th. [The new tenants] began paying rent August 1st, which was when we terminated your lease and I returned the deposit, 2 weeks earlier than the end date on the lease agreement. ***I realize I misspoke here and have a reword in my potential response***we also terminated her agreement on July 18th, not August 1st***
HER: "...I am FULLY aware that this is in no way, shape or form a legal maneuver on your part."
I WOULD GREATLY APPRECIATE ADVICE BEFORE I SEND THIS DRAFTED TEXT:
"The lease has been terminated and your deposit has been returned in full. If you would like to attempt to negotiate a return for the $654 you paid for the remaining part of your August rent, the early termination fee will apply because you will be attempting to receive a refund for money legally owed. The lease is a legally binding document and every property manager has the right to charge a fee if the lease is broken.
A recap of part of a text sent June 5th: Since you are not breaking your lease, the $500 early termination fee does not apply. Rent due for August = $654.83."
I did not charge you the termination fee because you finished your financial obligation through August 14th. Had you chosen to not pay your August rent, I would have been legally allowed to keep $500 of your security deposit (lease agreement) to pay for the early termination fee incurred with the early termination.
Because the lease agreement has been terminated, I am not legally obligated to return any funds to you. However, because you and HIM always paid rent early, kept the unit in great condition and maintained your financial agreement until the end of the lease (even though both you and HIM vacated the unit), I would be happy to return $145 to you (the difference of the rent you paid minus the termination fee)."
PLEASE GIVE ME SOME ADVICE!
You may be technically legally right (I'm not a lawyer so I can't say for sure) If it were me I would consider the fee ridiculous and refund it. You found a tenant immediately after she stopped paying rent because you presumably advertised the unit before the time she paid for was up. In placing a tenant before her lease was up you may have broken the lease, (again not a lawyer not legal advice). I don't see how you justify the fee logically.
DO what it takes such both sides feel it is justified. Fuss over something that is not worth the trouble. Move on.
@Jo Ballagh is the $500 fee even legal? I suspect it is not in a residential lease. However if he moved out May 1 and I presume April was the last month rent was paid they owe you for May, June and July, You didn't mention the amount of the rent or the deposit other than the pet deposit.
I would add up the rent missed subtract any deposit not already refunded and subtract the amount she gave you ($645) and give here any difference if any is left.
IF I understand the situation that is what you are doing and what your letter states. I am not sure I would mention the $500 easily termination fee without talking to a lawyer.
Many states are very strict about security deposits, sometimes with triple damages. Since a security deposit is calculated in what is owned / returned, I would want to be very careful.
@Ned Carey I'm fairly certain an early termination fee is legal. I've seen in on many leases and in forums on other sites.
The tenant moved out May 1st and continued paying the owed rent through the end of their lease, August 14th. About a month before the end, they got fed up that, despite multiple showings, I hadn't been able to find a new tenant, and just wanted to be done with it and paid it off. I obviously did NOT charge a termination fee because they completed the agreed upon lease terms. We did a walk through and I returned the security deposit. End of story. So I thought.
I found a new tenant who moved in a week after I terminated the previous lease agreement with the tenant in question. Now, two weeks after the new tenants moved in, the old tenant wants to be reimbursed for the money they had paid from the time the new tenants took over through the end of the OLD lease...even though we have terminated the lease agreement and the security deposit has been returned in full.
It really sounds like you broke the lease by renting the property before the official lease term was up even though she wasn't living there. If you want to fight the tenant on this you may very well lose.
@Aaron K. - Thanks for replying! The early termination fee, from other Property Management leases and forums that I reviewed is to 1) discourage a tenant from breaking the lease early in the first place but financially 2) cover the costs of advertising, showing the unit, etc involved with re-leasing the unit. Often I see this called a "Re-leasing fee" and it is often in the amount of one full months rent. The tenants broke their lease 3-1/2 months early. I spent 3 months advertising, showing the unit, and eventually had to drop the rent to get a new qualified tenant in place.
The bottom line is the lease had been terminated, security deposit fully refunded; transactions were done. She's coming back later asking for money back because she drove by and saw people living in the unit.
@Sam Shueh -Great advice. Thank you!
@Aaron K. How could I have broken the lease when the lease was officially terminated? We signed a final walk through and I returned the security deposit in full. One week later, I found a tenant.
edit to add: Had we not terminated the lease already, there would be no question. I'd still be entitled to an early termination fee according to other lawyer forums I've been reading, but she chose to pay out her lease and wash her hands of the place.
@Jo Ballagh if the lease was terminated early why was she not charged the termination fee then? Do you have paperwork stating that lease ended on X date from the tenant?
My current understanding is that the tenant paid for the unit through the end of the original lease and then you re-rented it before the end of the original lease. Is this incorrect?
Here's the timeline:
July 18th- the tenant pays for the remaining amount of the lease (through August 14th) because they "just want out." A walk through is done and the security deposit is returned in full. Security deposit check is cashed the same day. I did not charge a termination fee because she paid through the end of the lease. I did not lose any money owed for the remainder of her lease. Yes, the tenant paid for the unit through the end of the original lease. The transaction was finalized.
August 1st- new tenants begin paying rent on a new 12 month lease.
How does it make any sense that I would return any money? I am offering to return the difference of the amount of rent paid from August 1st-14th ($645) and the early termination fee ($500) which would now apply because the lease would retroactively be terminated early (August 1st rather than August 14th).
I'm not trying to make this a big deal. I'm trying to get help deciding if there is any logical reason or legal obligation to return any funds since the transaction has been finalized for 3 weeks. And if i were to return funds, then that would negate the fact that she completed her terms of the lease.
@Jo Ballagh The logical reason is that if the tenant terminated the lease early they should have been charged your $500 fee (assuming it is legal) which they were not. If the lease was not terminated early and she just wanted the walk-through done early, it would be you that broke the lease by charging a new tenant rent when the old tenant had already paid for Aug 1-14.
I believe you can't double collect for Aug 1-14 and you can't impose your termination fee retroactively.
@Jo Ballagh You have an interesting situation that is probably not specifically addressed in the law.
Normally when a tenant breaches a lease and leaves early, they are liable to you for rent until such time as you re-rent. That presumes you diligently try to re-rent the unit, which you clearly did.
However here they paid you in full in advance to fulfilled their obligation on the lease. The legal issue at hand, most likely not addressed in any statute, is are you entitled to "double dip" and receive rents during a period you have already been paid rent? Perhaps this may have been addressed in a precedent setting court case. It is a pretty technical issue of law and maybe has never been settled.
You did not originally charge the early termination fee because there was no early termination you were paid in full for the entire lease period. I think you would have a very tough job convincing a judge that you are entitled to retroactively charge the early termination fee.
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