Avoiding Lawsuits - Consequences of Poorly Written Leases

[Thomas Meyer]

Leases are legal contracts and the ramifications of poorly or vague language regarding late fees, early terminations, breaking the lease, re-let and the costs associated and "double dipping" in our state are very vague and there is statues that discuss "reasonableness' in accessing fees.  As I constantly find myself updating our contracts even after an attorney review I am seeing areas where language has to be spelled out or they will fail to hold up if disputed by renters and the ability to collect after a renter goes dark is even more daunting as the legal costs to pursue damages and then collect are not worth the effort as even you get the judgement collection is a costly experience.  A security deposit does not cover much on broken leases and the costs associated with re-marketing and re letting rentals. If anyone has best practices on this topic please chime in.

[Lauren Robins]

Hi there Thomas!

In real estate law, there’s always a bit of a tug-of-war between what feels “reasonable” and what the contract actually says, especially when it comes to liquidated damages and administrative fees. In states that lean heavily on fairness and equity, your best protection as a landlord isn’t just a signed lease, it’s being able to clearly show that your fees are reasonable and tied to real costs, not designed to punish a tenant for leaving early. One common pitfall is “double-dipping,” where a landlord charges a re-letting fee and then also collects rent from a new tenant for the same time period. The way around that is to be very clear in the lease that administrative costs are separate from lost rent. If you can point to actual staff time, marketing expenses, and overhead caused by an early termination, it’s much easier to defend a flat re-letting fee even if the unit gets re-rented quickly.

When tenants disappear or simply stop paying, the bigger issue is whether chasing them through the courts is worth the time and money. Since a security deposit rarely covers the full damage, one practical option is to include a buy-out or liquidated damages clause in the lease. That said, in the real world, it’s often smarter to encourage a clean break rather than spending good money trying to collect from someone who may never pay anyway.

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.