When dorm opens, teen wants out of lease
How can student avoid losing deposit, paying penalty?
By Robert Griswold, Thursday, April 24, 2008.Q: Several weeks ago my 18-year-old niece signed a one-year lease contract to room with several students at a privately owned rental condo and gave them the first month's rent and a portion of the security deposit. A few days later she changed her mind and doesn't actually want to move in because our local university informed her that a dorm facility right on campus was available.
The landlord and her roommates are upset that she is not moving in and are demanding that she continue to pay rent until she finds someone else to take her place on the lease plus they want her to forfeit her share of the security deposit she paid as well. The landlord did offer to let her out of the lease if she pays a penalty equal to her share of the rent for two months. But I found out that she was not given a copy of the rental contract. So can't she claim she never had an agreement and get all of her money back? Isn't there a grace period that would allow her to change your mind about the rental condo? Can you suggest her options to get out of potential problems with the landlord?
A: It seems to me that you are blatantly looking for a loophole to break what appears to have been an agreement between not only your niece and the landlord but also the other roommates who are now faced with one less person to help pay for the rent. While it is always important to ask for and receive a copy of the signed lease, if your niece knew what she was signing (a one-year contract), then it is unethical to weasel out of a commitment because of a technicality.
As a property manager, I believe that the only legitimate basis for using the "I didn't get a copy of what I signed" argument would be if there was a genuine disagreement as to the facts. For example, if your niece thought she signed a month-to-month rental agreement and was tricked into a long-term lease. That doesn't seem to be the case here. My suggestion is for your niece to either move-in as promised or pay the cancellation penalty and move on-campus.
Why should the landlord and the roommates be stuck by your niece when the only legitimate reason for the cancellation request is on-campus housing became available? If the availability of on-campus housing was a possibility, then your niece should have waited or negotiated a more favorable cancellation penalty.
Q: Are there any circumstances, rules or laws where a tenant would be required to pay a percentage of the replacement cost for a carpet, with the landlord paying the remainder? What would the percentage ratio be (e.g., 20 percent tenant versus 80 percent landlord). Do the rules change if the tenant has been living at an apartment for many years, say 10?
A: No, there are no rules or laws in most states regarding sharing the costs of any rental-unit component. But there are circumstances, and those would be based on the fact that landlords are responsible for the entire cost of properly maintaining the basic habitability or health and safety of the rental unit. Specifically with carpeting, the usual criteria is that if the carpet is threadbare and worn out through age and normal wear and tear, then the landlord will be responsible for 100 percent of the replacement cost. If the carpet is fairly new and the tenant wants new carpet for aesthetic reasons, then the tenant may have to propose paying for the entire amount or the majority. If the carpet is older but still has some life left and the tenant wants new carpet for personal reasons, then that would be subject to negotiation between them. Also, the landlord and the tenant would need to decide how the carpet will be installed with the tenant living there and who is responsible for moving the furniture or paying to have it moved.
As with all tenant-landlord legal issues, you need to check with the local laws to make sure that you are in compliance. You also need to make sure that you have the same procedures and criteria for making these decisions and apply it to all tenants equally or you could be challenged on fair-housing issues if you show favoritism to certain tenants. A prudent landlord should base his or her decision on objective criteria such as "the carpet will be replaced after a certain number of years as the normal expected life span of the carpet is exceeded." So the length of your tenancy could be an important issue that could support your position that you should have your carpet replaced.
This column on issues confronting tenants and landlords is written by property manager Robert Griswold, author of "Property Management for Dummies" and co-author of "Real Estate Investing for Dummies."
E-mail your questions to Rental Q&A at rgriswold.inman@retodayradio.com.
Questions should be brief and cannot be answered individually.
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Submitted by Janet Portman on April 24, 2008 - 10:33am.
Regarding the lease-breaking college student, I'd like to suggest a different answer.
Your niece has broken her lease even before moving in, and has legal problems with both the landlord and her would-be roommates. Before you can advise her, you need to understand the law (Can the landlord impose a penalty? Is she responsible for finding a substitute?) and the market (How desirable is this rental, and how difficult will it be to find a suitable replacement?). After you see the whole picture, you’ll know what to do.
First, there’s no easy out here. A few consumer transactions do come with a legally-required cancellation period—under the Federal Trade Commission’s “cooling off rule,” you have until midnight of the third day to cancel a door-to-door sales contract for more than $25, or a contract (with some exceptions) for more than $25 made anywhere other than the seller’s normal place of business. Many states have additional cancellation rules, covering contracts for dance or martial arts lessons, credit repair services, health club memberships, dating services, weight loss programs, time share properties, and hearing aids, but signing a lease isn’t among them. The moment your niece penned her name to the lease, she obligated herself to its terms.
Not receiving a copy won’t do her much good, either. Some states do require landlords to provide a copy of the lease to tenants, but none of them specify that failure to do so voids the lease.
The landlord’s solution to this lease-breaking—imposing a penalty—is not a legally-sanctioned response, and your niece doesn’t have to go along with it. Judges willingly enforce contract provisions that make people pay for the actual damages they cause when they break a contract. A penalty, on the other hand, is designed to punish, not fairly compensate the other side. Judges typically won’t enforce penalties, particularly in a transaction involving a business and a consumer (rather than a business-to-business transaction).
Landlords don’t have to resort to illegal penalties to make sure that unjustified lease-breaking by a cotenant doesn’t hurt their bottom line. They are entitled to the entire rent from the remaining cotenants, courtesy of the principle of “joint and several liability” (think of it as the legal version of the Three Musketeers’ “All for one and one for all”). The landlord may be concerned that without your niece’s contribution, the remaining tenants won’t be able to pay the rent and he’ll have to evict them. In that case, he can choose to accept a short rent check and make it up with funds from the deposit, but savvy landlords won’t seriously deplete the deposit, fearing that they will need it to cover more unpaid rent or to remedy damage at the end of the tenancy. Most landlords will demand the entire rent and leave it up to the remaining roommates and the departed cotenant to work it out among themselves.
Your niece’s roommates are now in a difficult spot, having to shoulder her portion of the rent until they find (and the landlord accepts) a substitute. They cannot just sit back and expect your niece to produce a new roommate—they have to take reasonably prompt steps to replace her (and of course your niece should help in the search). Once they find a sub, her responsibility for the rent ends. Suppose it takes them a month to find a new occupant. If they’ve had to dip into their pockets to cover her for her portion of the rent, they can sue her for that amount if she refuses to pay. If the rental is competitively priced, in good shape, and the roommates are an attractive bunch, they might find a new cotenant right away, and your niece’s losses would be minimal. The worse-case scenario would be a college town awash in vacancies, with many opportunities for better digs at lower prices—in that event, your niece could even be responsible for her portion of the whole lease.
Now, let’s put this all together. Knowing that the landlord’s “penalty” is unenforceable, your niece can ignore it if she’s pretty certain that reasonable efforts on the part of her roommates and herself will land a substitute in less than two months (she’ll still have to pay her share until that person takes over). But if the market is soft, or the rental just isn’t that attractive, settling for those two months would actually be the smarter thing to do. If your niece ends up paying rent at two locations for a time, she can think of it as additional tuition, for a class called “Contracts.”