Question: We live and work in Germany at this time, but own some rental properties back in the United States. We signed a one-year lease for a rental house for our son to live in back in our hometown. We were looking to increase our real estate investments so we decided to buy a property of our own for our son to live in. We notified the owner of his current rental immediately, telling him we wanted to be released from the contract as soon as possible and that there was another person interested in taking over the lease. The new tenant moved in about two months into the lease and signed a new contract with the property owner. The owner told us our security deposit will not be refunded to us, and that it was our responsibility to collect the money from the new tenant. We believe our security deposit should be refunded to us. Do we have any recourse? More importantly, how can we insure we are completely released from this contract/lease?
James McKinley, an attorney for landlords, replies:
When you sign a one-year lease for the rental of property, you are obligated to pay rent for the entire term of the lease. Under virtually all tenant-landlord laws, if a tenant breaches a lease by vacating the leased property, the tenant is responsible for the rent until the lease expires, or the property owner can mitigate his damages by finding a new paying tenant. In your case, the property owner was under no obligation to release you from the lease. However, when your son vacated the premises and a new tenant moved in with the property owner’s consent, that effectively terminated your lease. The property owner should have refunded the security deposit or given an accounting of how the deposit was applied. Your remedy is to sue the property owner in small claims court for the refund of the security deposit. If the court finds that the property owner kept the security deposit in bad faith, he could be subject to statutory damages of up to twice the amount of the deposit. Although the property owner mitigated damages by finding a new tenant, you could still be held responsible for any lost rent not paid until your lease expires. If, for example, the new tenant is paying less rent, you could be held responsible for the difference. If the new tenant vacated and stopped paying rent, you could be held responsible for the unpaid rent. The only way to be completely released from the obligations of the lease you signed would be to enter into a written agreement with the property owner, releasing you from your obligations.
Question: I have a friend at work who was telling me about this situation and I thought you might be able to help us. My friend is a tenant and she has a lease that just recently expired. She does plan to move and she gave the landlord a 30-day notice but the landlord is telling her to get out immediately as she hadn’t paid rent this month and wanted the landlord to take the rent out of the security deposit. The lease is for a fixed term, as there is no “automatic rollover” provision in the lease where the expired lease becomes a month-to-month rental agreement. Can a landlord take legal action against a tenant only if he or she owes one month’s rent and the lease has expired?
Property manager Griswold replies:
Yes, the landlord could pursue an eviction based on the lease expiration and unauthorized holdover of the rental unit or the nonpayment of rent for the current month. Typically, the nonpayment of rent is the easier case to prove and win for a landlord than other causes of action for an alleged breach of the lease or rental agreement. The tenant giving a 30-day notice after the expiration of the lease and when rent has not been paid has no effect in overcoming both causes of action by the landlord to regain possession of the rental unit. It is not acceptable for your friend to take the position that the owner can simply deduct the rent for the last 30 days from the security deposit unless there was a specific agreement that the tenant had paid the “last month’s rent.”
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,” and San Diego attorneys Steven R. Kellman, director of the Tenant’s Legal Center, and James McKinley, principal in a law firm representing landlords.
E-mail your questions to Rental Q&A at email@example.com.
Questions should be brief and cannot be answered individually.