Q: I recently signed a new lease on a beautiful rental home. However, I lost my job and am finding it very hard to pay my rent. I was wondering if there was a way to break my lease due to loss of job?
A: No, not unless you have a specific "lease break" clause for loss of your job or a job transfer or other similar reason. If not, then your only hope is that your landlord is voluntarily willing to allow you to break your lease. A lease is a legally binding contract and enforceable regardless of your employment or personal situation. What if the landlord lost his job? Would it be acceptable that he raise your rent during a fixed-term, fixed-rent lease just because something changed in his life? Of course not. Just as you would expect to rely on all terms of your lease, the landlord does too.
If you had any possibility that your job or personal situation might change at any time during the entire lease period, then you should have negotiated a lease-break clause or gone with a month-to-month rental agreement so that you aren’t obligated under a long-term lease. Most likely you wanted the stability and maybe even lower rental rate offered by the landlord with the lease, but the risk you took was that you are locked in to this lease commitment.
In my opinion, leases are really to the benefit of tenants. You rarely see a landlord attempt to break or modify the lease because his circumstances have changed and he needs to move back into the rental for some reason. But most tenants will want out of their lease as soon as it is not in their best interest. The double standard is that your landlord cannot break your lease or raise your rent during the term of the lease, but the law provides that your landlord does have to mitigate or attempt to re-rent your rental unit if you vacate prior to the end of your lease.
Sorry about your job loss and I suggest you contact your landlord and work something out. Maybe you can help find another tenant and cooperate in showing your rental until you actually vacate. Cooperation and communication are essential at this time, and your landlord is likely to be more understanding and compassionate if you are honest and forthright and do everything you can to assist him in re-renting your apartment.
Q: I recently spoke to a friend who is planning to purchase a home. He found a great home and is ready to sign the purchase agreement, but the sellers are insisting that one of the conditions of the sale is that they be able to stay in the house on a month-to-month basis while awaiting the completion of their new home in another state. They will pay the first month’s rent and a security deposit as a credit in the purchase transaction, and the month-to-month rental agreement will be a part of the contract submitted to the title company at closing. I told my friend that this is not a good idea because the occupants now become tenants and have all the rights provided to them under state laws, and my friend would have the responsibilities of a landlord. My friend states there has to be some provision to protect the buyer, because this practice is very common these days. …CONTINUED
I suggested he contact an attorney before signing the purchase agreement but I think he’s so excited about buying a house that he’ll almost agree to anything. What course of action can the buyer take if the occupant defaults on the agreement?
A: I think you have given him great advice. Before signing any real estate documents it is important that the buyer fully understands exactly what he is signing and what the implications are if everything doesn’t go as planned. It is very exciting to buy a new home, but that doesn’t mean your friend should let common sense and patience go out the window. A local attorney should review the purchase agreement and specifically the language about continued possession by the seller.
Chances are that the tenant is legitimately seeking just one month till their new home is available. But I think you are correct that this proposal will result in a tenant-landlord relationship. The buyer could then find his own plans to move in to the home are on hold if the seller’s new home isn’t ready or they have problems qualifying for a loan or simply change their mind. It would not be as simple as cancelling the purchase transaction. The buyer would then be the proud owner of a rental home, which is clearly not his motivation to buy this property.
If your friend really feels he should go forward with this purchase as proposed, I would suggest that he receive the security deposit and even ask for an additional "good faith" deposit to hold pending the tenant actually vacating the property as promised. If the occupants don’t, then your friend will need to go through the normal eviction process, which can take several weeks.
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."
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