Unsigned lease affords rights

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Q: I have a tenant whose one-year lease expired last spring. I gave him a new, yearlong lease then, but he never signed it. When I asked him for it, he said he misplaced it. He did pay the new, increased rent, and I’ve had no problems until now, when he revealed he wants to move out, and he’s given me 30 days’ notice.

But the lease will not expire until March 1. Can I hold him responsible for the entire lease term? It’s going to be very difficult to rent this apartment in the middle of winter (one reason I never begin yearly leases in the winter). And can I impose my lease-breaking fee, which was in the first and second lease? –Ron H.

A: In most states, if a tenant stays on beyond the expiration of a fixed-term lease with the consent of the landlord, he becomes a month-to-month tenant, subject to the other terms and conditions of the now-expired lease. If you and your tenant’s behavior — after the first lease ended — fits within this rule, then he is a month-to-month tenant and is entitled to end the tenancy with proper notice.

As for your lease-breaking fee, it’s not clear that this would be legal even if both of you had signed the second lease. Regardless of its legality, however, this much is clear: It doesn’t apply to a month-to-month tenant, who has no lease to break.

I’d say that this analysis describes your situation but for one thing: Your tenant has been paying the higher rent amount, which was part of the second-year deal. You may be able to argue that his acceptance of the new rent provision (evidenced by his paying that higher amount) constitutes an oral agreement to the other terms of the new lease. In other words, by abiding by at least one term of the new lease, your tenant signaled his consent to its terms — which include an obligation to stay until its ending date.

You and your tenant may simply have a new, oral lease for one year, one that he cannot end on 30 days’ notice before the lease term is up. On the other hand, perhaps his agreement to pay the new rent constitutes simply a change in his month-to-month arrangement, without turning it into a lease. Because arguments can be made on both sides, the only way to know for certain is to get an answer from a judge in a lawsuit.

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Now, assuming you have an oral lease with your tenant, let’s get back to that lease-breaking fee. To be on safe legal grounds in most states, such a fee cannot exceed the real damages you suffer as a result of a tenant’s early departure. If it turns out that, despite your reasonable efforts, you cannot find a tenant for the remaining months of the lease term, and your fee doesn’t exceed the rent you lost during those months, you’ll be able to confidently impose it (or retain the deposit to cover it). But if the fee exceeds your actual losses, it’s a penalty, and the excess is not legally collectible.

The lesson here is to be vigilant when asking tenants to renew their leases, and to secure their signature (or their agreement to leave at the end of the first lease term) before the end of the first lease. It seems at least possible that your tenant was planning all along to move out during what would have been the lease term, and conveniently "lost" your second lease to avoid having to sign it.

Rather than going along with this "dog ate my homework" excuse, you could have printed out a second copy and presented it to the tenant, along with a reminder that unless he signs it, he becomes a holdover tenant if he stays beyond the end of the first lease term. Holdover tenants can be evicted on short notice, as long as landlords don’t accept rent or do anything else that indicates their assent to the tenant’s continued occupancy. …CONTINUED