Tenant Troubles: Can I get in trouble for breaking a lease?

I’m finding myself in the position of looking for an apt for the first time in a long time. I thought I ought to check some things out with you. 

What’s the deal with lease terms? If you sign a 12-month lease and you end up breaking it, can the LL really enforce? Have you heard of tenants actually getting in trouble for a breaking a lease? Also, is there any actual advantage for a tenant in signing a long term, fixed lease under rent control? They can’t legally evict or increase your rent whether you’ve signed a lease or not, no? 

Thanks for your help and any other insight or pitfalls I should look out for.

What’s the deal with with lease terms? As an attorney, I will tell you that the terms of the lease comprise the contract you have with the landlord to live in or use a given apartment, house or business space. They define your duties and obligations to the landlord, but in residential situations they rarely set out the landlord’s duties and obligations to you. That’s why the courts have developed various doctrines like theimpliedwarranty of habitability and the impliedcovenant of quiet enjoyment.

In most cases, especially in cities, the competition for apartments is so keen that most tenants, when they find a suitable deal, will sign a lease based solely upon the amenities of the unit and the price of the rent they will paying. If a tenant is uncomfortable with other terms buried in a a lease, he or she will usually acquiesce to them because the amenities are acceptable and the price is right—like clicking the button agreeing to terms when one buys something online or accepting new Facebook terms. In other words, as in the law, leases heavily favor the landlord in the landlord/tenant relationship, based upon medieval practice from over 1000 years ago.

Do tenants actually get in trouble for breaking a lease?

If you sign a year lease and you want to, or have to move early, you will be breaking the lease, legally speaking, breaching the lease, because you promised to stay for a year and you want to break that promise.

As with any contract, the breaching party may be liable for damages to the “injured” party.  To calculate the damages for breach the courts will apply a formula: A tenant will be liable for every month left in the lease that the landlord cannot rent the unit. Most landlords stop right there in the analysis. But under Civil Code § 1951.2(c)(2)the lessor (landlord) must “proves that in reletting the property he acted reasonably and in a good-faith effort to mitigate the damages.”  To mitigate (lessen) his damages, a landlord must diligently attempt to re-rent the unit as quickly as possible after the tenant vacates at a rent that is as close to the same amount for which the tenant contracted.

Yes, tenants can get into legal trouble for breaking a lease, if the landlord sues for damages. If you signed a year lease and you want to move after six months, the landlord has an expectation that he would receive the same rent as you pay for the next six months. These are called “expectation damages.” He must mitigate those damages by renting the unit for the same amount as you were paying, not more. If the landlord can only rent the place for $100.00 less than you paid, he would incur $600.00 in expectation damages and you would be liable for those damages. The landlord might also incur costs to re-rent the unit, like advertising, or reasonable payment to a rental agent or expenses incurred in re-keying a unit, etc. You may be liable for those costs, if the landlord can prove he spent the dough.

Often a landlord, to his financial detriment, will attempt to re-rent a unit for a much higher price or refuse to attempt to re-rent a unit at all, basically refusing to mitigate his damages. Or the landlord will attempt to make the tenant responsible for re-renting the unit, demanding that the tenant continue to pay rent until he or she finds an acceptable new tenant.

If you are simply breaking the lease because you want to move, you should simply give the landlord a 30-day notice to terminate the tenancy. If you want to obtain evidence that the landlord failed to mitigate his damages, you may want to advertise the unit on craigslist or another popular site for rentals and refer the applicants to the landlord to “help him out.”

You should notcontinue to reside in the unit after the thirty days have expired, as many landlords will demand, simply because the landlord refuses to get off of his ass to attempt to re-rent the place. Landlords may think they own you, but last time I looked, the 13th Amendment to the constitution was still (if only barely) in effect.

What about lease termination fees in a term lease?

If the lease contains an early termination fee—a fee (often amounting to two months rent or more) to reimburse the landlord for breach damages—you can attempt to negotiate the fee down, pointing out that it will not take the landlord two months (or whatever the fee amount equals in rental weeks/months) to re-rent the unit. Also remind the landlord that that if you pay the fee and he re-rents immediately, he could be unjustly enriched. You may also want to include the fact that your security deposit should cover the damages.

If you don’t want the added hassle of a landlord’s potential lawsuit to collect the fee, sometimes it’s just better to pay it and move on—more unfair, unearned income for landlords.

By the way, if you move early, the landlord will never, ever refund your security deposit, despite the fact that you left the place in pristine condition, which you should always do, if you’re gearing for a fight later on.

If you’re adventurous and you think you may have to sue the landlord for the security deposit anyway, here’s a theory that early termination fees may be illegal. Don’t use this unless you’ve consulted with an attorney!

Early termination fees are liquidated damages, damages that the landlord in this case, suffers because you terminated the lease before it expired. Liquidated damages are legally defined as “difficult to quantify.” The landlord and tenant can agree to an amount that will compensate the landlord for his damages ahead of time. When the fee is paid, the damages are liquidated (concluded, finished, paid.)

Civil Code §1671 deals with with the validity of liquidates damages provision in a contract. Section 1671(c)(2) provides:

The validity of a liquidated damages provision shall be determined under subdivision (d) and not under subdivision (b) where the liquidated damages are sought to be recovered from […] [a] party to a lease of real property for use as a dwelling by the party or those dependent upon the party for support.

Section 1671(d):

In the cases described in subdivision (c), a provision in a contract liquidating damages for the breach of the contract is void except that the parties to such a contract may agree therein upon an amount which shall be presumed to be the amount of damage sustained by a breach thereof, when, from the nature of the case, it would be impracticable or extremely difficult to fix the actual damage.

Check your lease, if there is no provision in which you agree that “the amount which shall be presumed to be the amount of damage sustained by a breach thereof” or similar language, then the early termination fee clause could be void.

Many leases, however, have such language. However, damages for breach can be easily determined using the calculation above. If the landlord mitigates his damages by, for example, renting the unit for $100.00 less, there’s no way to justify a two month early termination fee.

As I said before, don’t try this without running it by a lawyer with your specific circumstances!

Is there any actual advantage for a tenant in signing a long term, fixed lease under rent control?

Yes, there may be an advantage to signing a long-term lease, a lease for more than a year, even in a rent-controlled jurisdiction. A term lease, for whatever the term, protects you from rent increases and other just cause evictions like the Ellis Act. Remember, all “no-fault” evictions in either state law or rent-controlled jurisdictions like San Francisco or Santa Monica or Los Angeles apply to month-to-month tenancies. Why, because a landlord will be in breach of a term lease if he attempts to change the terms, increase the rent or evict you for something other that your breach of the lease—no owner move-in, no Ellis Act, without the landlord risking heavy liability.

For further reading on this take a look at  my article, “My Neighborhood’s Too Dangerous, Can I Break My Lease?”and “Breaking Your Lease,”by Ken Carlson.

How to help Dave help you

Dear Readers:

Every once and awhile I will have to guess at a detail or two when I attempt to answer your questions. For example, I will often assume that a building was built before 1979, given the context of a question. When I make that assumption, it’s highly likely that I will assume that you live in a rent-controlled unit and answer your question using the standard of the San Francisco Rent Ordinance. That could be a problem for two reasons. If your building was built after 1979, it is not covered by the Rent Ordinance. Worse, what if you don’t live in San Francisco?

So, I thought it might be a good idea to give you a short list of details to consider and/or include when you write me.

When was your building constructed?

If you don’t know, you can find out by using the SF Assessor-Recorder’s website to find out. If that site is being funky (not unusual) ask around. Finally, take a look at your building. Victorian? That’s easy. The difficult ones are buildings built in the 1960s and 1970s, the big square ugly boxes reminiscent of the shit they’re building these days.

How many units are in your building?

That seems like a no-brainer. But it’s not so easy if you live in a single-family dwelling in which the landlord rents rooms. The Rent Board might consider each room as a unit depending on the facts. The other common scenario is the single-family house with an illegal in-law. Rent controlled? (By that I mean, subject to annual allowable increases?) Yes. This is a two-unit building because Illegal units are covered by the Rent Ordinance.

Do you live in a house?

If the house was built before 1979, it is subject only to the just cause eviction provisions of the Rent Ordinance and the landlord can increase the rent as much as he likes…within reason. However, if your tenancy started before 1996, the house is subject to the price control provisions of the ordinance.

Do you live in a condominium?

This can be difficult to ascertain if you live in a converted building. Ask the landlord or check the Assessor-Recorder site above. Condos are legal single-family dwellings, usually only subject to the just cause eviction provisions of the Ordinance. There is an exception, see Tenant Troubles: Are The Buyout Terms My Landlord’s Offering Acceptable?

How old are you? Are you disabled?

This may be applicable if you are a protected tenant under the Rent Ordinance.

How long have you lived in your unit?

This could be important to determine if you have a protected status or, as in the example above, if your tenancy in a house or condo is subject to price control.

How much is your rent?

Often this is the most important detail because it usually points to the underlying motive of the landlord for taking whatever action he is taking–he thinks you’re not paying enough rent.

What does your lease say about it?

The lease controls the terms of your tenancy. It is always helpful to me to understand how to apply the law to your problem when I know if there is an applicable term in your lease. For example, if you are having a problem adding a new roommate, I need to know if the lease absolutely prohibits subleasing or if subleasing is subject to the landlord’s written consent. The ordinance is different for each scenario.

Details, details, details.

If the landlord is harassing you, I want to know how. Does the landlord like to watch you sleep? It’s important to understand if your lease has a clause prohibiting pets and you just adopted a baby gorilla. It’s also important to know about the gorilla because other laws may apply. Sometimes little details can shed light on an issue you may not know you have.

Obviously, this format has its limits. If you know your unit is rent controlled you can just say so. I want the gory details that make your case unique. They help make this column more interesting and fun.

Oh yeah, if you live in Oakland, I need to know that, because they have a different Rent Ordinance. If you live in Daly City, I also need to know that, because they don’t have jack to protect tenants except feudal (California) law.

I’m at 48 Hills to answer your landlord-tenant questions every Wednesday, so send them to me at Askdave@48hills.org

The opinions expressed in these articles are those of the author and do not constitute legal advice. The information provided is general in nature. Seek the advice of a tenant attorney for any specific problem or issue. You understand that no attorney-client relationship will exist with Dave Crow or Crow & Rose, Attorneys at Law unless they have agreed to represent you. You should not respond to this site with any information that you believe is highly confidential.