clause in rental agreement

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Latest post Mon, Feb 2 2009 3:07 PM by adjuster jack. 4 replies.
  • Sun, Feb 1 2009 3:41 AM

    • cgil
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    • Joined on Sat, Jan 31 2009
    • Posts 7

    Question [=?] clause in rental agreement

    We own a home in Indiana which is being managed by a property management company. We leased out our house to a couple with a two year contract. We were ask by the property management company if a clause could be added to get them out of the contract because they may get relocated by their employer and we agreed. The clause says "Lesses have the option to terminate this lease agreement after the first six months, should they be relocated, by providing a 45 day written notice. Documentation of relocation must be provided by employer."

    With four months left on the contract they gave property management a 45 days notice that they were moving out. They were told that they need the documentation from the employer about the relocation. They got the letter. I was then told that they were living in the same area and working in the same place that they had just bought a house closer to his work. They said that a relocation is just moving from point a to point b and that is what they did and can use that clause. He says it's too vague. We assumed someone at his work just did him a favor. The property management had left a message with boss to verify, he didn't return call. Left second message telling him this could possibly go to court. Boss panicked thinking the employer could be sued and said their company would possibly terminate them both before being involved in a lawsuit. So this prompted tenant to call us to talk about it thinking the managemet co was pitting us against each other.

    He admitted on a voicemail and an email that his move had nothing to do with his company relocating him, just that he bought a house closer to his work. He said the letter only says he moved closer to work and not that they relocated him. We are stilling trying to be nice and offered a compromise rather then holding them to the whole contract which he was happy to cooperate with instead of possibly going to court. Contract ends March 31 and we would split what was left on contract. He agreed then when we came up with the half figure we even lowered it a bit more so he was paying less then half and we were taking a bigger loss, but he says that is too much for him to pay and wants us to take an even bigger loss. So we may just forget the compromise and hold him to the total contract. The property management is saying we can hold him to it with the employer saying they did not relocate him. How strong do you think the clause is?

    Thank you
  • Sun, Feb 1 2009 8:11 AM In reply to

    Feedback [*=*] re: clause in rental agreement

    You may be able to do so, but you also have a duty to mitigate your damages. That means that you (or the property management company) need to find new tenants as soon as possible.

    It seems that you have offered a "buyout" and the tenant has rejected it. So, if the tenant or former tenant refuses to pay, your option is to sue him and try to collect. Be prepared to show the judge evidence that you have, in fact, made reasonable efforts to find a replacement tenant. I trust that your lease givens you the right to recovery your legal costs and attorney fees.

    Just remember that, even if you get a judgment, you still have the problem of collecting it.

  • Mon, Feb 2 2009 8:39 AM In reply to

    • Drew
    • Top 10 Contributor
    • Joined on Thu, Mar 30 2000
    • PA
    • Posts 51,418

    re: clause in rental agreement

    Suggestions from a prior LL.

    I think if the clause is as written and he is not relocating you hold the drivers seat to win--and if he is buying a home you may have leverage to collect.

    Me, I'd file an action ASAP just as soon as he breeches the contract because it may gum up his ability to finance his purchase and provide leverage to get matter resolved.

    Caution, in theory offers to resolve a problem should not be held against you --EG your offer to solve the problem for 1/2 should not be held against you when you now seek the contract in full--but watch out.

    Caution, as other post--CA holds you (and the tenant as well) to a duty to try to mitigate damages so once the tenant actually breeches the contract you/your agent do need to at least go thru serious motions you can prove you tried to abate same--but keep track of added remarketing costs etc.

    That said, if the contract has 5 months to go when he vacates unit I'm not sure if the abatement issue is limited to 5 mos or what--in many markets its hard to lease a unit for 5 mos so be sure whatever you and your agent do fits the local scorecard as to trying to abate.

    As a LL I'd say your added costs to prep the unit for a new tenant midstream and you added commission and fees and advertising plus court costs etc should be recoverable or offset in your favor. Depending on how well your lease was crafted you may have a shot at recovering attorney fees--but you are unlikely to get them unless the contract is crystal clear on said point. Its not the "American Rule."

  • Mon, Feb 2 2009 3:07 PM In reply to

    re: clause in rental agreement

    "Lesses have the option to terminate this lease agreement after the first six months, should they be relocated, by providing a 45 day written notice. Documentation of relocation must be provided by employer."

    As a former LL of 20 years I rarely come to the defense of tenants unless there is good reason to.

    But in this case I will.

    That's an extremely weak clause.

    You don't define "relocation" and you don't define "documentation".

    Under your vague clause, I could move across the street (relocate) and have my employer send a letter saying, "Dear Sir, He moved across the street" (documentation).

    As Drew often points out, contractual provisions that are unclear, undefined, or ambiguous are construed by courts against the creator of the contract who is trying to enforce those terms.

    Doesn't matter what you "meant" those terms to mean, matters only what is written in the contract.

    You also have to consider your local rental market with regard to mitigation.

    Mitigation requires you to re-rent as soon as reasonably possible and you don't sue until the place is re-rented and you can total up your losses.

    The longer it takes you to re-rent the more strongly you will have to prove that extraordinary circumstances beyond your control prevented the acquisition of a new tenant.

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  • Mon, Feb 16 2009 8:44 PM In reply to

    • tirxie1
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    • Joined on Mon, Feb 16 2009
    • Posts 6

    Feedback [*=*] re: clause in rental agreement

    Probably at this time, I would be more interested in re-renting the house, and this time put a clause in there, that if they leave under false pretenses, then they go to court.
    You could be making more money now, and not have to mess with the old tennant.
    Trixie 1
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