A Rental Lease Usually Benefits the Tenants more than Landlord

Robert S. Griswold | Steven R. Kellman | Ted Smith
2-December-2001 Sunday

This column on issues confronting renters and landlords is written by Counselor of Real Estate and Certified Property Manager Robert Griswold, host of Real Estate Today! with Robert Griswold (10 a.m. Saturdays on AM1130 - KSDO radio, or on the Internet at www.retodayradio.com), and by attorneys Steven R. Kellman, director of the Tenants' Legal Center, and Ted Smith, principal in a law firm representing landlords.

QUESTION: I recently renewed my lease for an additional year and I noticed a lease termination clause that states that if I break the lease prematurely I have to pay $1,000. I am concerned since a job transfer or another move out of necessity never seems to coincide with the expiration of the lease.

Whatever happened to a 30-day notice? The lease seems to be totally in favor of the landlord. Isn't the $1,000 fee just another way for greedy landlords to gouge tenants in addition to raising my rent every year? What are the advantages and disadvantages of a lease? Isn't the $1,000 lease termination fee a rip off?

ANSWER: Griswold: There are benefits and drawbacks to using a lease that many tenants and some landlords do not fully appreciate. In most rental markets, landlords offer tenants a choice of a lease or a month-to-month rental agreement. A lease is usually offered to tenants at a lower rent than a month-to-month rental agreement since tenants are committing to a longer tenancy. The longer a tenant stays the lower the cost of operating the rental property to the landlord.

The excessive turnover of tenants is very expensive for landlords not only in dollar and cents costs but also the physical wear and tear on the property plus the diminished reputation of the rental property in the community.

Naturally tenants like having a lease since the landlord cannot change the terms or increase the rent during the lease term.

This has been very beneficial for tenants who have seen rents escalate significantly in the last few years. It also has given some protection to tenants that have seen landlords eliminate the acceptance of pets in an attempt to upgrade their tenant profile as they take advantage of the strong landlord's rental market.

Also, tenants with leases have been protected from a variety of other potentially unpleasant changes in terms that could occur if their rental property changed ownership. The downside of a lease is that the tenant is committing to stay for a minimum period of time even if it is inconvenient. A job transfer, relationship or roommate problems, an opportunity to purchase a home, or even just a better rental opportunity are not legal reasons to unilaterally break or terminate a lease.

Of course, under California law, a tenant can break the lease but is responsible for the balance of the lease term or until the landlord is able to rerent the property. In your case, the landlord offers a liquidated damages clause that effectively gives you a lease with the benefits of a month-to-month rental agreement. You can give a 30-day notice for any reason or no reason and cancel the balance of the lease at your sole discretion. The only requirement is you need to pay the lease termination fee of $1,000.

The landlord is then taking on the additional costs and associated risk of remarketing and rerenting the rental unit.

An advantage is that you are not taking the risk that you will still owe rent for the entire duration of the remaining lease term. Of course, your landlord must also account for and use your security deposit in accordance with the law.

While I am a strong proponent of leases for tenants who are interested in locking in the current terms of their tenancy, I am surprised at the significant number of tenants who do not realize that a lease has certain limitations.

Overall, my experience is that a lease offers many more advantages to most tenants than landlords. Thus, I suggest that tenants primarily concerned only with potential rent increases can seek the best of all worlds by attempting to negotiate with their landlord for a month-to-month rental agreement and a written rental guaranty. The written rental guaranty is simply a written letter or agreement that the rent will remain fixed for a certain minimum period of time such as 12 months. Many landlords will agree to this proposal since they most likely do not have any intentions of raising the rent more often than annually anyway.

The slob factor

I am an owner of a rental condominium in a very nice complex in the Mission Valley area. I have had several occasions to enter my rental unit for various reasons. I am continually shocked at the condition of the unit. There is no structural damage. However, the tenants are horrible housekeepers. I do not think they have ever washed the kitchen floor, there is grease on the stove an inch thick, the bathrooms are horribly dirty and the carpeting is very soiled.

When they move out I will have to have the place professionally cleaned and I don't know if the carpeting will ever come clean. The tenants are very nice and they pay the rent on time consistently. Do I have any right to tell them to get the carpet cleaned and just maintain a clean home? What amount of security deposit is appropriate to take for carpet cleaning and housecleaning? What is considered "normal wear and tear" vs. damage?

Smith: The concept of ordinary wear and tear is vague. Any standard or guideline you set up -- despite your best intentions -- could be disapproved by the court. Still, we know certain things about what you can deduct from a tenant's security deposit. By most accounts, cleaning an extremely dirty floor would be deductible from the deposit. California Civil Code specifically addresses that issue and authorizes, in a general way, deductions for both damages above ordinary wear and tear and reasonable cleaning expenses.

The facts that the bathrooms are horribly dirty and the carpeting is soiled all lead me to believe that these matters are deductible. The way you describe the apartment makes it sound like a pigsty. As such, most of what you are claiming would be deductible. Should you come up short on the deposit, you would have the right to file a court action for your costs exceeding the deposit.

Upgrade downer

I rent one of three houses owned by the same person. The houses are identical in floor plan and square footage, located next to each other. All three houses are managed by the same management company. One house is occupied by the owner's son and the son's family at a discounted rent amount. The other house is rented by a Navy family who $900 a month as I do. The house they rent was upgraded with new carpet, vinyl flooring and various other fixes to make the house sellable. However, before it was sold, it was rented to the current tenant.

My house has old, I mean old, carpet. Probably the carpet that was there when the house was new about 20 years ago. The vinyl flooring in the kitchen and bathrooms is old and worn as well. Since the rent and the properties are identical, shouldn't I have equivalent dwellings, i.e., new carpet and vinyl floors?

Smith: Let me give you the landlord's take on this. The short answer is no, you are not entitled to equivalent furnishings such as carpet and vinyl floors. Each rental stands on its own. All that the landlord is required to do is maintain minimal levels of habitability.

Habitability does not mean the cosmetically perfect place to live. Providing bare living conditions is all the landlord is required to do. New vinyl flooring and carpet are not within the warranty of habitability. While new carpet may be desirable, there is nothing in your question to suggest to me that the old carpet is dangerous or a health and safety hazard. It is quite common for a seller to doll up the property prior to sale to extract a higher price. But, the seller is not required to replace the carpet for rental purposes.

IF YOU'RE A TENANT OR LANDLORD, the authors stand ready to answer your questions in this column, although letters cannot be answered individually. Write them at: Rental Roundtable, Homes Section, San Diego Union-Tribune, P.O. Box 120191, San Diego, CA, 92112-0191. Or you may e-mail them at rgriswold.sdut@retodayradio.com

Copyright Union-Tribune Publishing Co.

Back to 2001 Rental Roundtable Index

Robert Griswold and the Real Estate Today! radio show strongly support the intent and the letter of all federal and state fair housing laws. As a reminder to all owners and managers of real estate, note that all real estate advertised is subject to the Federal Fair Housing Act, which makes it illegal to advertise "any preference, limitation, discrimination because of race, color, national origin or ancestry, religion, sex, physical disability, or familial status, or intention to make any such preference, limitation or discrimination." Additional state and/or local fair housing laws may also apply. Be sure to inform all persons that all dwellings offered or advertised are on an equal opportunity basis.

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Revised and Updated - Wednesday, April 26, 2006

Robert S. Griswold, CRE, CPM, CCIM, PCAM, GRI, ARM
Griswold Corporate Center
Griswold Real Estate Management, Inc.
5703 Oberlin Drive, Suite 300
San Diego, CA 92121-1743
Phone: (858) 597-6100
Fax: (858) 597-6161
Email: rgriswold.ret@retodayradio.com