Is Landlord Asking too Much to Break Lease?

Robert S. Griswold | Steven R. Kellman | Ted Smith
12-December-1999 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.

Q: My husband and I rented a house and signed a two-year lease agreement.
It has been a little over a year and we need to break the lease because we
are moving. We told our landlord over two months before the day we had to
move so he could re-rent the property. We said we would pay to advertise
the house in the papers, take applications -- do whatever we had to in
order to get the place re-rented.

We also said we would make up the difference (if any) that the house was
vacant as long as he made a reasonable attempt to get the house rented. He
said he would think about it.

It is now one month before our move-out date and he has decided to try to
sell the property. He wrote us a letter saying he wanted us to sign a new
agreement modifying the termination date to December therefore obligating
us to pay $8000 after we move out.

He felt this was fair because our original lease didn't expire until May.
We can't afford to pay double rent. With the rental market the way it is,
I'm sure he would have no problem re-leasing it. What should we do?

A: Griswold: For future reference, you should always put the notice in
writing as soon as possible so you can prove the exact date you gave
notice. Yes, you are responsible for the balance of the lease term yet the
owner must mitigate your damages; he must make a reasonable effort to
re-rent the property under the same or similar rental terms. You can be
held responsible for the (reasonable) actual advertising and other related
costs (credit checks, etc.). But, you are not responsible for the rent once
the house has been re-rented.

You are right, the demand for rental homes is very high and the owner
should not have any problem re-renting the house. Remember that the owner
has the affirmative duty to mitigate your damages and cannot just sit there
collecting rent from you.

The fact that the owner now has decided to sell complicates the matter, but
it seems like the owner is trying to take advantage of you and unfairly
charge you for the marketing time for the sale. I believe that the fair
charge would be only the amount of time it would reasonably take the owner
to re-rent the house. In the current market that is no more than 30-45 days
tops and possibly much less since you are willing to allow access during
the next 30 days.

By the way, under 1954 of the California Civil Code the landlord has the
right to gain access to show the house to prospective renters upon giving
you at least 24-hour advance notice. So you are obligated to do this
anyway, but it is clearly in your best interest as well.

As far as his proposed settlement, I wouldn't take it. I would settle for
nothing more than 30 days, but again -- since the owner is demanding so
much more and there is a potential for a major conflict here, I would pay a
few hundred bucks and have an attorney on my side! You should also reach an
agreement regarding your security deposit.

Smith: I will add a few more comments to Robert's analysis. The defaulting
tenant continues to be legally responsible for rent so long as the landlord
is diligent in his leasing efforts.

After the tenant vacated, the landlord decided to take the property off of
the rental market and instead place it for sale. In all likelihood, the
court will find that by doing so, the tenant should not be held accountable
for future rent.

This makes sense, since the landlord should not gain a windfall of rent for
a period in which he no longer owns the property. I would encourage the
tenant to continue to monitor the property to see how the sale is going.
Once escrow closes, the tenant's liability for rent should terminate, even
though the lease has not expired.

Q: I am a tenant in a town house. I understand California law 1941.1D that
heating systems must be in good working order but is there also a clause
for cooling systems? Our AC bill runs at $200 plus a month, while being run
from 8 a.m. to 8 p.m., while neighbors (assumed to have the same type of AC
unit because of town house situation) have bills of $130 a month running 24
hours a day. I have complained to the landlord with no success. What can I
do?

A: Kellman: The law you refer to in the California Civil Code requires
landlords to provide "Heating facilities which conformed with applicable
law at the time of installation, maintained in good working order." That
code section is silent as to cooling systems, but other codes may lend some
assistance.

For example, according to the California Health and Safety Code, a rental
may be "substandard" if it contains a "lack of, or improper operation of
required ventilating equipment" Further, "all mechanical equipment,
including vents" must be in good working order.

The landlord should certainly maintain the equipment supplied in your unit,
including the air conditioner. For many residents in Southern California,
an air conditioner is essential for their health.

Based on the higher bills, your system may need to be examined for some
maintenance. You may wish to put the request in writing and inform the
landlord of the situation.

You can state that if such maintenance is not performed within a reasonable
time, you reserve the right to do so and deduct the cost from the rent.
Seek legal advice before taking this approach since rent withholding may
prompt the landlord to begin an eviction proceeding for your actions. If
you handled the matter properly, such an eviction attempt may be improper
and illegal.

Smith: With all due respect to Steven Kellman, you had better pay full rent
despite the air conditioning problem. If you fail to pay rent, you could be
on the receiving end of an eviction based on your nonpayment.

The higher than normal air-conditioning bill does not excuse you from
financial responsibility. Air conditioning in rental property is not
covered by the California Civil Code, which contains the minimum items to
maintain rental property in a habitable condition. Even in areas that are
warm during the summer, buildings without air conditioning systems are not
rendered uninhabitable.

The law places a higher value on heat in the winter than it does on air
conditioning in the summer. Have the air conditioning checked out at your
expense to evaluate the discrepancy. If it is determined that the system is
defective, resulting in the higher bill, then try to make a deal with your
landlord -- but do not attempt to take a rental credit without permission.

Q: I understand that a recent California court ruled that a lease signed by
a corporate tenant requires two signatures. Is that valid?

I've had some nibbles on a beachfront rental I own by several large
companies. I thought just one signature would be enough, but the court
ruled that signatures of two officers are needed to bind a corporate
tenant, even if the single signature came from a guy who was the CFO and
secretary, as in this case. What is your advice?

A: Smith: California law requires certain contracts and leases to be signed
by two different corporate officers in order to legally bind the
corporation.

Generally, it is the president who signs on behalf of the corporation,
together with any other officer. In a recent California case, the court was
faced with a situation where one person held all the offices in a small,
closely held corporation.

Stay tuned, though, because the California Supreme Court has this matter
under review but has not issued a ruling. As a result, my advice to
California's commercial landlords is to obtain two signatures if you are
leasing to a corporation, even if one person holds all the offices. If you
only obtain one signature, it is possible that the corporation could break
the lease and not be held liable by the court.

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 1999 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