Renters caught in a bad situation

Published 3:29 pm Friday, April 30, 2010

Q For almost four years we rented a house with a rental management company as the landlord. We signed a rental agreement “month to month for a set term.” The term was a year.

We were told, and it’s in the agreement, that after the set term we would be month to month. Every year on the anniversary date of our initial rental date the management company did an inspection of the home and told us if we could continue renting. We always received the same form back each year that says: rental agreement and with the words: Month to month for a set term underneath.

We assumed all was fine until we gave notice in March that we would be vacating the rental on March 31st. Our anniversary rental date is July 1. We received an itemized form from the management company stating that we owed them a full month’s rent as a “lease break fee” for vacating before July 1. They have deducted that from our security deposit as well as charging us the balance of $400.

We have tried contacting them, but they refuse to explain why they are doing this. Is there anything we can do?

A Your unfortunate situation illustrates a number of important issues both from a renter’s perspective and from a landlord’s perspective.

First of all, I know renters may not care to hear this but this is a very tough market for rental property owners. Vacancies are way up and it’s hard to find renters, so most landlords are very reluctant to let you walk away from a lease without paying some kind of a penalty because the unit may sit empty for a few months. So I’m not surprised that they want you to pay a month’s rent as a fee for breaking your lease.

Now, what seems to be in dispute here is whether you actually had a lease or a month-to-month rental agreement. The portion of the contract you showed me does say that the lease becomes a month-to-month rental at the end of the “set term described on page one” however you didn’t send me a copy of page one, but I assume that was for one year. You also indicated that the property management company inspected the unit once a year and had you “sign a form.” I am assuming that “form” was actually another one-year rental agreement. So while you are correct that your rental would become a month-to-month agreement when the lease expired, it sounds to me like you actually signed a new one-year lease every year after the property inspection.

One thing I find odd about the agreement is the clause that says: “This rental agreement is a month to month agreement for a set term. Landlord reserves the right to terminate this agreement any month during the term of this agreement.”

I am not an attorney, but I don’t think that’s legal. If you have a “lease” you can’t move out early and the landlord cannot terminate the lease early unless you have violated some requirements in the lease such as damaging the property. If you have a “month-to-month” rental agreement then the landlord can terminate that agreement at any time with proper notice. In this case, it sounds like the landlord is trying to have it both ways: they want to prevent you from leaving until the rental term is over, but they want to be able to end that rental term whenever they want. I don’t think that’s fair, or legal. So you might want to consult an attorney about that clause.

The bottom line is that it sounds like you were confused and did not fully understand what you were signing. Verbal agreements are meaningless in real estate transaction; it’s what’s on paper that counts. Unfortunately for you, I think the property management company may very well be entitled to a fee for breaking the lease. The problem is that you didn’t think you actually had signed a “lease.”

I wanted readers to see your whole story because it illustrates how good, honest people can find themselves in a bad situation if they don’t understand what they are signing. When you rent a property, always get all agreements in writing and make sure you understand what you are signing. If you can afford it, have an attorney review the documents. If not, have a friend who has some real estate experience take a look at the papers for you. Never depend on what people tell you, you must read and understand the written rental agreement completely — or find someone who can do it for you.