Rental Company Changing Their Mind on Lease Break
October 19, 2011 5:16 AM   Subscribe

Former leasing company just sent a letter threatening to send me to collections. Am I SOL?

In April, I broke my lease at my apartment complex as I purchased a house. The lease was unclear on the penalties, but makes a statement about recouping damages. A phone call prior to breaking the lease indicated that the rules were that I needed to give 60 days notice and pay a 1 month penalty. So that's what I did. I gave my notice in February, when we closed on the house.

I then received notice in March that I would owe them through the end of the lease (September). I contacted the manager at the leasing office and explained my situation. We verbally agreed that I would only have to pay the 1 month penalty (with the 60 days notice). I initially tried to get this in writing, but then (and here's where I royally screwed myself) promptly forgot about it, as the new homeowner stresses set in.

Yesterday, I received a letter indicating that I owe them around $7500, and that I need to respond in ten days. I can write a letter within those ten days, but basically, they're going to send me to collections if I don't send a certified check for the full amount. I left a message with the company to call. The only option I can see is sending a letter indicating that I relied on my verbal contract with this particular manager, but since I don't have anything in writing, I've got the sinking feeling that I'm out $7500.

YANML, but does anyone have any thoughts? If I try the letter route, am I screwing myself in terms of a bad mark on my credit?
posted by runnergirl to Law & Government (12 answers total)
Have they rented the apartment to someone else?
posted by JohnnyGunn at 5:23 AM on October 19, 2011

The lease was unclear on the penalties

Tthe lease is too important here to shrug it off as "unclear." Figure out what it actually says. Beyond that, lawyer.
posted by jon1270 at 5:23 AM on October 19, 2011 [4 favorites]

They claim to have not rented it to someone else. I am going to try to find out whether or not that's true (by going over and knocking on doors), but thanks to an ill-timed business trip, won't be able to do that until very close to the end of the ten-day window.
posted by runnergirl at 5:30 AM on October 19, 2011

Landlord/Tennant law varies greatly state to state. Which state are you in? In many states, a landlord is required to mitigate damages - they must make a good faith effort to rent the property. Did they advertise other apartments, but not yours? This is important.

Also, the lease was not "unclear" - you just do not understand it. You need to figure out exactly what that legal language means.
posted by Flood at 5:30 AM on October 19, 2011 [1 favorite]

I'm in Maryland. And it's a large apartment complex, so they are always advertising. I'm sure that they did have the option to fill my apartment, but why bother, when they could fill another empty 2 bedroom apartment and come after me for the rent on mine?

I actually do understand the lease penalties, I just don't have them in front of me. Essentially, I'm liable for damages unless I am military or get a new job out of state. Which likely means that the verbal contract is pointless and I'm out the funds. I'm just grasping at straws.
posted by runnergirl at 5:34 AM on October 19, 2011

Look up the Fair Debt Collection Practices Act, as well as your state's debt collection laws.

Short answer: your former landlord is trying to squeeze you for money you don't owe. (Assuming you are correctly reading the lease and in fact paid the one month penalty.) So let them send you to collections, because then you write the collection agency a letter that says that you dispute the debt, that they should not report any negative information to and credit reporting agencies, and that they should not contact you any more regarding the debt. The couple of times I've had to do this, I never heard from anyone again. And it wasn't on my credit report.
posted by gjc at 5:48 AM on October 19, 2011 [1 favorite]

Here's some MD specific info.

Unfortunately, leases longer than 1 year generally must be in writing, and cannot be modified orally. So, even if you came to a "verbal contract" and could prove that somehow, if the landlord chooses to no longer be bound by it, he is free to do so. See here.

Two additional points:
(1) if sent to a collection agency, you can likely settle for much less than the $7500
(2) this may ping your credit report, but as you are now a homeowner and not a tenant looking to rent an apartment in the future, the impact of this may be less (i.e., I believe a landlord-tenant dispute on a credit report is primarily a problem when applying for a new apartment, which you likely do not plan on doing). Again, I said may.
(3) as part of your settlement with the collection agency you can try to negotiate that it will not be reported to the credit agencies (I believe that rental disputes that have not gone to court are generally not reported as matter of practice); or if it was already reported, you can ask to have it removed. The collection agency gets paid based on how much they recover and how quickly - their cut of the recovered amount generally goes down after 60, 90, 120, etc days, so they have an incentive to give you these things.
posted by melissasaurus at 6:10 AM on October 19, 2011 [1 favorite]

*I meant 3 additional points
posted by melissasaurus at 6:15 AM on October 19, 2011

if sent to a collection agency, you can likely settle for much less than the $7500

That's a very general statement and I don't know that it's supported by fact. There's two sorts of collections you can find yourself dealing with (well, three, but this early in the game only two). The more likely one here is a creditor representative who works on behalf of the people who own the debt, a third party agency. They get a cut of the take, often a sizable one, but they may or may not have a contract with the creditor that allows them to negotiate a total recoup less than the debt.

They'll avoid doing that at all costs anyway, preferring to try to rope you into a payment arrangement of some sort and keep you on the hook for the remainder. That's a win for them both in monetary collection and in keeping the debt statute of limitations ticking - it resets to zero every time you make a payment. And since they get paid a percentage of what you pay they're not real motivated to shave off amounts. They'll balance an immediate payoff against dribs and drabs but they're not going to make this painless.

If this does end up in collections you need to make sure of one thing - DO NOT SCREW AROUND ABOUT RESPONDING TO LEGAL NOTICES. MD is very debtor-unfriendly when it comes to lawsuits; if you fail to respond the lawyer doesn't even have to show up in court to get the judgment against you. That's way further down the line but it's valid advice regardless. The law is very unfriendly when you don't play ball - a failure to respond will often result in default action.

Which isn't to say you want to be acknowledging a lot here. Be careful about agreeing that you owe something. You should stick to your guns that you were promised deal X and that's what you owe, nothing more.

Here's the thing to remember in this deal - you are actually in the position of strength in that you have the money and they want it. $7500 is not bullshit money but it represents a small fraction of the rents they collect in any given month. Their best case here, if they hand it off to an outside agency to collect, is that you immediately agree and they get $7500 minus 25 to 50% commission. Worst case they never get any of that and your debt is sold off to some junk debt buyer or they have to pay attorney fees to get a judgment against you.

Fire back with a letter detailing the facts and offering to write that check for the remainder immediately upon written agreement. Make it clear that you're not going to accept an alternate offer. What do you have to lose in that other than some face if you have to back down? The smart move for them is probably to take that deal.

Just don't take it personally or get flustered if they don't. Remember, this is a large organization that has policies in place designed to get the best response on average. So you might find yourself trying to reason with an automated process that isn't interested in making deals. If that is the case you may want to seek out the person who originally made you this deal and offer them an immediate resolution. Or you may just have to play hardball.

Good luck.
posted by phearlez at 7:17 AM on October 19, 2011

They are bluffing.

Treat this as a beaucraric snafu. Send a polite letter, certified mail and return receipt, reminding them that you already fulfilled your lease obligation as per your agreement with X person in their firm. Include photo copies of the cashed checks, redact the account numbers.

IF you ended up in court, you would likely win. You can repeat this dispute letter if it gets to collections (it hopefully won't.)

Bonus points if a lawyer drafts and sends this letter on your behalf.

The fact that you are so willing to fold and pay them these funds you do not owe tells me they are picking on the right person. The big management agencies do thus all the time! I'm sure sometimes it is by accident, but more likely I suspect they do it because once they send threatening letters, at least some of the dupes pay up. Don't be a dupe. They gave you directions on how to properly terminate your lease early, you followed those directions. Your relationship with them is fulfilled and terminated.

When you get a chance, do pop over and see if your old apt is rented, but don't worry about that now. Just make sure your polite dispute letter gets sent via certified and return receipt. I urge you not to talk to them on the phone anymore unless it is your lawyer that chit chats with them.

If you pay a lawyer $500 to show these folks you are holding them to their agreement, they will back down. That's much better than forking over $7500 to these criminals.

I'm still hoping this is a misunderstanding since you had an agreement, like one part of the office doesn't know what the other part of the office was doing when this demand letter was generated.

Treat this professionally, but as a paperwork snafu on their end until and unless you find out otherwise.

Stay calm. Good luck.
posted by jbenben at 7:44 AM on October 19, 2011 [8 favorites]

IANYL, but in many states, a landlord has a duty to mitigate their damages when a tenant breaches a lease-- i.e., they have a duty to rent your place out to a new person if they can, they can't just say "why bother?" if they have an option to fill your place.

I do not know if Maryland is such a state (although this statute suggests that it may be) or if there are complications in your situation that would make this rule inapplicable, but before giving up, you or a Maryland lawyer that you obtain should look into that possibility.
posted by willbaude at 10:31 AM on October 19, 2011 [1 favorite]

It's my lucky day. I contacted the person who sent the letter and the manager of the leasing office. He agreed that we had a deal and there was a note in my file to that effect. I now have in my hands a signed letter saying that all debts have been settled and that I have a zero balance.

Lesson? Get everything in writing next time. Even though the outcome was good, having the letter would have saved a lot of stress.
posted by runnergirl at 2:16 PM on October 28, 2011

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