Friends want to break their lease on my house. What do I say?
May 30, 2016 12:49 PM   Subscribe

Friends rented my house with the intent to purchase. They bought a different house, and let me know they'd be moving out early. I did my utmost to close the sale with a different purchaser, as close to their move out date as possible. At the last second, the buyer bailed. My friends are moved out, with 2 mos left on their lease. I feel like a jerk charging them rent if they're not in it, but I can't afford not to. What do I say to them? To myself?

YANML, I'm looking more for ethical and phrasing advice on this one…

I bought the house ~10 years ago when the market peaked, and its been a ton of work & stress to rent it out for the last 9 til the market has finally come back to where it was.

The couple in question are kind, conscientious people. We created a formal, signed, legal 1 year lease (the same I've been using with tenants for 10 years). They took great care of the house, did small maintenance, etc. We have not 'hung out' as friends per se, but we have always had a good time chatting when we have run into each other. I gave them a discount on rent because of the trust I had in them (same as what I would've otherwise paid a property manager).

They paid a damage deposit, moved in, and seemed to love it. We were exchanging emails about them purchasing the house from last August until this January. But in March they sent me an unexpected note saying they had put in an offer on another house. They acknowledged our contract, and wanted to discuss. I responded that I would contact a realtor right away upon return, stating I would try to get a closure as close to their move out date as possible, in the hopes to avoid them paying rent plus mortgage. No problems, friendly correspondence since.

There were no formal signed papers exchanged (as is stipulated in our state's landlord tenant act), documenting either party ending the lease. However, we have been going through all the motions (cleaning, check out, accounting fuel oil use etc), as if their last day of tenancy would be tomorrow.

In going through the details of their move-out, they asked to apply their damage deposit to their last months rent (referring to May). I declined, noting they hadn't paid water/sewer for the year, and we still had to settle for heating oil. My email correspondence does not say which month was to be their last month.

The house had multiple offers within a week, and (I thought) an ideal pre-approved buyer. The buyer agreed to a close date the same as when my friends wanted to move out. I went through the million hoops to do all the repairs after inspection, and everything seemed fine… until I got a note from the realtor 48 hours before closing that the guy (who'd had a signed employment contract), wasn't taking the position, wasn't moving to town, and wasn't going to purchase after all.

Before I accepted the offer, I asked my realtor about the low deposits on all the offers (1000$ which she said was standard for the area, and she encouraged me to accept the offer as is.) In my view 1000$ isn't much to hold a buyer to, and its less than half of what I charge for one month's rent. I wish in retrospect I'd asked for a much higher deposit, so I wouldn't be in this awkward position.

I asked the realtor to immediately relist the property (stipulating a higher deposit is required).

The lease has about 2 months left on it, and also stipulates the tenants cover all utilities. Even if no one is using the utilities, the city minimum for water/sewer/electric still has to be paid. Rent (2000/mo + utilities 250/mo), for a total of around 4500$.

I like these people. They left the property spotless, and in great shape. They are offering to keep mowing (also required by the lease).

I try to do the right thing in the world, in general. In the past, I have avoided court battles (even when it has hurt me financially). I feel like a jerk enforcing the lease on them, if they're not living there. But, I really did do my best to get a quick closure, and I think the buyer who ditched is the one who is the jerk here, not me. If I do tell them they need to keep paying rent, I'm going to be upset if they refuse, and the idea of small claims court makes me feel sick. Just thinking about this whole awkward situation makes me feel terrible either way, and I don't know what to say to these nice people.

I am financially stretched because I'm paying rent and another mortgage in another town because I split my work between those two cities, basically working two jobs. Last year, a freak storm did 35,000$ worth of (uninsured) damage to that house, and I'm under a ton of financial strain. They are older, closer to retirement, higher net worth than I.

I want to do the right thing, I don't want to feel like a jerk, and I don't want to feel taken advantage of. Can you help me find the right words to tell them? To tell myself? I know I'm over thinking this, but I really can't find the right words and need to communicate with them ASAP. YANML, obviously. Thanks for the input
posted by iiniisfree to Human Relations (24 answers total) 2 users marked this as a favorite
 
update: tenant has notified me that they are stopping payment on utilities, effective june 1, so they are likely also stopping rent payments unless I say something.
posted by iiniisfree at 12:53 PM on May 30, 2016


You have done way more in the way of accommodating them than any other landlord I've ever had, FWIW. I don't believe that you are in the wrong asking them to pay rent for the last two months. The fact that they have now said they won't be paying the utilities shows me how they feel about their agreement (and "friendship") with you, and I'd (personally) have to push them on it.

I would probably do the initial conversation myself - "I'm sorry that the buyer backed out. I will continue to try to sell the house, but the rent and utilities will continue to be your responsibility through the end of the lease." You could also suggest that they find you another tenant, which I think in some states would relieve them of the balance of rent due (IANAL, IANYL). If (when) that fails, I'd start looking for a lawyer or file in Small Claims.
posted by getawaysticks at 1:02 PM on May 30, 2016 [25 favorites]


If you let them out of the lease based on the purchase, the tenants made their plans based on that information.

This is all yours to deal with, unfortunately. its not their fault that you had inadequate insurance, or that your seller backed out of the deal.

You can ask them to pay you, but they won't have the money either. All you can do is to try to sell or re-rent the house at this point.

Can you put it in Airbnb or rent it a month at s time to try and get some income from it?
posted by Ruthless Bunny at 1:02 PM on May 30, 2016 [2 favorites]


Aside from the wall of text, really, it breaks down to this:

The lease has about 2 months left on it, and also stipulates the tenants cover all utilities. Even if no one is using the utilities, the city minimum for water/sewer/electric still has to be paid. Rent (2000/mo + utilities 250/mo), for a total of around 4500$.

They owe you 2 months rent, and utilities.

If you can sell the house before then, great, but they signed a lease, and knowingly backed out of it two months early. I have been on 'friend-ish' level terms with landlords, but a lease is a lease and a legal document. You don't state your jurisdiction, but even the most renter-friendly jurisdictions don't let this fly in court.

Chances are, you're not going to be friends with them after this is all over. Come to peace with that, and do know that you've been way more lenient than any landlord I've ever had, even the friend-ish ones.
posted by furnace.heart at 1:04 PM on May 30, 2016 [29 favorites]


"Unfortunately, my buyer for the house bailed out at the last minute. I'm working diligently to find another buyer for the place, but in the meantime, in order to avoid financial ruin, I do need to ask you to continue to pay rent as per our signed lease. You have been wonderful tenants and I was hoping to let you out of your obligation early and still hope to do so if a buyer steps forward, but for now I do need June rent. I'll keep you informed as the situation develops."
posted by killdevil at 1:06 PM on May 30, 2016 [41 favorites]


Dear Tenant,
This is just to remind you that in accordance with section x.x of your lease, you are required to pay rent and utilities until June 30, 2016, the end of the lease period. I had hoped that I would be able to sell the place before then which would have saved you some of this expense but, unfortunately the sale didn't work out so you still have the obligation to pay rent in accordance with your lease.

There is a possibility that if you show clearly and firmly that you expect him to pay up, he will be law-abiding (or conflict avoidant) enough to do so. Don't assume you have to take him to small claims court until you get there. You have been so nice, I'm sure he is hoping you will continue to be nice but this is his legal obligation so it is entirely reasonable that you expect him to perform. Given that nothing else has been put in writing, do this in a formal fashion will let him know that this is important and give you foundation if (and only if) he does default and you do decide to go after him.

INAL (if you couldn't tell). Once he is actually behind on rent, you will need to be careful to give notices and move forward in a legal way but since he isn't late yet, I think this would be appropriate.
posted by metahawk at 1:12 PM on May 30, 2016 [13 favorites]


to the question of Jurisdiction: State of Alaska. Sorry for the wall of text. Shorter: I re-read the landlord tenant act, and believe I have not let them out of the lease (we have not exchanged the necessary signed papers the act stipulates). We have only discussed the things they would do before moving out, and the day they would be out. They informed me of their plans (to purchase another and move out by June 1), in the same email that they acknowledged we still had a contract. (Thus, my plans did not change their existing decision to move/buy.) I responded "I will contact a realtor right away upon return and get it under contract, to get a closure as close to your move out date as possible, in the hopes to avoid you paying rent plus mortgage."
posted by iiniisfree at 1:22 PM on May 30, 2016 [4 favorites]


These people are NOT your 'friends': real friends don't shit on each other like they're trying to do to you. No, absolutely do NOT let them use the damage deposit for their rent, do NOT let them out of paying for the next two months' rent or utilities.

They've already shafted you in numerous ways, and they're planning more --- they accepted a rent cut knowing they lied about planning to buy your house, they signed a year's lease they're now trying to stick you with, they signed agreeing to pay utilities they've now told you they won't pay --- what do you want to bet that "will continue to mow the grass" bit is ALSO a lie?!?

No more. This was a business deal you made to rent to them, and they owe for the rest of the lease plus utilities, no question about it. The only reason to MAYBE let them off the hook is if you finalize a sale of the property before the two months are up.
posted by easily confused at 1:33 PM on May 30, 2016 [20 favorites]


When you negotiate what they owe you, it should be taxes/sewer/mortgage. They're not in situ, so let them out of the remaining utilities.

You might also be misunderstanding them - they might not be saying they don't owe back utilities - just no utilities going forward?

FFS. You can't charge them the rent, but you can use your legal right to charge them rent as a negotiation tactic.

If you close before the end of lease terms, agree to let them off the hook for mortgage for that month? IDK. It's better if they pay you a penalty for breaking the lease early and you both call it done.
posted by jbenben at 1:54 PM on May 30, 2016


Legally you can charge them the rent!

I meant to say that ethically you really just need them to 100% cover whatever costs you are out because they broke the lease and you were both loosey goosey about it.
posted by jbenben at 1:57 PM on May 30, 2016


The fact that they chose to move to a new place while still legally having tenancy of your place isn't your problem. They chose to have to pay for two places at once - it's no different than if they'd gone on a two-month cruise around the world. That's nice and all, but it wouldn't mean they didn't owe rent and basic utilities on the home even if they weren't in it during those two months.

If they can't afford to pay mortgage and rent at the same time, they should have negotiated a different closing date, or asked the seller to cover their remaining lease obligations, or something. Expecting you to make up their shortfall at your own expense for their convenience is... yeah, no, don't let that happen.

Go with killdevil's script. You have been extremely accommodating -- extremely! -- but seriously, the people who should be feeling the financial pinch here are the people who made the financial decision that started all this. Not you.
posted by current resident at 2:02 PM on May 30, 2016 [25 favorites]


"They are offering to keep mowing (also required by the lease)."

In addition to the excellent practical and phrasing advice offered above about how to firmly but kindly insist they pay what they owe, I'd suggest you reframe your own attitude towards this. They are not kindly "offering" to mow. One doesn't "offer" to do things one has signed an agreement to do. Your stance now needs to be all business, to avoid getting shafted. Stop thinking of or referring to them as friends; they're not. Stop thinking they are doing you favors by honoring some of their agreement; they're not.
posted by mysterious_stranger at 2:02 PM on May 30, 2016 [20 favorites]


I responded that I would contact a realtor right away upon return, stating I would try to get a closure as close to their move out date as possible, in the hopes to avoid them paying rent plus mortgage.

This is the only point where you mention saying anything to them about letting them out of the lease early, and you make it quite clear that if you were to do that it would be contingent on getting a buyer lined up. You went out of your way to try to make that happen, and it didn't work out, so unfortunately you need them to pay rent and utilities through the end of the lease as agreed. The situation is not ambiguous and you're not being a jerk by asking them to honor the agreement and fulfill their legal obligation.
posted by contraption at 2:04 PM on May 30, 2016 [2 favorites]


IANAL, IANYL.

Letting your landlord know that you're moving out before the end of the lease is what you do when you don't intend to renew the lease. It doesn't get you out of your obligations outlined in the lease.

Lots of people have to break their leases because of buying a house, moving for a job, getting married, getting divorced, etc. The reason for leaving doesn't change anyone's obligation, unless the place has become legally uninhabitable or, say, the tenant dies. It's pretty standard for the landlord to say, "You're responsible until the end of the lease, but I will accept a suitable sub-letter. In the meantime, I will try to find a new tenant but you're on the hook if I don't."

It costs a lot of money upfront to buy a house. They should have factored this in to their decision.
posted by Pearl928 at 2:05 PM on May 30, 2016 [13 favorites]


IANAL either, but, from what I can tell, you have acted in good faith, and they have not entirely. I don't think they are wrong for making an offer on another house, but expecting you to absorb the cost and hassle of their decision to do so and overlook their breaking of their lease is not reasonable. Also, please do not "feel like a jerk enforcing the lease on them, if they're not living there." You are a landlord, enforcing the lease is what you are supposed to do regardless of whether the property is occupied by the renters or not. It's very nice of you to try to find a way to absolve them of their financial obligation, but it is not unethical for you to expect them to pay for the remainder of their rental agreement, if you aren't able to do so. I'm sorry they put you in this position. Best of luck!
posted by katemcd at 2:10 PM on May 30, 2016 [1 favorite]


It does not sound like the two parties here have had this simple conversation:

You: "Hey, we should have had this conversation right away, but you are intending to pay rent for the remainder of the lease, right? If someone moves in before the end of the lease, you'll be off the hook, obviously."
Them: "Oh, yeah, we are."

They might be hoping to get out of it but willing to do what is legally required, and if so this will put that to bed. If they expect to get out of it you will have to have the much more uncomfortable conversation you fear. But don't catastrophize this until you know it's a catastrophe. Ask.

Many people move with overlap and pay rent on the empty property for some period of time. Ask if that is the case here.
posted by Lyn Never at 2:14 PM on May 30, 2016 [2 favorites]


Slightly different angle: if these are very, very old and dear friends, I'd offer to split the difference if I could afford to. It sounds from your description, though, that these are more casual friends. If so, the lease stands as written.
posted by 8603 at 4:25 PM on May 30, 2016


IANAL but I believe that you are legally (and ethically prohibited) from "double dipping" : if you have a tenant who breaks a lease, they are obligated to pay through the end of the lease, but only if you were unable to mitigate your damages: e.g. you must make a good faith effort to lease it out asap, and once it leases, your lease-breakers are off the hook at that point.

Since you are not trying to get more tenants but rather trying to sell the property, this complicates things.

For example, if I were your tenants, and you sued me, I would point out that you hadn't listed the property on Craigslist for rent, as evidence that you weren't really trying hard to limit your damages. I have no idea if "trying to sell it" is the same as "trying to rent/lease it", legally.

Also, "rent" and "lease" have different connotations (and probably different legal meanings too) and it's probably good to be clear about these.
posted by soylent00FF00 at 4:40 PM on May 30, 2016 [2 favorites]


Yes, you haven't been able to sell it, but would you have been able to re-rent it? My understanding of the law (which is incomplete: IANAL and know nothing about Alaska's laws) is that it generally requires one to "mitigate their damages." You could, of course, argue that you DID try to mitigate your damages via this effort to sell the place, but I think courts look for like-for-like replacement. Just as a judge would frown if you said "I couldn't find anyone to rent it" after you greatly boosted the rent, trying to sell instead of rent might be increasing the level of difficulty in a way that might arguably make your inability to replace their income your own fault in the eyes of the law (as I understand it).

How it'd play out in court would be anyone's guess. But you asked about the ethics, so I'd ask -- could you have rented it out by now if you'd gone that route? If so, it seems like some or all of the responsibility for not having quickly found a new source of income should probably be yours.
posted by salvia at 5:20 PM on May 30, 2016 [1 favorite]


So they have a legal 2 month rent past this date? That is theirs to pay if that is what the lease said.
posted by Vaike at 6:01 PM on May 30, 2016 [1 favorite]


So, I am a landlord in Alaska and I have broken a lease in Alaska.

You have to be making a good faith effort to rent the place. They're on the hook for rent while you're doing so---because it sounds like they announced they were breaking the lease.

When we broke our lease (because the landlord we were renting from announced two weeks after we'd moved to Alaska and found this place that oops, turned out he had an offer on the place and was selling it so too bad for us, so then I was like, no way I'm putting up with this, so we up and bought ourselves a house, in Fairbanks, in October, before we'd been there a winter, and then because landlord was an asshole it turned out his deal fell through, so then he said no, you still have to pay rent and by thereby the way please show the house because I've moved to Miami) we got a lawyer. It was maybe even a thousand bucks when all was said and done, but it was so worth it to be able to have all correspondence with the crazy asshole go through the lawyer.

I understand you're friendly with your tenants, and it sucks you're in this position, but they think they've broken their lease and that you're cool with it. You need to tell them you're not, and if they push back, then a landlord-tenant lawyer.

(Depending where you are, I have a friend who used to work in landlord-tenant law in Alaska and might be able to make recommendations. MeMail me if you want me to ask.)
posted by leahwrenn at 6:31 PM on May 30, 2016 [6 favorites]


My email correspondence does not say which month was to be their last month.

This is where you screwed them over. You let them believe that their lease was ended in May but never actually made it clear that it wasn't or told them what you wanted. You had several chances to tell them you are or are not accepting an early termination of the lease and under what conditions and you didn't, instead just stringing them along. Your house sale falling through isn't their problem, and in their situation I'd be really pissed when you appeared to change your mind and asked for money after not saying anything all this time. You probably do legally have right to it, but it's a somewhat grey area when they talk about May as their last month and you don't correct them, appearing instead to accept that (which is, of course, what they're going to think when you don't say anything to the contrary). In their situation I'd be letting you do all the work coming after the final two months.

And yeah, these aren't your friends. This is a business relationship and your not acting fully professionally during it has screwed you over a bit. Don't do that again.
posted by shelleycat at 11:29 PM on May 30, 2016 [2 favorites]


The other thing is that their legal case would be stronger if they'd prepared. E.g., they could've found someone to take over the lease. The fact that you're friends and didn't indicate that you were planning to hold them to the lease means that they haven't done this kind of preparation. It sounds like they'll be blindsided. It doesn't feel fair to me for you to suddenly play hardball given that you didn't warn them that this was a possibility.
posted by salvia at 6:57 AM on May 31, 2016


You could ask them their intentions. It sounds to me (and to you and everyone else that responded) that they're planning on skipping out of the lease, but maybe they're not. If they haven't read the lease closely, it makes sense that they'd turn the utilities off as they're not using them, and have moved out. However, anyone with common sense would figure they're still on the hook for the rental payments or finding a replacement or subletter.

I agree that you should have a conversation with them about what's happened with the would-be purchaser, and about your expectations. "I'm glad you found a house you love! I got your message about the utilities being turned off, but I hope you understand that they need to be paid until the end of the lease term because .... I realize you have a mortgage now, but I just wanted to make sure you'll still be paying rent. I'd hoped this wouldn't be a problem and I didn't bring it up before because I thought I had a purchaser for the house. This agreement fell through and you'll have to pay the rent or find a replacement until the term of the lease has ended."

You've been more than fair and generous, and it sounds like they were great tenants while they lived there, but they kind of screwed you twice- by leaving early and by not purchasing the house. I know there is a legal thing about security deposits, but would it make you feel more comfortable (if you could) to keep the security deposit and ask them to pay only one month's additional rent, assuming the security deposit is equal to one month's rent?

I understand you don't want to go to court and that a security deposit cannot legally be held in lieu of unpaid rent, but maybe you can meet them halfway if they refuse / can't pay, and then do what was suggested above and try airbnb or finding a short-term renter. But if they refuse, they're not friends of yours anyway.
posted by serenity_now at 10:06 AM on May 31, 2016


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