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Updated over 6 years ago on . Most recent reply

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Sarah Lewis
  • Dana Point, CA
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Early Termination Fees- Have they held up in court?

Sarah Lewis
  • Dana Point, CA
Posted

I'm looking for some protection against a tenant who will break a lease, especially during the winter months when it might take more than one month to find a replacement tenant. A early termination fee in the lease, where the tenant has to pay a significant fee to break that lease, seems like that might work. 

But, I'm concerned about how legal such a clause would be and whether or not it would hold up in court if the tenant contested it. Just because a tenant agrees to an illegal contract does that make the contract legal or enforceable. Has anybody gone to court over the issue of an early termination fee and how did the judge rule on that matter?

Unless there's a specific statue in the law, wouldn't the landlord's duty to mitigate damages and the prohibition against double-dipping trump any such early termination fees?

I usually turn to Nolo in such matters because I find it both comprehensive and understandable at the same time. Nolo, however, doesn't mention using a early termination fee so I don't know if its silent on this matter because it doesn't believe such a clause would be legal or if there wasn't enough room to write about it.

When I googled this question, I did find this one thread where they were debating this very issue:

http://www.city-data.com/forum/renting/2119312-lea...

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Elizabeth Colegrove
  • Hanford, CA
1,833
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Elizabeth Colegrove
  • Hanford, CA
Replied

@Sarah Lewis  No legal advise. Honestly that is the number one addendum that I would have forever. I have it in my lease and love it! We almost had to go to court last week over it and my attorney was not worried at all. You hear alot of issues where landlords say tenants will not abide by it. In my class A rentals it works well. I had a tenant that tried to leave but when she realized how much it was going to cost her she decided to stay. Other had paid and left. The clientele that stay him my homes have the ability to pay the fees and/or have the means for me to go after. 

As always real estate is different in all areas and for different people. This works brilliantly for me but probably wouldn't for everyone!

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