Early Lease Termination and Security Deposit

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Early Lease Termination and Security Deposit

Sarah Miller
Investor · Canton, OH · Member since 2015 · 116 posts · 20 votes

Hello! A little long but I really value opinions here.....

We rented a house for a short time while looking to purchase a new one.  We signed a 12 month lease knowing there was a possibility we would find a house sooner than that.  Well, that's exactly what happened.  We had been in the rental for 5 months when we signed a purchase agreement for a new house.  We kept the property manager informed of everything and even told him when we would be out for sure 2 months in advance.  Well, he was able to find a tenant pretty quickly within 2 weeks after we moved out (we also continued paying rent since this overlapped a month beginning).  HOWEVER, he literally NEVER told us they found a new tenant.  We still had things in the backyard and my husband went over to get them and he was there the minute I got an email from the PM saying someone already moved in.  WE STILL HAD OUR KEYS!!  HOPE HE CHANGED THE LOCKS!! anyway.... The PM had done a walkthrough with us prior to that and said the place looked excellent and we would be getting back the majority of our security deposit minus just some hole patching on the walls (we hung TVs).  We cleaned the place from top to bottom and it was "move in ready" per his words.

The rest of the story is a little longer than necassary so anyway, he is trying to keep our security deposit 100% citing our lease agreement.  The lease states "The tenants will forfeit the security deposit if they vacate the premises prior to the full term of the lease expiring".  I understand that the lease says this, however as a landlord myself, I don't think this statement by itself is legal.  I thought the security deposit could only be held to mitigate damages.  Since they re-rented the house pretty quickly, and we continued to pay rent until that happened, I don't really see any reason why they could hold our security deposit.  (BTW this is in Ohio)

ADDITIONALLY, he is saying that he has until March 30th to get back to me on the security deposit.............. The law states that I am entitled to my itemized deduction list and refund check within 30 days of the date the lease terminates.  Now, I would think that the minute those new tenants signed their lease, that terminates OUR lease.... correct?  If they don't inform within that 30 days can't we go to small claims??

Any and all advice is welcome.  Pretty peeved off right now as this is a large sum of money!

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Aaron M.
Investor · Kingston, PA · Member since 2017 · 27 posts · 9 votes
8y
One thing that has not been mentioned is there is a cost to placing a new tenant. Regardless if he found a new tenant quickly and how well you cleaned the unit, there is still cost. Bottom line it is spelled out in the lease.
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  • Kimberly H.
    Residential Real Estate Broker · Chicago Suburbs, IL · Member since 2013 · 1k+ posts · 594 votes
    8y

    The damage is that you broke your lease early. Unless for some reason prohibited by law in your area, that is legal.

    1Reply
  • Sarah Miller
    OP
    Investor · Canton, OH · Member since 2015 · 116 posts · 20 votes
    8y

    But didnt he breach contract the minute he allowed a new tenant t9 sign a new lease and MOVE IN without telling US when we hadnt handed over possession yet and were still paying rent?! We still had stuff there, we still were paying utilities, we still had our keys and were still paying rent! We had communicated on multiple occasions that we would continue paying rent through our lease if we needed to.

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  • Max T.
    Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
    8y

    in PA the security deposit must be returned within 30 days of lease expiration OR move out - whichever happens first. Not sure about OH.

    Also if this clause about keeping your security deposit was in your lease, could you have negotiated and signed off on an early release beforehand? Seems like you knew this was coming if it was in your lease and just hoped they wouldn't hit you because you cleaned up well.

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  • Aaron M.
    Investor · Kingston, PA · Member since 2017 · 27 posts · 9 votes
    8y
    One thing that has not been mentioned is there is a cost to placing a new tenant. Regardless if he found a new tenant quickly and how well you cleaned the unit, there is still cost. Bottom line it is spelled out in the lease.
    2Reply
  • Sarah Miller
    OP
    Investor · Canton, OH · Member since 2015 · 116 posts · 20 votes
    8y

    its in our lease that if we terminate the lease early, then we forfeit our security deposit. But WE DID NOT BREAK THE LEASE EARLY. We PAID rent for February and was not informed of a new tenant moving in February 10th.  We still had stuff there... And we still had our keys..... so i dont really know where WE broke the lease when we still had possession of the property and were still paying rent....

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  • Sarah Miller
    OP
    Investor · Canton, OH · Member since 2015 · 116 posts · 20 votes
    8y

    Also, i would think that even if it is in the lease that we "forfeit our security deposit" this goes against what is considered a lawful application of the security deposit in the state of Ohio. if there was an "early termination fee" that could have been DEDUCTED from the security deposit then thats different.

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  • Corby GoadeBusiness Member
    Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
    8y

    I agree with @Kimberly H. on this one. "Damages" does not have to be physical damages. Unless your law prohibits this, you signed the lease with that clause in it, which makes it pretty tough to argue your point. It doesn't matter if he rented it out again, you agreed to forfeiting your lease before you even moved in. It sounds like you are pretty worked up- it'd give it a couple days to decide if you have the time and energy to fight this. If you do, call an attorney and pay them for an hour to review your lease and give you their opinion.

    1Reply
  • Sarah Miller
    OP
    Investor · Canton, OH · Member since 2015 · 116 posts · 20 votes
    8y

    But we didnt break the lease. We hadnt even vacated the property. We still had stuff there and KEYS. What if we still had stuff in the basement or something and he just let some new people move in?! I still dont know for sure if we did leave anything there because we hadnt handed over possession.... 

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  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    8y

    @Sarah Miller they can charge a releasing fee, but they can't double dip on rents. A full months rent for releasing is reasonable. As far as February rents, they should prorate back anything after February 10th, so 18/28th of the months rents should be returned. 

    As far as the 30 day clock, I would assume that starts on February 10th which is when a new tenant was placed in the property. You were officially "out" of the lease at that point. 

    As far as your stuff being there, that should have been removed before a walk though. You claim to have moved out, then claim you had stuff there so you hadn't moved out. It is either one or the other, so hard to put that on the PM.

    Neither you or the PM handled this situation as well as you could have, but from what you said, I do think you are entitled to some money back for prorated February rents.

    0Reply
  • Andrew B.
    Rockaway, NJ · Member since 2016 · 2k+ posts · 2k+ votes
    8y
    Originally posted by @Sarah Miller:

    But we didnt break the lease. We hadnt even vacated the property. We still had stuff there and KEYS. What if we still had stuff in the basement or something and he just let some new people move in?! I still dont know for sure if we did leave anything there because we hadnt handed over possession.... 

     It definitely sounds like the property management company is doing something wrong and you are owed at least some money. They absolutely cannot double dip on rent, you are owed 2/3 of Feb rent at min. Also, if you told him you would be handing over possession on x date, and they chose to move someone in early without telling you, I think you have a reason to argue damages on your part. it may not be worth a lawyer though, and the situation is messy enough that I think you need a lawyer to untangle. my only suggestion would be to ask for prorated Feb rent. That's 2/3 of your deposit assuming one month security. Only other recourse that's worth it IMO is to see if your town has free legal aid for tenants.

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  • Sarah Miller
    OP
    Investor · Canton, OH · Member since 2015 · 116 posts · 20 votes
    8y

    Ok and what if he is saying he will refund me February rent but is trying to also deduct "wall damage" and water bill from that rent? Also, we never gave him a date that we were handing over possession since we still had stuff there. Thats the only reason we found out new people had moved in was because I told him we were getting the remaining stuff out and was GOING to hand over possession soon after. He jumped the gun and moved people in before that.

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  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    8y

    If you want to resolve the issues regarding the legality of the PMs actions you must take him to court. The likely hood that you will convince him to change his policy and refund your money without filing is zero. Once you file he may be more receptive to your arguments and settle out of court.

    Do not waste your efforts attempting to argue that you did not break the lease. Whether the PM agreed or not, even if you paid rent, does not change the fact that moving out prior to the end of the lease is legally considered breaking a lease. All other facts are irrelevant......the lease must be broken for you to legally leave.

    0Reply
  • Sam LLoyd
    Investor · Wasilla, AK · Member since 2016 · 277 posts · 139 votes
    8y

    That is very frustrating.  As a landlord, I've been dealing with similar situations at least 3 times in the last year. In the end, a lease is a contract.  From what you said, I think they should keep the deposit.  I also think that I'm going to put better language in my lease for when this happens again.

    Regarding rent, yes, you should get a refund on February rent.

    Regarding damages.  Any damages that occurred other than wear and tear you are responsible for, weather it comes out of the deposit or you pay for it yourself.  Taking it out of rent may not be legal, but if you owe it, it should be paid.

    I'm sorry to hear your story, it highlights how frustrating move in/move outs can be with poeple's possessions, homes, and money on the line.  Congratulations on your new house,  I hope you get some of that rent back and can move on and enjoy your new place.

    1Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    8y

    @Sarah Miller here is the facts as you stated them:

    1. You signed a lease knowing there was good likelihood you would need to break it. The lease stated you would forfeit your security deposit if you broke it.

    2. You signed a purchase agreement for a house after renting only 5 of your 12 month contract. So you signed a new contract, knowing it would cause you to break an existing contract.

    3. You called your PM and told him you wanted to break your lease.

    4. In your original post you stated he found a tenant two weeks after you moved out, so by your own admission you had moved out. You even had a walk through, which is something that occurs when you vacate a property. It seems pretty clear to the PM you were no longer there.

    5. He informed you that you would be charged for the hole patching on the wall, which you didn't dispute or offer to repair yourself. As far as property condition, after 5 months the place should be spotless, you barely lived there. Cleaning is your responsibility, not a special thing you did as a favor.

    6. Your lease states you will forfeit security deposit for breaking your lease, which is what he is withholding. A court would consider this reasonable as a releasing fee. Why should the owner have to pay a new leasing fee, because you are breaking a contract?

    7. Odds are your lease requires you to pay the water bill and apparently you cancelled service, so he is now billing you for the cost up until the new people moved in. Correct me if I am wrong, I can't see any other reason you would be charged this.

    In my opinion this PM is being completely reasonable. You should thank him for quickly finding a tenant, which saved you money. Some landlords would just let the place sit vacant and charge you. 

    It comes off as self centered to believe that after knowingly breaking a contract that you are somehow being wronged here. I am sure you are a good person, but your perspective here is wrong. I am sorry if that offends you to hear.

    2Reply
  • Gregory H.
    Real Estate Agent · Philadelphia, PA · Member since 2013 · 451 posts · 369 votes
    8y

    @Sarah Miller Now, I'm not saying that this landlord is not a bit shady, he certainly is, I would never handle a tenant terminating the lease early like this. My question is, how could you, as a landlord yourself, not have done anything to protect yourself against this?? If you were giving up possession early, you should have required an addendum be drawn up that stated how rent, utilities, security deposit, etc. would be handled. You don't really have too many options here. You can request the security deposit & pro-rated rents back. If he says no, you can threaten to take him to court. Then you can take him to court. Whether it is worth your time/money or not is up to you. The big lesson here is ... you need to have whatever your agreement is in writing ... this is real estate 101.

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