Tenants Break Lease Expect Deposit Back

[The Proponet]

Hi

I have a group of 4 college girls who signed a year lease and sent me a letter today that as of april 30th they will be moving out and they are terminating the lease early.  They will be 4 months shy of the year long lease.  They also state:
"My rental deposit should be forwarded to this address within 30 days of the termination of our rental agreement as required by the Uniform Residential Landlord and Tenant Law of Iowa section 562A.12, subsection 3."

Up to this point they have been excellent tenants with rent on time and in some instances rent paid ahead of time .  
It is my understanding of Iowa law that I have to make reasonable attempts to rent the house to mitigate damages.  I will do my best to get new tenants, but how would you go about things?  Do I let them know that I am not obligated to return their deposit?  Do I tell them anything other than ask if it is ok to show the house?  

Thanks!
TP

[The Proponet]

Also in my lease agreement I do not have any clause that allows for a payout for a broken lease.  I know some say that 2 months rent or whatever will mitigate damages.  

Do i attempt to rent house out and if I don't get someone who is qualifed in there for may rent then keep their deposit.  And wait to get sued or what?  I would prefer not to see a lawyer about this yet since that could cost me as much as losing a months rent.
Thanks guys!
TP

[henryinma]

I don't know anything about the state laws of Iowa, but you may be able to get a free consultation from a local attorney. I believe the local bar association could probably recommend one that deals with real estate law and usually the initial hour or 1/2 consultation is free.

Anyway, if it were in this state, I use a standard lease from the local real estate board and it has language in there to protect me. If they break the lease, they're liable for the remainer portion of it if I can't rent it out. Local laws and case laws say that I have to make a reasonable effort to rent it out otherwise I can't sue for damages and I may have to present evidence of that.

I've told a tentant that wanted to break a lease that they had 2 options, find someone to sublet the apartment subject to my approval (no criminals, etc.) or let me find a new tenant that signs a new lease and they're off the hook after that.

I think you're actually in a better position than you think. You can actually sue them for the missing rent money and if they don't pay, have a court judgement against them. It'd probably be on their credit report for several years possibly making it difficult for them to rent in the future the next time somone pulls a credit report. Around here, you can take it to small claims and it costs $35 to file. I forget what the limit is, maybe $3000, but someone else said if it was for more than that, then you just file two separate claims for different months of missed rent.

[The Proponet]

Thanks Henry! I think I am in a good position as well.  
My lease states:
Clause 4:
The term of the rental will begin on __________, and end on______________.  If tenant vacates before the term ends, Tenant will be liable for the balance of the rent for the remainder of term.

Also my lease makes all tenants jointly and severally liable. Plus all 4 of the parents signed cosigner agreements!  

I just can't believe that they think they can get out of a fixed term lease just by giving me 30 days notice.  They must have gotten bad advice from someone.
THanks again.
TP

[Wu Wei]

TP...I belong to my local apartment association (220$ yr.) and they have a "hotline" that you can call for issues just like this. One call like this just about pays for the membership dues, which of course are tax deductible. Also, they provide every form known to man!

That said, I believe that you are in an excellent position! Smart move getting the parents to co-sign. I would find out exactly where I stood (legally) first, and then I would send a VERY polite letter to the young women AND their parents explaining to them that everyone of them is liable, that everyone of them will be hauled into court, and that everyone of them will have their credit attacked to the fullest extent allowed! Someone will flinch - you only need one.

I would love to know what happens with this, please keep us informed. Good luck.

MG

[The Proponet]

Thanks!  I can't believe that they didn't think about the consequences of breaking the lease agreement.  It's not like it's a month to month tenancy.  All I have to do is show the court that I am attempting to rent the house out and document everything (names and phone numbers of interested tenants) and show the court why someoned didn't qualify to rent the house and bam judgement against them.

I can't believe the parents would all allow their kids to break a lease and not be accountable.  

If I cannot lease the home to a qualified tenant before their lease runs out then I will be going to court for unpaid rent, advertising costs, misc. costs etc.  This could be expensive lesson for the girls and their family.
TP

[The Proponet]

Here is Iowa law on deposits (Note subsection a):

3.  A landlord shall, within thirty days from the date of termination of the tenancy and receipt of the tenant's mailing address or delivery instructions, return the rental deposit to the tenant or furnish to the tenant a written statement showing the specific reason for withholding of the rental deposit or any portion thereof. If the rental deposit or any portion of the rental deposit is withheld for the restoration of the dwelling unit, the statement shall specify the nature of the damages. The landlord may withhold from the rental deposit only such amounts as are reasonably necessary for the following reasons:

a.  To remedy a tenant's default in the payment of rent or of other funds due to the landlord pursuant to the rental agreement.

b.  To restore the dwelling unit to its condition at the commencement of the tenancy, ordinary wear and tear excepted.

c.  To recover expenses incurred in acquiring possession of the premises from a tenant who does not act in good faith in failing to surrender and vacate the premises upon noncompliance with the rental agreement and notification of such noncompliance pursuant to this chapter.

In an action concerning the rental deposit, the burden of proving, by a preponderance of the evidence, the reason for withholding all or any portion of the rental deposit shall be on the landlord.

[Wu Wei]

I'll bet the parents don't know about it yet. ***Suuuprise!***

[The Proponet]

Wu

The funny thing is one of the cosigning parents is a small time landlord.  Has a 4 or 8 plex in a small community.  He was a real jerk when we had our first meeting.  Didn't know what rental insurance was and wasn't going to buy it for his daughter.  I let that slide but I knew this guy could be a pain in my arse.  
I almost bet he is the one that gave them the advice to send me a letter and quoting Iowa Code.  He must have either a) not understood the lease OR b) did not believe that I would pursue the matter further.  

[Redtigress]

Sounds like he may not have even realized that what you're doing is POSSIBLE.  Let alone likely.  He may be one of those clueless fools that gets into REI thinking it's a quick easy buck.  What I've found of those types is that usually their buildings aren't even up to code.  Gotta love ignorance...  Well hopefully the dent to his wallet will help him learn.

[LoriK]

Please keep us updated on how this turns out!

[Redtigress]

Any update on this Proponet?

[aak5454]

this is an open and shut case.  send a letter to all parties staing leases date is to X and Y and total money due is Z.  An outstanding balanced of ZZ is still due.  The lease is still in force and failure to pay the contracted amt will result in legal action to remedy the breach of contract.

Make sure to send this with proof of delivery.

Small claims court all the way on this one.

[The Proponet]

aak5454

I have not made any contact with the tenants thus far concering their letter.  I will allow them to move out first before I write them a letter.  I am still expecting them to pay april rent so I don't want to antagonize them until i get the cash and get them out of my house with my keys on april 30th.  I am planning on trying to rent the house may 1.  If I get tenants in there I am no longer entitled to their remaining rent as I understand iowa law.  Do you think I should still send them a certified letter asking for the total of 4 mos. rent if I already have the house rented?

TP

[aak5454]

you need to act now as this is not going to solve itself other than you are to lose money.

you must acknowledge the receipt of their letter and clearly state that their attempted early termination of the lease in not allowed under the lease agreement signed by all parties.

if you want to be a bit conservative then do not mention legal action in the first letter.  just end the letter stating the lease ends on Sept 1 and payments should be made in accordance with the lease.

then when they come back to you to whine, then MAYBE offer them to get out if they pay all fees related to placing new tenants and pay rent until new tenant moves in.  This depends on how soft the market is in the summer.

in this case, silence is agreement.  you must act now!

Mike in Calif (been landlording for 6 yrs.)