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Early termination fee - house lease contract - 2 months rent OR 'as provided by law'?

Wellington, FL |

I am the renter about to lease a house for 12 months (monthly rent $3,200). There is an addendum with the lease - 'Early termination fee/ Liquidated damages'. The 2 options states below are mentioned. There is a significant probability that I might end up buying my own house before the lease expires and hence move out of the rented house. I was wondering which of the following options is better for me?

Option 1. I agree to pay $6,400 as liquidated damages or an early termination fee if I elect to terminate the rental agreement and the landlord waives the right to seek additional rent beyond the month in which the landlord retakes possession.

Option 2. I do not agree to liquidated damages or an early termination fee, and I acknowledge that the landlord may seek damaged as provided by law

Attorney Answers 3

Posted

The other attorneys have given good answers, but are non-Florida attorneys. Some years ago their was a controversial case in Palm Beach regarding early termination fees which lead to a change in the law in Florida. It lead the legislature to write a statute giving the options in the lease addendum you are reading. Liquidated Damages is a legal term essentially meaning "predetermined" or set amount damages. The legislature thought 2 months was appropriate, it modified the then existing law of damages which involved a landlord's "duty to mitigate damages", meaning the landlord had to do their best to re-rent the property so the former tenant who vacated early was not on the hook for the entire balance of the lease. It was seen as unfair that a landlord could charge the former tenant plus get new rents on top of that from a new tenant, essentially getting DOUBLE rent for the balance of the lease. So the duty to mitigate helped with that problem of unfairness in the landlord's advantage. So that is what option 2 means. The problem with option 2 is that it is unpredictable, maybe the landlord can get someone into the place the very next day after you move out, then your liability is ZERO. But what if it takes 4 months to rent it? Then you are on the hook for 4 months of rent as long as the landlord used reasonable efforts to lease the place. So option 1 was given by the Florida legislature as a "compromise", seen as fair to both parties that it should be reasonable to expect that an early terminating tenant is not over-charged, and that it is reasonable that a landlord in a decent market should be able to find a new tenants in 2 months.

Attorney answers to questions are for general purposes only and do not establish an attorney-client relationship. The hiring of an attorney is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send you free written information about our qualifications and experience. Landlord/Tenant, Appellate and Criminal Defense. Robert Devin, Esq. (954) 647-5927, 200 SE 6th St., Suite 603, Ft. Lauderdale, FL 33301 robert@devinlawfirm.net

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Asker

Posted

Very informative. Where can I read more details about the case from Palm Beach? I tried searching on Google but did not find anything, I am having a tough time locating the court website too, thanks in advance

Robert David Devin

Robert David Devin

Posted

In a case preceding the amendment to §83.595 that mandated the addendum, the Court in Olen Properties Corp. v. Moss, 984 So.2d 558, 560 (Fla. 4th DCA 2008) [33 Fla. L. Weekly D1297b] invalidated a liquidated damages provision that failed to comply with the legislative scheme. The Olsen Properties Court stated that the statute sets forth a comprehensive approach to damages upon default under a residential lease, “We agree with the circuit court's conclusion that paragraph (16) violated Lefemine rendering the liquidated damage provision of three months rent a nullity. We also find that the attempt to create a liquidated damage remedy violated section 83.595(1), which sets out the total universe of choices available to a landlord when a tenant has not completed the term of a lease. This statute places limitations on the freewheeling ability to contract; the legislature recognized that in a residential setting, landlords and tenants do not bargain from equal positions of power and knowledge.” 984 So.2d at 560.

Posted

Option one avoids all attorney fees

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Posted

I agree with the previous answer and a certain fate is sometimes better. However if you do need to leave and can re-rent the property at no expense whatsoever to the landlord you may not own anything the risk of the house sitting empty for a few months could easily go over the fee and will certainly if the landlord has to sue to get the lost rent. The early termination fee is generally a good thing, you may also ask for a shorter lease with less certainty for your future and higher rent.
Good Luck

If this answer was helpful, please mark as helpful below. Please be sure to indicate the best answer Only If and until you and I sign an Agreement for Legal Services, I am not your attorney. These answers are provided for informational and/or novelty purposes

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