Governor June 10 and Effective Now
A new Florida law has just been signed which amends Florida Statutes
section 83.43 and 83.595. The law can be seen at
http://www.myfloridahouse.gov/
the full text of the laws being amended can be seen at the FLorida
house of Representatives website www.myfloridahouse.gov The specific
weblinks to the revised laws are
http://www.myfloridahouse.gov/
and http://www.myfloridahouse.gov/
The new law gives a landlord the option of of putting a provision into
a residential lease which allows for a flat fee in the event the
tenant terminates the lease early. Under a prior Florida class
action lawsuit filed in Palm Beach County and captioned as Yates, el.
al. v. Equity Residential, a resident who broke a lease would only be
responsible for rent until the unit was re-rented. This spawned a lot
of later lawsuits as well.
YOU NEED TO BE AWARE THAT IF YOU CHOOSE TO OFFER THE FLAT TERMINATION
FEE YOU ARE LIMITED TO A FLAT TERMINATION FEE OF SIXTY DAYS RENT AND
UP TO SIXTY DAYS NOTICE PRIOR TO THE TERMINATION BY THE TENANT! THIS
MAY NOT BE ENOUGH TIME TO RE-RENT THE UNIT. YOU SHOULD NOT USE THIS
FLAT TERMINATION FEE UNLESS YOU ARE SURE YOU CAN RENT THE UNIT WITHIN
A MONTH. IF YOU REQUIRE SIXTY DAYS NOTICE OF EARLY TERMINATION IT
MUST BE SHOWN IN THE LEASE.
It is important to note that you are not required to offer the flat
termination fee option. It is also important to not that many
"standard" form Florida leases carry provisions related to termination
fees which are now illegal under the new law. If you are using an old
lease make sure you review it against this new law. There is required
language stated in the law as follows:
From Florida Statute 83.595
"83.595 Choice of remedies upon breach or early termination by
tenant.—If the tenant breaches the rental agreement for the dwelling
unit and the landlord has obtained a writ of possession, or the tenant
has surrendered possession of the dwelling unit to the landlord, or
the tenant has abandoned the dwelling unit, the landlord may:
(1) Treat the rental agreement as terminated and retake possession
for his or her own account, thereby terminating any further liability
of the tenant;
(2) Retake possession of the dwelling unit for the account of the
tenant, holding the tenant liable for the difference between the rent
stipulated to be paid under the rental agreement and what the landlord
is able to recover from a reletting. If the landlord retakes
possession, the landlord has a duty to exercise good faith in
attempting to relet the premises, and any rent received by the
landlord as a result of the reletting must be deducted from the
balance of rent due from the tenant. For purposes of this subsection,
the term "good faith in attempting to relet the premises" means that
the landlord uses at least the same efforts to relet the premises as
were used in the initial rental or at least the same efforts as the
landlord uses in attempting to rent other similar rental units but
does not require the landlord to give a preference in renting the
premises over other vacant dwelling units that the landlord owns or
has the responsibility to rent;
(3) Stand by and do nothing, holding the lessee liable for the rent
as it comes due; or
4) Charge liquidated damages, as provided in the rental agreement, or
an early termination fee to the tenant if the landlord and tenant have
agreed to liquidated damages or an early termination fee, if the
amount does not exceed 2 months' rent, and if, in the case of an early
termination fee, the tenant is required to give no more than 60 days'
notice, as provided in the rental agreement, prior to the proposed
date of early termination. This remedy is available only if the tenant
and the landlord, at the time the rental agreement was made, indicated
acceptance of liquidated damages or an early termination fee. The
tenant must indicate acceptance of liquidated damages or an early
termination fee by signing a separate addendum to the rental agreement
containing a provision in substantially the following form:
[ ] I agree, as provided in the rental agreement, to pay $_____ (an
amount that does not exceed 2 months' rent) 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.
[ ] I do not agree to liquidated damages or an early termination fee,
and I acknowledge that the landlord may seek damages as provided by
law."
If you do not use the early termination fee you can continue to charge
rent throughout the full length of the lease until you re-rent it. To
me this is probably a better option for most landlords.
The Florida Apartment association put out a press release which gives
a good overview. The full press release can be seen at
http://www.sefaa.org/
The Florida Apartment Association pushed for this law and is positive
on it than I am. Given current market conditions I think you are
better off keeping the tenant in the apartment by letting them know
they will continue paying rent until the unit re-rents, which may take
awhile.
Here is a selection of items I found valuable from the Florida
Apartment Association Press Release
he following wording must be placed in a separate addendum and must be
in substantially the
following form, with the tenant signing the addendum and checking or
initialing the choice that
is made.
Sample wording:
_______I agree, as provided in the rental agreement, to pay $__________
(an amount that does not exceed 2 months' rent) 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.
_______I do not agree to liquidated damages or an early termination fee, and I
acknowledge that the landlord may seek damages as provided by law.
The optional lease addendum will soon be available for anyone using
the FAA Blue Moon lease.
What did the law change accomplish?
The law change allows the landlord to give the tenant an option of 1)
limiting his damages if he
skips (liquidated damages) or giving the required notice and paying a
fee to terminate early
(termination fee) OR 2) paying rent until the unit is re-rented or the
end of the lease, whichever
occurs first. The landlord benefits because if the tenant skips, the
landlord can charge the
liquidated damages. The tenant benefits because, if he gives the
required notice and pays the
termination fee, he can leave without breaching the lease.
If I offer this addendum to the tenant and the tenant chooses the
liquidated damages or
termination fee option …
What can I charge?
You can charge:
a) the liquidated damages or the termination fee,
b) any rent through the end of the month when you retake possession, and
c) any accrued charges through the end of the month when you retake
possession, for
example, any utilities through the end of the month.
Can I require notice from the tenant?
You may require the tenant to give you up to 60 days' notice in cases
where the tenant wishes to
early terminate the lease and pay the early termination fee Your
lease or addendum must clearly
state this notice requirement. If the tenant gives you notice but
fails to remain on the premises
and pay the rent through the notice period, the tenant is in breach of
the lease and you can charge
the tenant the liquidated damages amount.
Can I charge a penalty for failure to give notice if the tenant leaves
BEFORE THE END
OF THE LEASE?
You cannot charge a penalty for any failure to give notice if the
tenant leaves before the end of
the lease. Liquidated damages are the total damages that have been
set for the breach of the
lease. You cannot charge any other additional penalties.
Can I charge a penalty for failure to give notice if the tenant
doesn't give the required
notice AT THE END OF THE LEASE?
Failing to give the required notice at the end of the lease is covered
by a separate Florida Statute
(FS §83.575).
What about damage to the property at the time the landlord retakes possession?
The tenant will still owe these amounts regardless of the law change.
Action Plan:
If you wish to take advantage of the law change, you MUST place the
"choice" language (see
Sample wording: above) in an addendum and present it to the tenant
upon lease signing. When
explaining the choice to the tenant, you can tell the tenant about
market conditions if you wish.
This will better allow the tenant to make an educated decision as to
whether he should choose the
liquidated damages or early termination option.
All landlords in Florida should read Florida laws 83.595 and 83.43 in
their entireties.
Bob Diamond
