Florida Early Lease Termination Bill - 4/17/2009

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Florida Legislature Passes Early Lease Termination Bill
Published: August 13, 2008


By Erika Schnitzer, Associate Editor

Tallahassee, Fla.--Florida Governor Charlie Crist has approved an early lease termination bill, which will allow an owner and resident the option of agreeing to a flat amount fee prior to the lease being signed.

Though the legislature passed a similar bill in 2007, Governor Crist had vetoed it. The Florida Apartment Association (FAA) reintroduced the bill this year, with some changes. The ruling, House Bill 1489, was signed into law on June 10.

“It may take a while until people start using the new option, but the ability to start incorporating the language into the lease was immediate,” says Jeff Rogo, government affairs director for the FAA.

Prior to this new ruling, a Circuit Court held that, in the class action suit of Yates, el. al. v. Equity Residential, a resident who broke a lease would only be responsible for rent until the unit was re-rented. At the time of the ruling in 2004, market conditions were more favorable, vacancies were extremely low and units rented quickly.

Residents were claiming that owners and managers could not charge an early termination fee because the Florida statutes did not allow it, explains Rogo. Instead, the owner or manager could only charge the monthly rent until the unit was rented. The legal argument for this suit was that the owner could potentially be “double renting” if the resident was charged a flat fee and the unit rented as soon as it became available.

The new legislation allows the owner and resident to agree to a flat amount for liquidated damages or a termination fee. This would prove advantageous to both parties, “because just like there’s a question on the part of the resident on how long it will be to rent the unit, there are questions on the part of managers as well. It’s much easier to sit down with the resident and work something out first,” Rogo tells MHN, adding that this provides a certainty for both parties involved. Even if the unit rents quickly, the owner or manager incurs administrative and apartment prep expenses. Additionally, with the flat fee, residents can only be charged the equivalent of up to 60 days rent.

With the new bill, residents will have a choice at lease signing to pay either this early termination fee of or take a chance and pay rent until the unit re-rents. Managers cannot charge an additional penalty for failure to give notice if the renter leaves before the end of the lease. Additionally, the manager has the option of whether or not to even use the addendum in the lease.