Just Bought My First House (Ending a Fixed Term Lease)

[YYC in LAX]

Well CP, I just bought my first home. WOW, what an exciting time this has been. We didn't work with Travis however, I found this forum extremely informative so thank you to Travis for the sponsorship and great information.

Things went very quick and we only started working with a realtor about a week and a half ago. We targeted a specific area and bought a house about 15 hours after it was listed. Just wanted to provide a little background information as we're pretty excited. I've heard some home search horror stories and just wanted to share that there's definitely hope!

Now the crappy part...we are signed onto a fixed term lease ending in October 2014. While I thought I only needed to give 2 months notice to the property management company, (which I did on Friday) it sounds like I'm on the hook for the entire lease. In hindsight this is understandable as it is a contract but I just wanted to see what my options are. As per the property managers, they will start looking for new tenants for us which is great but we are obligated to continue to pay rent and utilities until they have found a new renter. They said to let them know when our house purchase is finalized (home inspection is on Wednesday and finances are taken care of already) and they will begin to look for new tenants. They will charge us a $250 "lease termination fee" which isn't a huge amount but I don't see that anywhere in the lease agreement. Is that pretty standard?

New house possession is July 3rd so it seems like there is sufficient time for new renters to be lined up. It would just really suck to be paying a mortgage and rent together...would be very hard financially.

Anyways, I think that's enough information to get things going. Thanks a lot!

[YYC in LAX]

Dammit...meant to put this in the realtor 1 forum. Please move.

[photon]

Basically your legal obligation is as they've described; they'll try to re-rent it and when they have you'll be off the hook.

Another option is to try and negotiate something else. If you think it's a good rental market then maybe offer them something that they might find attractive.. maybe offer them 2 months extra rent to terminate the agreement on the day you move out. If they think they can re-rent it in 1 month then it's like a bonus month's rent for them. Or offer them a scaling bonus the faster they rent it out after you've left, something to motivate them to rent it fast.

On the flip side check to make sure they are actually advertising it after you leave.

As for the $250 termination fee, that's an iffy one. If it's not in the agreement I don't think they can charge it, and it might not even be allowable if it is in the agreement. I've been told that the courts have decided that landlords can charge damages, but not penalties.

So the landlord charging you rent until they re-rent it makes sense because that's how much it would cost them if you disappeared.

$250 termination fee doesn't really represent damages, since everything they'd have to do to re-rent it they have to do every time it's re-rented anyway. I guess they could make an argument that advertising and such are costs they wouldn't otherwise incur because it is a fixed term, but I'm skeptical.

Service Alberta has a line you can call to ask about such things.

In the event you don't want to pay it, and they feel they can, they may keep it from your security deposit and then you'd have to fight for it via mediation or court.

[YYC in LAX]

After our conditions were lifted on the house we purchased, we gave official notice to the management company to advertise the house which is now listed on rentfaster.ca (probably amongst others)

We are paying $2100/month, however they have it listed at $2500/month. Are they entitled to do that? I'm fairly confident they will get it rented in this market but I just wanted to see if they are in breach of any rules. The house next door just rented for $2500/month so the number is certainly reasonable.

Also, FYI for those who might find themselves in a similar situation, as per the RTA, "The RTA prohibits a landlord from charging a fee for giving consent to an assignment or sublease of a residential tenancy agreement."

Source (page 67): http://www.servicealberta.ca/pdf/RTA..._A_TENANCY.pdf

So they can charge us for re-listing the property on our behalf and taking part in showings, but they can't charge someone for wanting to sublet the property.

[photon]

Originally Posted by YYC in LAX

We are paying $2100/month, however they have it listed at $2500/month. Are they entitled to do that? I'm fairly confident they will get it rented in this market but I just wanted to see if they are in breach of any rules. The house next door just rented for $2500/month so the number is certainly reasonable.

They're free to advertise it for whatever they think the market value is no?

They have to make a reasonable effort so if the market was $2500 and they were charging $5000 with the intent to not have it rent so they could stick it to you or not have to worry about it for a while, then you could probably complain to someone to try and make a case that they're not making a reasonable effort, but if it's within the market then I don't see what the problem would be.

EDIT: Congratz on the purchase!

[ken0042]

Congrats on the purchase- what area are you moving to?

I know from looking myself that the rental market is pretty hot, so I wouldn't be too concerned.

[YYC in LAX]

Originally Posted by ken0042

Congrats on the purchase- what area are you moving to?

I know from looking myself that the rental market is pretty hot, so I wouldn't be too concerned.

We are moving to an infill on the east side of Montgomery. I'm a NW guy at heart so I wanted to stay in NW while being closer to downtown. I also like to cycle so being close to the river pathway was a factor in the decision.

[gladaki]

Originally Posted by YYC in LAX

Well CP, I just bought my first home. WOW, what an exciting time this has been. We didn't work with Travis however, I found this forum extremely informative so thank you to Travis for the sponsorship and great information.

Things went very quick and we only started working with a realtor about a week and a half ago. We targeted a specific area and bought a house about 15 hours after it was listed. Just wanted to provide a little background information as we're pretty excited. I've heard some home search horror stories and just wanted to share that there's definitely hope!

Now the crappy part...we are signed onto a fixed term lease ending in October 2014. While I thought I only needed to give 2 months notice to the property management company, (which I did on Friday) it sounds like I'm on the hook for the entire lease. In hindsight this is understandable as it is a contract but I just wanted to see what my options are. As per the property managers, they will start looking for new tenants for us which is great but we are obligated to continue to pay rent and utilities until they have found a new renter. They said to let them know when our house purchase is finalized (home inspection is on Wednesday and finances are taken care of already) and they will begin to look for new tenants. They will charge us a $250 "lease termination fee" which isn't a huge amount but I don't see that anywhere in the lease agreement. Is that pretty standard?

New house possession is July 3rd so it seems like there is sufficient time for new renters to be lined up. It would just really suck to be paying a mortgage and rent together...would be very hard financially.

Anyways, I think that's enough information to get things going. Thanks a lot!

Out of curiosity u went with 5 percent or higher downpayment

[gladaki]

Originally Posted by YYC in LAX

We are moving to an infill on the east side of Montgomery. I'm a NW guy at heart so I wanted to stay in NW while being closer to downtown. I also like to cycle so being close to the river pathway was a factor in the decision.

You are near Safeway eh ?

[YYC in LAX]

Update: The landlord's management company was able to find new tenants for next month so we won't be paying any additional rent. It was actually a pretty smooth and painless process; I believe we "showed" the house twice and the 2nd viewing put in an offer that was accepted by the owner. Worked out well for them as they are making an additional $300/month.

Our possession date in our new home is July 3rd, therefore our move out date in the rental is July 5th. Pretty random days so I feel fortunate the new tenants were able to work with that date.

We are paying a $250 re-listing fee which IMO, is fair as the management company needed to re-list the property online and take part in showings, credit checks, etc.

Originally Posted by gladaki

Out of curiosity u went with 5 percent or higher downpayment

Went with a higher down payment; I believe it ended up being some random number like 14.6% or something.

Originally Posted by gladaki

You are near Safeway eh ?

Hmmm, decently close, yes. We are moving to 19th ave and 44th st.

[Kjesse]

Originally Posted by YYC in LAX

Update: The landlord's management company was able to find new tenants for next month so we won't be paying any additional rent. It was actually a pretty smooth and painless process; I believe we "showed" the house twice and the 2nd viewing put in an offer that was accepted by the owner. Worked out well for them as they are making an additional $300/month.

Our possession date in our new home is July 3rd, therefore our move out date in the rental is July 5th. Pretty random days so I feel fortunate the new tenants were able to work with that date.

We are paying a $250 re-listing fee which IMO, is fair as the management company needed to re-list the property online and take part in showings, credit checks, etc.



Went with a higher down payment; I believe it ended up being some random number like 14.6% or something.



Hmmm, decently close, yes. We are moving to 19th ave and 44th st.

Good result. The re-listing fee is reasonable even though you leaving actually benefitted them to the point they gained and it is arguable the fee shouldn't be paid, but I wouldn't make any issue of it. Congrats on the purchase and its good to see your landlord/manager treated you well, as they should.

[photon]

$250 relisting fee is bogus IMO (and I'm a landlord!). They would have to advertise at the end of your tenancy so all you are doing is changing the dates they have to advertise, not their costs.

I suspect it wouldn't stand up in court or mediation.

That said, looks like it's working out great so on the flip side I'd gladly pay that $250 and be merrily on my way.

[ken0042]

Originally Posted by photon

$250 relisting fee is bogus IMO (and I'm a landlord!).

I'm going to disagree with you on that one. If there was no difference in anything else, why would landlords want 1 year leases instead of 6 month leases? Having to go through the process of finding a tenant more frequently has to cost money. Sure, maybe not every tenant is going to want to bail early. However if there was no cost to do so, what is the point of a lease in a hot rental market?

[bizaro86]

Originally Posted by photon

$250 relisting fee is bogus IMO (and I'm a landlord!). They would have to advertise at the end of your tenancy so all you are doing is changing the dates they have to advertise, not their costs.

I suspect it wouldn't stand up in court or mediation.

That said, looks like it's working out great so on the flip side I'd gladly pay that $250 and be merrily on my way.

I also agree that it wouldn't stand up in court, but I wonder if it would if it was in the lease and called out as liquidated damages. Even in a hot market I use a lot of my time re-leasing a place. I get 30 calls, answer questions, tell people when to come, and spend a couple hours showing the place. I wouldn't choose to re-rent a place for someone in exchange for $250, so I don't think that's too much for having to do it more often from a fairness persepective, but I've never charged because I don't think its legal.