What is a Breach of a Lease Agreement?
Whether it be residential or commercial, the lease agreement is foundational to any landlord-tenant contractual relationship. The terms of the lease agreement dictate lease terms, rent payments and other contractual obligations that have been agreed upon by the parties. In addition, the lease agreement usually outlines the consequences in the event of a breach of the agreement. As a landlord, you should be aware that violations of Park County Codes and Regulations , Colorado Springs Municipal Code and/or El Paso County Zoning Regulations by your tenants can be considered as a breach of your lease agreement. Some common violations are: Late rent payment violations; Unapproved alterations to the premises; The presence of illegal activities on the premises; Violations of other health or safety codes, regulations and/or ordinances. Please note that this list is all-inclusive. A violation of the terms of your lease agreement is sufficient to constitute a breach and give rise to a legal right to terminate the lease.
Legal Action for Breach of Lease Agreement
The legal consequences for the landlord and tenant depend, of course, on the nature of the lease agreements. Often, there are no actions or fines taken by either party. However, sometimes there may be legal action and fines from the government. All legal action stemming from a lease violation comes under the category of "breach of contract." A breach of contract occurs when a line of a contract is broken. (A contract is broken if one or more parties to the contract do not abide by its terms.) For example, you may violate the parts of your lease agreement that talk about how many pets you are allowed to have. When you get the violation, you are expected either to pay a fine or take the pet out of the apartment or condo, for example. If you refuse to pay the fine and continue to break the lease agreement, legal action can be taken against you.
Any lease breach will generally first be handled with a notice. For example, a notice might ask the tenant to leave the property or to fix something that has been broken. If the tenant does not fix the problem in the given time period, the landlord has the option of taking legal action against the tenant. The legal action is usually in the form of an eviction notice. The eviction notice is a notice demanding that the tenant vacate the property within a certain period of time or face legal action. If the tenant fails to comply with the demand the landlord can go to court to "evict" the tenant. It is important to note that the landlord cannot try to evict the tenant without going to court. It is a violation of the law for a landlord to take matters into its own hands. Another common legal action is the landlord’s legal right to cut off his or her common utilities. If, for example, a tenant has not paid his or her rent, the landlord may choose to withhold their water supply.
If a tenant has violated the stamp of their lease and the landlord takes legal action, the tenant may face legal consequences. Most of the time, the legal consequences are monetary fines that the tenant must pay. It is possible for a tenant to face jail time as a consequence for lease violations, but this is rare. The legal action taken against a tenant depends on the lease agreement. A tenant may have already agreed to certain penalties for particular violations of the lease. For example, if a tenant violates his or her part of the lease for having too many pets, the tenant may get a fine. If they repeat the violation, additional fines will be assessed.
How to Proceed After a Breach
Actions to Take: A landlord should keep a detailed record of any lease agreement violations and their dates. A good policy to follow is to contact the violator informing them of the lease agreement violations. In some cases, this may be all that is necessary to remedy the problem. If the violation is not remedied, then the landlord may decide to seek to terminate the lease agreement or otherwise stop the violation. In that case, it is best to provide the tenant with a copy of the lease provision that is being violated and instructions on the procedure to stop the violation (if remedy is possible under the provisions of the lease agreement). In some cases, a landlord must give a tenant notice and an opportunity to remedy the violation. The lease agreement should be consulted as to any notice requirements.
If the parties are unable to resolve the issue through informal negotiations, they may agree to mediation or possibly arbitration within the scope of the lease agreement. In the case of mediation, a third-party neutral would meet with the parties for the purpose of clarifying the issues in dispute and facilitating negotiation of a settlement. In the case of arbitration, the parties would agree to submit their dispute to one or more private arbitrators chosen by the parties for binding or non-binding determination. There are numerous alternatives to litigation for resolution of contract disputes.
Breach of Lease Prevention
Most landlords and tenants would agree that it is simpler and easier to follow and enforce terms in the lease agreement than you find yourself trying to back track after a breach and clarify the consequences that have arisen as a result. There are a number of ways that both tenants and landlords can seek to prevent breaches of the lease agreement, thereby contributing to a more successful landlord tenant relationship. Specific clauses in the lease agreement are often an effective way of contractually addressing and avoiding future problems.
A standardized, yet comprehensive lease agreement includes the following lease clauses:
- a prohibition on making any alterations or improvements to the unit without the prior written consent of the landlord;
- language confirming the correct use of the premises, including no illegal activity and reliance on municipal law;
- a provision requiring that any rent delivered be in the form of a bank draft or certified cheque; and
- a catchy business name clause which provides that if the tenant suffers a business loss as a result of another person having the same name as the tenant , the tenant must change their name.
A tenant can also take preventative measures to ensure the lease agreement is not breached, such as discussing with the landlord before the contractual obligations expire, rather than forcing the landlord to approach the tenant. As such, where a tenant is aware of a particular problem, they should inform the landlord before the contractual obligation becomes due. Tenants can also provide notice for the renewal of the lease agreement far in advance of the contractual termination date. Often times, the landlord will forget the original deadline and forget to follow-up with the tenant allowing them to continue occupancy. Landlords should schedule regular building inspections to confirm that the premises are being maintained, the rent is being paid, and that no illegal activity is taking place. Regular communication with the tenant is also an important preventative measure, particularly where the tenant is not making rental payments or paying them late, or is making complaints about the premises. The earlier the landlord is able to resolve the tenant’s issues, the better overall relationship they may enjoy.
Remedies for a Breach of Lease
A party aggrieved by a breach of a lease agreement may bring suit against the other party (the "breaching party") for any of the following remedies: (1) Money damages: If a landlord seeks money damages from a tenant for breach of a commercial lease, the damages sought are measured as the "present value of the future rent due under the lease, less the fair rental value of the premises." In the case of a residential lease, "the measure of damages is the difference between the rental value of the premises and the amount which the tenant agreed to pay under its lease." If a commercial or residential tenant continues to occupy the premises without payment of rent after a lease is terminated, the landlord may recover, "for each day, the fair rental value after default, but not more than what was reserved by the lease." This obligation to pay damages, under either a commercial or residential lease agreement, may be discharged if another similar premise is available for rent, because then the party suffering the breach "has a duty to mitigate damages." (2) Termination of the lease: If a tenant breaches a lease agreement, the landlord may terminate the lease relationship and recover any unpaid rent as well as any damages for loss of re-renting time, any consequential damages, and all damages due and unpaid under the terms of the lease. If the landlord is entitled to damages, he or she may not exclude future rents that accrue while providing the tenant with possession of the property as an offset for such damages. (3) Specific performance: A party may be entitled to specific performance of a lease agreement provided that (1) the party seeking specific performance must show that he or she will not receive the bargained for benefit if there is no specific performance of the contract, and (2) the contract involves a unique subject matter.
Going to Mediation or Litigation
For many, a litigated lease agreement dispute is the most costly approach to resolving a dispute. In addition to extensive attorney fees, litigated disputes involve the loss of valuable time that could be better spent focusing on the business of running a business and a negative long-term impact on the relationship between the landlord and tenant. Even if mediation is unsuccessful, the fact that a serious effort was made to resolve the dispute without resorting to litigation is often in itself valuable. A landlord/tenant who is willing to expend time and money on a reasonable effort to mediate the dispute rather than immediately turning to harsh litigation tactics may be viewed more favorably by a court if the dispute later becomes so serious as to require that level of intervention. Even though a lease agreement dispute may be so serious as to necessitate resort to court, either immediately or later on, fielding a serious effort to mediate the conflict acts as a buffer against escalation of hostility and bitterness into abusive and protracted warfare. The vast majority of lease contract disputes, however , never proceed so far as to end up in court. Rental vs. long-term lease agreement disputes are best solved through a moderate approach to settlement. That is, seeking to utilize the principles of mediation while engaging the assistance of a qualified attorney to draft the settlement agreement and participate as an advocate. Mediation, taking an active role with the help of an experienced attorney, with respect to the management, resolution, and/or drafting of the outcome document, is most frequently the most cost-effective method of managing your lease contract dispute. Typically, the attorney fees associated with drafting the settlement agreement and/or appearing at a mediation are substantially lower than the fees connected to litigating a case from the beginning to the end. An attorney who is familiar with both leasing laws and mediation can help you anticipate, manage, and prepare for the mediation process. He or she will also have the training and familiarity for analyzing the strengths and weaknesses of your position, evaluating your damages, and determining whether or not the settlement agreement offer put forward is fair.