Some say the road to hell is paved with good intentions.
Like in the case of the well-meaning Realtor who gets their client committed to a home purchase, without the client first having figured out what to do with their lease that doesn’t expire until after closing.
When eventually confronted with the question of why the landlord is unenthusiastic about letting the client out of the lease early, and demanding payment of the rent through the conclusion of the lease, an uninformed Realtor just shrugs and offers platitudes like these:
“Florida law allows for an automatic termination of the lease once you buy a new home.”
“The standard lease provides for early termination if you buy a new home.”
“That’s unfair, the landlord can’t do that.”
No one ever said life is fair, especially since there is no such thing as a “standard lease,” and Florida law says absolutely nothing about what happens when a tenant purchases a new home.
Suddenly, the Realtor finds their client in a costly quagmire. What to do?
Put in the most basic terms, a lease – written or oral – is an agreement to pay for the use of someone’s real estate for a specified period of time. Florida’s landlord-tenant act (Florida Statutes ss. 83.40-83.683) governs residential tenancies when there is no written agreement. Other than some basic requirements as to how to deal with advance rents and deposits, and certain basic maintenance duties required of a landlord, what two contracting parties agree to between themselves is entirely up to them.
For this reason, each lease is as unique as the people agreeing to it. From the fill-in-the-blank version you purchase at Office Depot, to the FAR-BAR template, to a lawyer-prepared agreement, each says what it says in its own way, and there is no mandate in the Florida Statutes as to what that agreement must contain.
Put another way, each lease is fact-specific, so you can never assume that what one says or does will be the same for another.
From the savvy Realtor’s perspective, while the client’s existing lease is not really their concern, the Realtor will undoubtedly be the first person the client calls when the landlord refuses to let them out of the lease early, and they’ll likely demand to know how their Realtor could commit them to a purchase knowing they still had a lease.
As is the case with any healthy relationship, a little bit of communication can be a good thing. Should you find yourself in this situation, a good starting point would be to take the following steps:
- Encourage the client to get their situation figured out in a way that makes it comfortable for them to proceed with their planned purchase.
- Remind them to read their agreement and understand whether or not they have a termination option, and if they do, how is it exercised, and what will it cost.
- If they do not understand their lease, they should call their landlord, or better yet, seek the advice of a real estate attorney to gain a better understanding of their options before they approach the landlord and/or the purchase offer you’re working on for them.
- Once they understand their options, they should pursue some sort of written resolution of the lease – either on their own, or with their real estate attorney’s assistance.
Meanwhile, document the action you’ve recommended so there is no question later about what advice you gave. It can be as simple as: “since you wish to purchase a home while you’re still obligated under a lease, we discussed that you’re going to take the following action to deal with your lease…. And, once you have this figured out, you will let me know when and how you wish to proceed with a purchase offer.”
Short, sweet, to the point, making it clear it is the client’s responsibility to deal with their lease, and under no circumstances are you promoting them making a large purchase commitment without first understanding their existing rental obligation and its financial impact.
Further, this is not a suggestion that you insinuate yourself into the lease termination discussion or process. Your goal is simply to make sure your client recognizes their existing obligation, and takes some action to address the situation so they don’t wake up weeks down the road with a major purchase obligation layered on top of a potentially significant lease obligation.
As always, never hesitate to consult with an experienced real estate attorney if you have questions about your role in helping clients with an unresolved lease commitment, or likewise if your clients need assistance achieving a resolution of their lease in order to move forward on their new home purchase.
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