Sale Or Rental At A Higher Price As Cancelling A Broken Lease

[radman]

I have a house in Ca that I lease, my tenants are moving out with 4 months remaining on their 18 month lease. They know they have to pay until their lease expires and are willing to do that, here is my question. My property management company says if I list the house for sale the tenants are released from their remaining lease obligation. I can only continue to collect rent if I am actively seeking a new tenant. They also are telling me that if I advertise the house for lease and increase the asking rent my tenants may have cause to legally cancel the lease. None of this sounds right to me but I would appreciate it if anyone can give me some advice.

[seniorjudge]

...My property management company says if I list the house for sale the tenants are released from their remaining lease obligation....

Ask your property management company to back this statement up with a case, rule, law, statute, ordinance, back of a cereal box, something...and then post the answer here.

[panther10758]

I live in CA and will be moving due to home is for sale. However all involved parties told me same lease is binding contract and if home was sold before lease expires new owner was bounf by lease terms. So I think your property mangement team is incorrect. By the way I am moving out when my lease expires not before. Unless there is a written agreement between all parties the lease is binding!

[aaron]

I suspect they're approaching it from this perspective:

As a landlord you have a duty to mitigate your damages by seeking a new tenant. The former tenant would normally get credit against the balance they owe for any amounts you collect from the new tenant.

If you put the house up for sale and are not seeking a new tenant, you are not attempting to mitigate your damages.

If you seek a tenant at a higher rate of rent than was paid by the former tenant, you have a reduced chance of finding a tenant.

I don't agree that you should have to rent at the same rate (or a lower rate) if you are seeking a new long-term tenant and not just somebody to finish out the former tenant's four remaining months. Admittedly, I have not researched California law on this issue. If you're seeking a replacement tenant on a longer-term lease (e.g., a one year lease or 18-month lease), I would tend to think that you would only potentially relieve the former tenants of their obligation if you were trying to charge an above-market rent which minimized the chances of re-renting during the four month period at issue.

If the only thing that will make the property management company happy is your charging the exact same amount of rent, and you don't want to have a local lawyer write them a letter clarifying your rights under the law (to the extent that they are in fact wrong), perhaps they would agree that you could either seek a short-term tenant to finish out the four months at that same rate of rent, leaving open the possibility of a longer-term lease at the end of that period, or seek a longer-term tenant while offering a "rent sale" through the end of the first four months followed by a bump up to a rate which reflects the current housing market.

The suggestion above is worth trying, also - ask them to produce their legal authority.