What Lost Rental Damages Can Be Charged if You Change Your Mind About Renting

My question involves landlord-tenant law in the State of: California

I recently applied to an apartment - Gave them a holding deposit, and signed their contract. Two weeks later, while sitting idly, I found a much better apartment and cancelled the other one. Two weeks later I get a letter in the mail for 700 dollars for "lost rental damages" every day the apartment was off the market. Basically the day I signed the contract is when they started accumulating charges for "damages." The apartment was not available to move in until a week after I cancelled it because someone was still living in it. My question is, is it legal for them to do this? I just can't see how I caused any damage when the apartment was not available to move in yet, and apartments in that area get taken very quickly. According to the landlady, I took the last one.

So because I cancelled it, they kept my 250 dollar holding deposit in addition to the 700 dollars for the "lost rental damages."

Are they in the right to receive 700 dollars?

By "signed their contract", do you mean that you signed the lease?

This is what I signed. A holding deposit agreement. You can find it online for the state of california

https://caanet.org/app/uploads/2015/..._agreement.pdf

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Applicant’s Failure to Enter into Rental/Lease Agreement. If Applicant, after approval, chooses not to enter into the Rental/Lease Agreement, Owner/Agent may deduct from the holding deposit "lost rental damages" to cover the lost opportunity to rent the premises.

Owner/Agent and Applicant agree that "lost rental damages" will be 1/30th of the monthly rent specified above for each day the premises was taken off market (beginning on [ ] [DATE] the date of this agreement or [ ] [DATE] ) and ending on the date specified in the "Acceptance of Application" section above.

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Did you agree that the lost rental damages would start on the date of the agreement? If not, what alternative date was specified?

Where it says "the date of this agreement" there is a check mark. So I guess it would be the same day I signed the agreement

It this even legal that I would have to pay this? It seems very unreasonable to be the law. I can imagine a judge excusing it if taken to court.

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Quoting markwest015

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It this even legal that I would have to pay this? It seems very unreasonable to be the law. I can imagine a judge excusing it if taken to court.

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You would be wrong.

The "law" expects people to know what they are doing when they sign contracts. The "law" expects people to carefully read and understand the contracts they are signing. The "law" expects people to be damned sure that they want something before they commit to it by signing a contract and handing over their money. The "law" expects people to suffer the consequences of breaching contracts. Especially when a contract is clear and unambiguous and as easy to read and understand as your holding deposit contract.

You signed an agreement that says you pay for each day that the unit was "off the market." That is not the same as saying each day that the unit "remained unrented."

Like it or not, your signature has obligated you to pay that daily rate and I do believe that the contract is enforceable in court.

So even if there are no actual damages I still have to pay because I signed it? That's like being billed for breathing the air because I signed a paper. I don't see how this is legal.

Not because you signed it, but because WHEN you signed it, you agreed to the terms set out in the contract. If you didn't understand, or didn't agree, you should have questioned, asked for a modification, or walked away. If you had signed an agreement to pay for breathing the air, you would be obligated to live up to that contract, or pay the charges that you acknowledged you would owe.

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Quoting markwest015

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So even if there are no actual damages I still have to pay because I signed it? I don't see how this is legal.

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That's because you know nothing about contract law.

Read the following article about liquidated damages to get an idea of why this is legal (and appropriate):

https://www.expertlaw.com/library/bu...damages-clause

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Quoting markwest015

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That's like being billed for breathing the air because I signed a paper.

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Be damned sure that you want the air before you sign a contract to pay for it.

The late charge example is reasonable and appropriate. This is simple thievery.

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Quoting markwest015

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The late charge example is reasonable and appropriate. This is simple thievery.

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It's what you agreed to pay when you signed the contract, and the amount you agreed to pay -- the value of rent per day for each day the apartment was off the market -- does not seem inherently unreasonable. It would not be a stretch to conclude that the amount of time a property was removed from the market is a reasonable approximation of how much longer it will take to find a tenant for the property once it is returned to the market.

If you believe otherwise, you have the right to sue for the return of the money. You can try to convince the court that the liquidated damages provision is unreasonable, and perhaps you'll get lucky and the landlord will decide to negotiate with you in order to avoid having to waste time in court.

I can see a slightly different argument that could be made in this particular instance. I would agree that if the unit were empty, that the contract would absolutely be valid because the landlord would be losing rental income while looking for another renter.

However, in this particular instance the unit is still occupied by the tenant who is leaving and the landlord still has time to get another replacement tenant. Therefore the landlord does not yet have a loss requiring reimbursement. I absolutely believe that the OP should lose his/her deposit but for the landlord to charge rent (which is what the landlord is doing) during a time period where someone else has paid rent for the unit, would be questionable at best.

I think that I would want to judge to decide whether or not that provision should be interpreted to mean that rent should be paid even if the unit is still occupied.

You misunderstand the purpose and effect of a liquidated damages clause. A liquidated damages clause is based upon a reasonable estimate of the economic harm that will be suffered in the event of a breach. It provides for efficiency by allowing the parties to avoid trying to calculate exact harm, and if reasonable actually serves to protect the breaching party from a claim for a great amount of actual damages. It is simply not the case that you can avoid paying liquidated damages based upon the argument that, although otherwise reasonable, the non-breaching party suffered a lesser amount of damages than you agreed to pay as liquidated damages. If the clause is reasonable, the clause is enforceable.

Here, also, the damage relates to the amount of time it takes to successfully market an apartment, not the question of whether the liquidated damages clause is triggered before or after the existing tenant moves out. Ideally, a landlord will transition from one tenant to another within a day or two.