Tenant Breaking Lease - Difficulty of Collecting

[L-1]

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

I own a beach house in California that rents for $4,410 per month. The current tenant, who is 2 months into a 1 year lease, has lost his job and moved back to New York where he is from, in search of work. He has left the house vacant, put his own lock box on it and is running for rent ads, attempting to find a replacement tenant to take over his lease. So far he has been paying rent on an empty house. Now that he has moved out of state, I expect his rent payments to end as when it comes to money he has always been a difficult tenant, trying to negotiate lease renewals at lower dollar amounts than the previous years.

I believe he has asked my property management company to let him out of his lease as they have asked me to lower the rent and allow a move in special of one month free. (Winter months are hard to get new tenants and rentals sit empty because no one wants to pack and move around Thanksgiving, Christmas or New Years.)

I do not wish to let the tenant out of his lease unless a new tenant paying the same rent can be found. However, should he default and stop paying, I anticipate suing him for the unpaid balance of the lease and getting a default judgement somewhere in the neighborhood of $40,000 + costs. He is/was a successful businessman and I suspect he has the assets, but they are in New York. I have never been in this position before. How difficult will it be to locate his assets and domesticate a judgement in New York?

[lill]

What steps have you taken to mitgate your damages?

[pg1067]

I believe he has asked my property management company to let him out of his lease as they have asked me to lower the rent and allow a move in special of one month free.

Why not ask your contact with the company to confirm? Did you give the company the authority to let him out of the lease?

How difficult will it be to locate his assets and domesticate a judgement in New York?

There's no way to answer this question in any sort of meaningful way. It might be really easy or it might be really hard (and what "really easy" and "really hard" mean is subject to interpretation). At a minimum, you know where the guy maintains a bank account, right?

[L-1]

We are assisting the tenant in finding a replacement tenant and when he defaults, we will continue to vigorously advertise (as we usually do) to find a replacement tenant at the same rent.

[pg1067]

We are assisting the tenant in finding a replacement tenant and when he defaults, we will continue to vigorously advertise (as we usually do) to find a replacement tenant at the same rent.

Mitigation of damages is an affirmative defense. If, in fact, you sue and the defendant defaults, you won't have to worry about mitigation.

[L-1]

Why not ask your contact with the company to confirm? Did you give the company the authority to let him out of the lease?


There's no way to answer this question in any sort of meaningful way. It might be really easy or it might be really hard (and what "really easy" and "really hard" mean is subject to interpretation). At a minimum, you know where the guy maintains a bank account, right?

I have instructed the property management company that he is not to be let out of the lease.

Yes, we have his bank account numbers.

[adjusterjack]

So far he has been paying rent on an empty house. Now that he has moved out of state, I expect his rent payments to end

Well, until they do, he is not in breach and there is nothing you can do except monitor the situation.

However, should he default and stop paying, I anticipate suing him for the unpaid balance of the lease and getting a default judgement somewhere in the neighborhood of $40,000 + costs.

Not likely to happen.

If he stops paying, then you must mitigate your damages unless you have complied with CA Civil Code Section 1951.4.

http://leginfo.legislature.ca.gov/fa...tionNum=1951.4.

Read it carefully. Have you complied with it to the letter?

If not, then you must mitigate by re-renting as soon as reasonably possible at the same or similar terms as the breaching tenant had and then you are only entitled to rent for the period from the date of the breach until the date you re-rent.

If you think suing a "successful businessman" for $40,000 isn't going to result in him getting on a plane and raising lack of mitigation as a defense, you've got another think coming.

And even if you complied with the statute and don't have to mitigate you'd be a fool to let the property sit vacant for another ten months because that's what you would have to do to be able to sue him for the balance of the lease when the lease is expired.

Meantime, your vacant property will give you problems with your insurance company and be vulnerable to vandalism.

You note that you are helping to find another tenant. Well, help harder. You haven't won the landlord lottery.

[L-1]

Well, until they do, he is not in breach and there is nothing you can do except monitor the situation.



Not likely to happen.

If he stops paying, then you must mitigate your damages unless you have complied with CA Civil Code Section 1951.4.

http://leginfo.legislature.ca.gov/fa...§ionNum=1951.4.

Read it carefully. Have you complied with it to the letter?

If not, then you must mitigate by re-renting as soon as reasonably possible at the same or similar terms as the breaching tenant had and then you are only entitled to rent for the period from the date of the breach until the date you re-rent.

If you think suing a "successful businessman" for $40,000 isn't going to result in him getting on a plane and raising lack of mitigation as a defense, you've got another think coming.

And even if you complied with the statute and don't have to mitigate you'd be a fool to let the property sit vacant for another ten months because that's what you would have to do to be able to sue him for the balance of the lease when the lease is expired.

Meantime, your vacant property will give you problems with your insurance company and be vulnerable to vandalism.

You note that you are helping to find another tenant. Well, help harder. You haven't won the landlord lottery.

Tenent usually pays rent early. His October rent check has not arrived. Instead, he sent an email asking to negotiate a buyout of his lease. We responded with an offer. Should he decline and not pay, I assume the next step is eviction, after which we attempt to re-rent. It is not my wish to let the property sit vacant. It's just that no one wants to pack and move during Thanksgiving, Christmas and New Years, and based on past experience, I anticipate the place will remain empty through the winter months in spite of any reasonable efforts we make.

Should it come to eviction, does the court then award us the reimnder of the unpaid lease or is that a separate action? If it is separate, must it wait until we have re-rented or do we go ahead once he had been evicted?

As yes Jack, I know I'm not as smart as you, that's why I'm here asking questions. One does not get to be as smart as you unless they ask questions and learn. If you know of an app I can purchase, plug in and instantly be as smart and successful as you, please let me know and I will run out and buy it. Otherwise, please have patience with someone who has never run into this before, is trying to learn and get all his ducks in a row.

[adjusterjack]

Should he decline and not pay, I assume the next step is eviction,

The next step before eviction is a 3 day pay or quit notice. See paragraph 2.

http://leginfo.legislature.ca.gov/fa...ectionNum=1161.

Then comes eviction through the court.

It is not my wish to let the property sit vacant.

Good. That's wise.

It's just that no one wants to pack and move during Thanksgiving, Christmas and New Years, and based on past experience, I anticipate the place will remain empty through the winter months in spite of any reasonable efforts we make.

The burden of proving those reasonable efforts would be on you.

Should it come to eviction, does the court then award us the reimnder of the unpaid lease or is that a separate action? If it is separate, must it wait until we have re-rented or do we go ahead once he had been evicted?

Separate action because your damages do not accrue until you have re-rented and can figure out how many days he owes you for.

As yes Jack, I know I'm not as smart as you

,

Never said you weren't. In fact, you probably are smarter than I. I never had a beach house in California that rented for $4000 +. My rentals averaged about $600 per month for modest income tenants but I did have 20 years worth of legal issues with some tenants so my experience may be greater than yours. Apologies if I came across as condescending.

please have patience with someone who has never run into this before

Will do.

[pg1067]

Bottom line: If you get a judgment in California (regardless of the amount) and the judgment debtor lives and has all of his assets in another state, then you'll have to domesticate the judgment in that other state in order to enforce the judgment against those assets. That's usually a fairly simple and inexpensive process, but I've never done it in NY. Beyond that, we have no ability to assess your ability to enforce the judgment.