If you own rental property, here is a scenario you should be familiar with: your tenant signed a 60-month lease providing for monthly rental payments in the amount of $1,000/per month. The tenant is approximately 17 months in when they decide it will be vacating the premises. Along with vacating the premises, the tenant ceases all rental payments. You want to file suit against the tenant for breach of contact ASAP, but how much can you seek in damages? The answer is: it depends.
The first question to ask yourself is whether your lease contains an acceleration clause. An acceleration clause allows a landlord to plead not only for the rent that is past-due at the time of filing, but also for all future rent due under the lease. With 43 months remaining on the term of the lease, you would be missing out on pleading for $43,000 if your lease doesn’t contain an acceleration clause. That’s a huge missed opportunity.
The second question to ask yourself is whether the lease provides for the recovery of collection costs and reasonable attorneys’ fees upon default. If the lease does not specifically allow for such fees, you will be unable to plead for, and recover, the same. As legal proceedings can sometimes become quite lengthy and involved, you want to be sure to give yourself the ability to recover the money spent on filing fees and paying your lawyer as a result of the tenant’s default. These are two minor additions to any lease that could end up making a major difference in the event of a default. Don’t let a bad situation (a tenant’s default) become even worse by limiting your recovery!