[RPPTL LandTen] Issue regarding inclusion of Liquidated Damage Addendum in Residential Lease forms for use by Non Lawyers

[Neil B. Shoter]

Our Committee was asked to review an issue regarding a conflict in one of the Residential Lease forms for use by non-lawyers that we helped to update in 2009 and the Supreme Court adopted (PDF of approved Lease attached.   The Bar was contacted by a  Brevard County judge who took issue with the Early Termination Fee/Liquidated Damages Addendum attached to the Residential Lease forms for use by Non-Lawyers.     The judge advises that the Early Termination Fee/Liquidated Damages Addendum (relating to FS 83.595)  makes reference to a liquidated damages clause in the lease, but no clause was included in the lease draft.     This is correct and can be obviously  confusing to a layman using this form.

Question:  Whether an Early Termination Fee/Liquidated Damages Addendum is appropriate and necessary to be included in this lease form.     If so, we will update the Lease to include the appropriate provisions.   If not, the Addendum will be omitted in future updates.   We will post a Notice on the Bar and Section's website as to this particular issue as a warning to those using the lease form until the next update.

If you served on Art Menor's subcommittee and worked on this Lease form, or would like to provide opinion on this issue,  please send your thoughts directly to Lanie Simon, our new Subcommittee Chair for Landlord/Tenant litigation/residential matters, and we will discuss this issue on January 23rd.

Neil Shoter
Chair

PERTINENT COMMUNICATIONS ARE BELOW:

To:    Lori Holcomb

Hello Ms. Holcomb,

This email poses a question regarding the Residential Lease for Single Family Home or Duplex approved and published by The Florida Bar and the Early Term
The Addendum is in the form indicated in §83.595, Fla.Stat., and provides in pertinent part that,

"I agree, as provided in the rental agreement, to pay ________________ (an amount that does not exceed two months' rent) as liquidated damages or an early termination fee if I elect to terminate the rental agreement. . ." [Emphasis supplied].

The Residential Lease for Single Family Home, the rental agreement to which the Addendum refers, is silent as to early termination.  It does not provide for early termination which would appear to be a breach of the lease.   The apparent inconsistency tends to suggest that either the Court to deem the statutory language of the Addendum superfluous or to invalidate the liquidated damages/early termination fee provision.  This is a concern particularly where liquidated damages clauses have been strictly construed.    This dilemma would appear to be remedied by a clause in the lease providing for early termination upon notice as agreed by the parties in accordance with the applicable statute.

Please advise as to The Florida Bar's position, particularly, any statute, case or rationale for reconciliation of the provisions in the Addendum and the Residential Lease.  It is of particular interest to me as I have the privilege of presenting the Landlord/Tenant Law presentation to new judges attending the Florida Judicial College.

Thank you for your assistance.

David E. Silverman
Brevard County Judge

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Please consider the responses of Art Menor and Michael Gelfand (email attached).

----------------Art Menor responded:
The genesis of the statutory revision was a series of cases challenging liquidated damages provisions in the lease forms of several large residential landlords.  To my knowledge these type clauses have never been used in regular residential leases with landlords of a single unit, which is what the Supreme Court form addresses.  Whether to use a clause like this requires a pretty sophisticated analysis well beyond the ken of most non-lawyers (and frankly many lawyers who do not represent owners of large apartment complexes).  The issue is whether the landlord is better off getting a couple of months rent as liquidated damages when a tenant leaves early rather than pursuing the tenant for the full damages of the difference between what was to be paid under the lease and what the landlord can recover on a reletting.  A large landlord who pursues lots of tenant defaults might make the pragmatic decision to use the liquidated damages alternative rather than go through the trouble of proving actual damages.  These same considerations may not apply equally in the single unit lease context.

I am not sure we would be doing a service to the public by including such a provision in the Supreme Court forms and maybe we should delete the Addendum from the current forms.  This can be debated at the LL/T Committee level.
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Neil B. Shoter
Partner / LEED Accredited Professional
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