[WSBARP] Residential Lease: Liquidated Damages Question

[Kary Krismer]

I'm not seeing that breaking the lease early would result in "damages" 
related to the new flooring in that presumably the house is worth more 
with the new flooring than without.  Conversely, I'm also not seeing 
that the schedule you propose deals with the actual harm possibly caused 
if the breach is late in the term. Assuming we're not talking about 
carpet, the floors should still be in good condition in 10 years, but 
what if it's been so damaged it needs to be replaced?  Would this system 
prevent any recovery for the landlord if the lease went to term and the 
tenant destroyed the floors?

Also, I'm having some "this is so bizarre it must be wrong" alarms going 
off.  Seems like a really bad idea from both sides. First, I'd be very 
skeptical of any tenant willing to enter into such a contract.  Second, 
assuming the property is encumbered, would the landlord face liability 
to the tenant in the event of foreclosure?  Third, if there were a 
breach would the landlord be able to actually recover for the breach.  
Stated differently, are they actually getting anything non-illusory for 
tying up their property for 10 years?  Fourth, if this property is in 
Seattle are they aware that in 2026 new legislation will provide that 
landlords will be tarred and feathered each time they collect rent?

Kary L. Krismer
206 723-2148

On 5/6/2020 8:46 AM, Gabriel Dietz wrote:
> Good Morning Fellow List Mates:
>
> I have a potential client, a landlord who is considering a 10-year 
> residential lease in Seattle. Before the lease begins, landlord and 
> tenant want to install new floors throughout the premises. Landlord 
> proposes to pay for the costs of the floor installation. Tenant, in 
> theory, would agree to a liquidated damages clause where tenant 
> reimburses landlord for some of the costs of the floor install in the 
> event that the tenant breaks the lease early. The amount of damages 
> would be a straight-line amortization over the life of the lease. For 
> example, if tenant breaks the lease in month 1, tenant would be 
> responsible for 50% of damages. If tenant breaks the lease in month 
> 120, tenant would not be responsible at all. Other than the typical 
> limitations on liquidated damages under Washington law, is there 
> anything in the Washington Residential Landlord-Tenant Act or 
> otherwise that would prohibit/limit this structure?
>
> Thank you in advance,
> Gabe
>
> Gabriel A. DietzPartner(206) 451-3859
>
> gabe at hdpnw.com <mailto:gabe at hdpnw.com>
>
> www.hdpnw.com <http://www.hdpnw.com>
>
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