[WSBARP] Residential Lease: Liquidated Damages Question

[Kaitlyn Jackson]

I agree that, in the case that the tenant breaches this lease, these
proposed provisions would not be enforceable due to the limitations under
59.18. Something about the 10 years seems fishy. However, I suppose that if
the lease is notarized and recorded against the Property it would
technically be in compliance with the statute of frauds.  I wonder if the
holder of a mortgage would have a problem with this arrangement -
especially since the current administration brought back to life the
requirement that all residential term leases for "bonafide tenants" be
allowed to run their term even after a foreclosure.

On Wed, May 6, 2020 at 9:31 AM Doug Owens <dougowens at seattlerelawyer.com>
wrote:

> Dear Gabriel, it seems to me that this arrangement would be impossible to
> enforce in light of RCW 59.18.310 that states just what the tenant who
> breaks a lease is liable for, and RCW 59.18.230(2) which prohibits any
> lease provision that has a tenant waive any rights under the Act (the
> exceptions in that section do not apply here).  Here the tenant would be
> waiving the right under RCW 59.18.310(1)(b) to have the landlord’s recovery
> for breach limited to the difference between the rent as agreed for the
> remainder of the term and the rent the landlord could realize by re renting
> the premises at a fair rent plus the costs incurred in re renting.
> Presumably the new floors would result in a fair rent that was commensurate
> with the enhanced value of the property.  In any case it seems to me that a
> liquidated damages clause such as you describe would not be consistent with
> the statute.  Yours truly, Doug Owens
>
> On May 6, 2020, at 8:46 AM, Gabriel Dietz <gabrieldietz at gmail.com> 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. Dietz
> Partner
> (206) 451-3859
> gabe at hdpnw.com
> www.hdpnw.com
>
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-- 
Thank you,

Kaitlyn R. Jackson | Attorney| DIMENSION LAW GROUP PLLC
130 Andover Park East, Suite 300 | Tukwila, WA 98188
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