[WSBARP] Residential Lease: Liquidated Damages Question

Wed May 6 13:05:28 PDT 2020

Correcting my typo, the tenant should have her "own" counsel.

Kathleen J. Hopkins
Real Property Law Group, PLLC
1326 Fifth Avenue, Suite 654
Seattle, WA 98101
Phone & Fax: (206) 625-0404
Home (please use during COVID-19 lockdown): 425-844-2749
email: khopkins at rp-lawgroup.com
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From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Kathleen Hopkins
Sent: Wednesday, May 6, 2020 12:52 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] Residential Lease: Liquidated Damages Question

Considering how deviations in tenant protections under from RLLTA must be approved by a lawyer (or the prosecutor's office), if I were landlord's counsel, since this is a residential lease I would require the tenant have her owner counsel and have the tenant specifically sign/initial the clause confirming the requirement to pay the unamortized balance (and use all the magic language about liquidated damages) and the independent counsel sign the lease as "approved as to form."

Kathleen J. Hopkins
Real Property Law Group, PLLC
1326 Fifth Avenue, Suite 654
Seattle, WA 98101
Phone & Fax: (206) 625-0404
Home (please use during COVID-19 lockdown): 425-844-2749
email: khopkins at rp-lawgroup.com<mailto:khopkins at rp-lawgroup.com>
www.rp-lawgroup.com<http://www.rp-lawgroup.com/>

*Licensed in Washington State.

This message is protected by the attorney-client privilege and the work-product doctrine; if you are not the intended recipient of this message please let the sender know you received it in error and please delete this message.  Thank you.

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From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> <wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com>> On Behalf Of Laird, Katherine
Sent: Wednesday, May 6, 2020 12:06 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: Re: [WSBARP] Residential Lease: Liquidated Damages Question

It would not be uncommon in a commercial setting to amortise the improvements over a shorter term.  The LL gets back back faster, thereby reducing the risk of loss from a default later in the lease term.  The new flooring is a material term and consideration for the term and you should state that somewhere.
Good luck,
Katherine

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On May 6, 2020 11:13 AM, nestor at pplsweb.com<mailto:nestor at pplsweb.com> wrote:
[EXTERNAL]
________________________________
How about increasing the total "rent" for the value of the flooring as agreed and include in the monthly rent over 10 years and then giving a monthly rebate for the amount to be forgiven.

Nestor Gorfinkel, Attorney at Law
Licensed in Washington & Florida
Florida Civil-Law (International) Notary

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From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> <wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com>> On Behalf Of Kary Krismer
Sent: Wednesday, May 6, 2020 9:12 AM
To: wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] Residential Lease: Liquidated Damages Question

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. Dietz Partner (206) 451-3859

gabe at hdpnw.com<mailto:gabe at hdpnw.com>

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