Florida Passes Flat Fee Early Lease Termination Law

 A law was enacted two years ago, which amends Florida Statutes, sections 83.43 and 83.595.  The new laws concern how landlords respond to the early termination of a lease by a tenant.

 Failure to Provide Notice Before Vacating

 A tenant may be required by a rental agreement to notify a landlord that the tenant intends to vacate the rented premises at the end of the rental agreement.  The rental agreement may require this notice to be provided up to 60 days before the end of the agreement.  A tenant who fails to give the required notice may be liable for liquidated damages specified in the rental agreement.  A month-to-month tenant may be required to pay an additional one month’s rent for failing to give at least 15-days’ notice of vacating the premises.

 Landlord’s Remedies on Tenant’s Breach/Early Termination of Lease

 Should a tenant breach a rental agreement by leaving prior to the end of the rental term, a landlord may choose one of three remedies provided in section 83.595:

  •  Treat the lease as terminated and re-take possession for his/her own account, thereby terminating any further liability of the tenant;
  • Re-take possession of the dwelling unit for the account of the tenant, holding the tenant liable for the difference between rental stipulated to be paid under the lease agreement and what, in good faith, the landlord is able to recover from renting to another tenant; or
  • Stand by and do nothing, holding the tenant liable for the rent as it comes due.

A tenant who prematurely terminates a lease must be given credit for rents received by a landlord after the property is re-let.  A judgment for future rent due under a lease must include a provision for an accounting of rents received for re-letting through the end of the lease term. 

 In Yates v Equity Residential Properties Trust (Fla. 15th Cir. Ct. Dec. 1, 2004), a trial court found that section 83.595 provides a landlord’s only remedies.  The facts in Yates involved rental agreements that imposed early termination fees, fees for failing to notify of lease termination, lease fulfillment fees, and concession payback charges.  In effect, these fees were liquidated damages for early termination of a lease.  Then fees often amounted to several months’ rent.  The apartments, however, were typically re-let in less than a month.  The court found that the landlord’s practices amounted to the collection of double rent in violation of section 83.595.

 In Olen Residential Realty Corp. v. Romine (Fla. 15th Cir. Ct. May 27, 2004), a court determined whether liquidated damages in a lease agreement are an unenforceable penalty.  In that case, a lease agreement gave the landlord an option to choose liquidated damages or to sue for actual damages caused by a tenant’s termination of a lease.  The landlord sought to enforce the collection of liquidated damages equal to about five months’ rent.  The court stated:

 A “liquidated damage” clause must fail if an option is granted to the landlord to either choose liquidated damages or to sue for actual damages because it indicates an intent to penalize the defaulting tenant and negates the intent to liquidate damages in the event of a breach.  Thus, the tenant would always be at risk for damages greater than the liquidated sum.  On the other hand, if the actual damages are less than the liquidated sum, the tenant would nevertheless be obligated by the “liquidated damages” clause because the landlord would opt to take the liquidated sum as it would represent the greater element of damage.  As neither party intends the stipulated sum to be the agreed-upon measure of damages, the provision cannot be a valid liquidated damages clause. Id.  The Olen court also cited authority that liquidated damages cannot be an arbitrary sum and that liquidated damages in a contract must reasonably estimate a loss.  The court concluded that the contract attempted to impose an unenforceable penalty.  The court further concluded that the remedies in section 83.595 are a landlord’s exclusive remedies.

 Effect of Amendments

 Section 83.43 was amended to revise the definition of “rental agreement” to provide that the term means any written agreement, including amendments or addenda made to the agreement.  The section was further amended to provide a definition of the term “early termination fee” to mean “any charge, fee, or forfeiture that is provided for in a written rental agreement and is assessed to a tenant when a tenant vacates a dwelling unit before the end of the rental agreement” but dos not include “[u]npaid rent through the end of the month in which the tenant occupied the dwelling unit” and “[c]harges for damages to the dwelling unit.”

 Section 83.595 is amended to provide an additional remedy that a landlord may elect should a tenant breach a rental agreement by leaving prior to the end of the rental term.  This remedy permits residential lease agreements to impose an early termination fee on tenants who terminate their leases before the expiration of a lease.  Under this provision, the landlord is entitled to both an early termination fee and liquidated damages provided the combined total does not exceed an amount equal to two-month’s rent.  Landlords are limited to sixty days’ notice prior to the termination by the tenant.  Fees and damages collected under this provision are in addition to unpaid rental payments “due under the rental agreement through the end of the month in which the landlord re-takes possession of the dwelling unit.”  This remedy is available only if the tenant indicates acceptance at the time the rental agreement was made by placing his/her initials next to the provision in the agreement.  

 It is important to note that landlords are not required to offer the flat termination fee option.  If it is to be used, however, there is required language that must be used and placed in an addendum to the lease, not placed in the lease itself.  The addendum must contain language in substantially the following form:

[  ]  I agree, as provided in the rental agreement, to pay $____________ (an amount that does not exceed 2 months’ rent) as liquidated damages or an early termination fee if I elect to terminate the rental agreement, and the landlord waives the right to seek additional rent beyond the month in which the landlord re-takes possession.

 [  ]  I do not agree to the liquidated damages or an early termination fee, and I acknowledge that the landlord may seek damages as provided by law.”

 If a landlord does not use the early termination fee, the landlord can continue to charge rent throughout the full length of the lease, or until the unit is re-let, whichever occurs first. 

We recommend that our clients not use this flat termination fee unless they are sure theycan re-let the unit within a month.  If our cleints require sixty days’ notice of early termination it must be shown in the lease.

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