How to Charge a Tenant for Lease Violations

Posted By: Christopher Cutting Law,

My office has received a lot of inquiries lately about what a housing provider may charge when a resident breaks a lease provision. Washington law allows a housing provider (or any contracting party) to recover their actual losses incurred for a breach but does not allow penalties intended to discourage or punish a party for breaches. For example, a tenant who moves out before the end of a lease can be required to pay the rent through the end of the term, but cannot be required to forfeit the entire deposit for that action.

One example where the law is particularly detailed is early move-outs, called abandonment in the law and regulated at RCW 59.18.310. When a resident moves before the lease term ends, the housing provider may charge the resident for the lesser of all rent remaining due on the lease or the total of all rent that goes unpaid until the housing provider finds a new resident plus any “actual costs” incurred to get that new resident. Actual costs mean documented out-of-pocket charges like the fee to list a vacancy in a newspaper and exclude indirect costs such as a housing provider’s time handling the turnover.

Consider a resident whose lease runs through August 31 but announces she is going to move out in May because she bought a house. The housing provider must send a move-out statement and an accounting for the resident’s deposit within 30 days of when she actually moves out. This statement will list all the rent due through August and the resident will not receive a refund on her deposit. The housing provider must also search for a new resident. If the housing provider does that search herself, spends nothing out-of-pocket, and a new resident moves in and starts paying rent on July 1, the resident will only owe one month’s rent for the early move-out. But if under that same timeline, the housing provider pays a listing-only real estate broker a lease-up fee of one month’s rent, the resident would owe two months’ rent for the breach—one to compensate for the unpaid June rent and one to compensate for the leasing fee.

To simplify this arrangement, some housing providers will offer residents the option to buy out the remaining term of the lease for a fixed fee—often 2 or 3 months’ rent. These buy-out provisions are lawful if they are at the option of the resident. When our new-home buyer above tells her landlord that she will be moving early, her housing provider could congratulate her on the new home, reminding her that she will still owe rent through August (the end of the lease), and offer to make the move easier by terminating the lease early in exchange for a one-time payment. So long as the resident has this as an option, and can still follow the default “abandonment” calculation of what is owed, this is lawful. Where it is held out as mandatory, or where this fee is charged on top of the abandonment calculation above, it is an unlawful penalty and cannot be enforced.

Formal legal advice and review is recommended prior to selection and use of this information. RHAWA does not represent your selection or execution of this information as appropriate for your specific circumstance. The material contained and represented herein, although obtained from reliable sources, is not considered legal advice or to be used as a substitution for legal counsel.