Guide to options a tenant has when trying to terminate a lease early.
A. Things that Don’t Work
The first thing that you have to understand is that there is nothing magical or easy about getting out of a rental agreement. You signed the thing, and you are generally going to have to live with it unless your landlord has done something wrong. Ohio has no law that requires a landlord to let you out of your lease because you can’t get along with your roommates. Ohio has no law that requires the landlord to let you out of your lease because you have a new job offer in a far away city. To the contrary, Ohio law states that you should have considered such issues when you signed the lease. It was at that time that you could have inserted a clause requiring the landlord to let you out if you had to relocate or if you flunked out of school.
B. What Happens if You Lose
The effects of not being able to get out of a lease can vary. Keep in mind at all times while reading these words that everyone on the lease, even the co-signers, will suffer the consequences of any breach of the lease. Firstly, your landlord will almost certainly report you to a credit reporting agency as owing the remainder of the money due under the rental agreement. Your landlord may also take you to court and if you do not show up, he may get a default judgment against you. If you do show up and lose, then your landlord will also take a judgment against you. Now we must keep in mind that there is no longer any such thing as Debtor’s Prison. They do not lock you up if you cannot pay. But with a court judgment in hand, you landlord can avail himself of several collection procedures. He is now what is known in law as a judgment creditor and you are a judgment debtor.
1. Judgment Debtor Examination
Firstly, you can be hauled into court for a Judgment Debtor Examination. The court will issue an entry ordering you to appear before a Magistrate, be sworn in, and answer questions under oath about your finances. If you choose not to show up, a bench warrant can be issued for your arrest. If this happens, the police will not typically be actively trying to find you, but the next time you get pulled over for a busted tail light or an illegal right turn on red, when the police officer checks your identity, the dispatcher will see on the computer that you are a wanted person and you will be taken into custody. So if you get a Judgment Debtor Exam Entry ordering you to be somewhere, it is best to go there and answer the questions of the judgment creditor.
2. Judgment Liens on Property
The first questions that you will face in any Judgment Debtor Exam will concern any real estate in which you have an interest. This means that if you own a home, condo, or other lands, or if you appear on the title of any real estate, then the Judgment Creditor will want to know about it so that he can slap a lien on it. Once a lien is on the property, then it will be encumbered by that lien, meaning that you no longer have clear title to the property. If you wish to sell it, any one looking to buy it takes it subject to the lien of the Judgment Creditor. In reality, no one will buy a property from you to which you do not have clear title, and thus you will be unable to sell or transfer your property without satisfying the amount of the lien. If the Judgment Creditor gets wind of the notion that you are probably not going to sell the real estate in your lifetime, then he may attempt to foreclose upon it. In this case, you will receive notice that there is going to be a sheriff1s sale of the property. It will then be sold out from under you at a Sheriff1s Auction. If there is any money left over after the debts are paid, then that money will come to you. It is also possible to put a lien upon your automobile or motorcycle such that it cannot be sold or transferred without the consent of the Judgment Creditor.
3. Bank Account Garnishment
If you have no real estate, the Judgment Creditor can also inquire about where you bank. If you have money in a checking account or a savings account or in investments, the Judgment Creditor can obtain a Garnishment Order from the court that issued the judgment against you and that Order will instruct your bank to hand over any money in your accounts to the Judgment Creditor. That is why on pay day in the poorer sections of town you will see a long line at the local grocery stores of people looking to convert their checks into cash. Many of these folks are Judgment Debtors. They know that if they deposited the money into a bank, there is a chance that a savvy Judgment Creditor would find out about it and get the proceeds.
4. Wage Garnishment
If you have a job, and the Judgment Creditor learns about it, then he can obtain a Garnishment Order from the court which issued the judgment and this Order will instruct your employer to deduct amounts from your paycheck until the money owed is paid. Only the first sixty hours over a two week period at minimum wage is exempt from such collection efforts. I give you all of this gloom and doom so that you will not enter into a rental agreement lightly.
II. Legal Arguments That May Work
A. Formalities of the Rental Agreement
A rental agreement does not have to be in writing unless it is for more that three years. If it is for more than three years, then it must also be witnessed by two persons and notarized (meaning that a notary public must acknowledge by signature thereon that all of the signatures appearing on the document were signed in front of him or her and that all were signed freely. Such leases must then be recorded with the County Recorder1s Office. But if the lease if for three years or less, then it can be in writing (with no need of witnesses or notaries) or it can even be oral.
1. Did Everyone Sign?
Did everyone that is listed in the front part of the lease (under the definition of tenants) actually sign at the end? If not, then the person seeking to enforce the rental agreement has a problem. There is a case in Ohio law, Chapin v. Weizman (1948), [cite] which is on point. In Chapin, a landlord drew up a lease for an automotive garage space for two tenants who wanted to run the garage as partners. One of the prospective tenants signed the rental agreement, but the other backed off when a copy was taken to him for his signature. The landlord tried to enforce the rental agreement against the one person that did sign it. The Court held that since the rental agreement was supposed to be signed by both persons, that the signature of only one of them was ineffective to bind either to the lease. So if you and four other roommates were looking to sign a lease and one backs out, then the whole thing is off under Chapin v. Weizman as only the signatures of all tenants who intended to move in will bind any of them.
2. Did the Co-Signers Sign?
Using the case above by analogy, if the tenants intended to sign with co-signers, and then a co-signer refused to sign, it is possible to argue that the lease is unenforceable. The tenants will have to argue that they would never have signed the lease without co-signers because they did not want to alone take on the responsibility of all those thousands of dollars in rent without someone to stand behind them and guarantee their payment. The landlord will counter that the guarantors of the lease were for his benefit, not the tenants, and the failure of the guarantors to sign should not affect the enforceability of the rental agreement. The landlord may also argue that the tenants by their act of moving in without the signatures of the guarantors waived any arguments concerning that failure by their conduct. This is in essence arguing to the judge that the tenants are trying to weasel out of the lease on a technicality. So long as the landlord has at all times acted properly in the matter of the rental property, a court may exercise its equitable powers on the landlord1s behalf and deem that the tenants are estopped from making the argument that the guarantors failed to sign.
It is important that the landlord acted properly because those who ask the court to use its powers of equity to help them must at all times have acted in a fair and equitable manner. The saying in court is that one who wishes for equity must come to the court with Clean Hands. This is known as the Clean Hands Doctrine. Another way of saying this is that to get equity you must do equity. So if your landlord has failed to make repairs and/or has cut off utilities or generally runs his properties in a slum like condition in violation of housing codes or has made unauthorized entries into the rental property (or generally done anything which a court would find distasteful), then the court has the option to tell such a landlord seeking an equitable remedy to get lost. Keep in mind, that just because the court has discretion, that does not mean that the court will use it. You may have acted in an inequitable manner yourself, canceling out the landlord1s bad conduct.
3. Do the Dates on the Rental Agreement Match Up?
Often the dates relating to the term of the lease will be improperly filled out. An example of this would be as follows: 3The term of this rental agreement shall run from September 1, 1998 until August 31, 1998.2 It could be a typo or it could be a brain interruption on the part of the person that handwrote in the lease term. The tenant will argue that the term of the lease makes it impossible to perform, and therefore they live there on a month to month basis. But the landlord will argue that this is a simple mistake or typo and the intent of the parties at the signing was clear and that the court should use it equitable powers to reconstruct the contract1s lease term so that it reaches the result that the parties intended. Again, if the landlord has acted properly during the course of the rental agreement, then the court will likely reconstruct the terms of the rental agreement such that a simple mistake or typo does not decide the case. But if the landlord has acted improperly during the term of the rental agreement, then the court has the discretion to leave the landlord where it found them.
4. Ohio Revised Code Section 5321.07
If the landlord has failed to perform his obligations under Ohio Revised Code Section 5321.04 (describing the landlord1s duties to the tenant), then Ohio Revised Code Section 5321.07 says that the tenant must send the landlord notice in writing of the problems. If after receiving such notice (which I recommend be sent by certified mail, return receipt requested so that there is no doubt about when or if the landlord got the notice), the landlord fails to remedy the problem within 30 days or a reasonable time (whichever is sooner–meaning that the landlord can take only a maximum of 30 days to fix any problem covered by Ohio Revised Code Section 5321.04) then the tenant who is at that time current on his rent has three options.
Firstly, the tenant can start to escrow his rent with the Clerk of Courts. It is important that the escrow be done through the Clerk1s office. Simply putting the money in a bank account in the tenant1s name will not suffice. The money must be paid on time every month to the Clerk. The Clerk of Courts will not release such funds to the landlord until the tenant tells the Clerk that the problem has been fixed, or until the Court decides at a hearing that the problem has been fixed. There are a few escape valves for the landlord here. If the landlord can prove to the Court that he cannot make the repairs without the money, then the Court will release some or all of the escrowed money to him for the repairs. Also, if the landlord shows that he will lose the building without the money because he is otherwise unable to make the mortgage payments, then the court may release some or all of the money to him.
Secondly, the tenant may petition the Court with a Motion to Compel Repairs in accordance with Ohio Revised Code Section 5321.07.(B)(2). As a part of this Motion, the court may require that the tenant begin to escrow the rent. Once the rent has piled up sufficiently in the Clerk1s account, then the Court may instruct the tenant to pay for the repairs himself and then the court will reimburse the tenant for those costs out of the escrowed rent.
Thirdly, under Ohio Revised Code Section 5321.07.(B)(3), the tenant may elect to terminate the rental agreement. Although the law does not say it, it has been my experience that the court will require the conditions at the apartment be pretty darn bad before it will rule that the rental agreement is terminated. It would behoove anyone asserting these remedies to have proof of the conditions in the form of pictures or video to show the court (while the court could do so, the court is very unlikely to travel out to the apartment to look for itself). Do not rely on your word against theirs.
In one or two Ohio Appellate Districts, the courts have adopted the ruling in the case of Cubbon v. Locker (), [cite]. In Cubbon, a tenant was evicted for a breach of the lease and the court held that the landlord could no longer collect money for the remainder of the term of the rental agreement since he had chosen to evict the tenant. This effectively let the tenant out of the rental agreement for the remainder of the lease term. But other Ohio Appellate Districts have followed the court decision of Briggs v. McSwain (), [cite], which held that the landlord could continue to seek rental payments for the remainder of the rental term even if he had evicted the tenants. So it depends upon where you live as to which decision applies to you.
5. Unauthorized Entries by the Landlord
Ohio Revised Code Section 5321.04 (A)(8) states that a landlord shall give reasonable notice to the tenant before entering into the property unless there is an emergency or unless it is impracticable to do so. Twenty four hours is presumed to be reasonable notice unless the party asserting that it is not can show the court otherwise. Obviously, if the apartment is on fire, then the landlord need not give notice to anyone to enter and take steps to remedy the situation. If the tenant is out of town for a month and has not given the landlord a phone number to call for permission to enter, then it would likely be impracticable to give such notice. But similarly from the tenant1s point of view, if the tenant tells the landlord that he will be spending the weekend out of town and will be back on Monday, then having the landlord leave 24 hour1s notice on the tenant1s answering machine may be unreasonable as well.
The statute says that if the landlord makes an unauthorized entry in violation of the above section, then the tenant has the option to terminate his or her lease. I specify what the statute says because depending upon the Appellate District in which you live, the court may or may not follow the law. In the Fourth Appellate District case of T.K.D. Enterprises v. Zimmerman, 1998 Ohio App. LEXIS 3167(July 2, 1998) Fourth Appellate District (unreported), a landlord1s maintenance persons admitted in court that they made an unauthorized entry into the apartment of the tenant. The court held that the landlord got the first unauthorized entry free, and that the tenant had to give notice that unauthorized entries would not be tolerated and that future unauthorized entries would result in a termination of the rental agreement. Other Ohio Appellate Districts follow the law as it was written by the elected officials in the State Legislature.
I don’t know of any other ways to get out of a rental agreement. There may be certain escape clauses that are in the wording of your rental agreement, but without being able to read it, I can’t comment upon it. It is important then at the lease signing that if you think that there is a possibility of your not being able to perform on your obligations, then you will want one of these clauses inserted. If the landlord won1t change the lease, then you will have to move on to a landlord who will or suffer the consequences of your signature on a legally binding document.