Did You Know? Departing Tenants Can Rescind their Notice to Vacate at Any Time–Which May Leave You Liable to a Planned Future Tenant

Many of our clients ask us to show their upcoming vacancies prior to the current tenant moving out. This obviously minimizes downtime, and therefore increases our clients’ bottom lines.

However, did you know that the exisiting tenant can unilaterally rescind their 30-day notices to vacate at any time before they move out? And that signing a lease for a new tenant prior to that may make you liable to the future tenants who have a signed contract, but are unable to move in as planned?

The existing tenant can rescind their notice because a failure to honor or otherwise comply with a tenant notice to vacate is not a “just cause” reason to terminate the tenancy, meaning your recourse under the local rent law won’t include compelling the existing resident to leave.

Now you have a current tenant who rescinded their notice to vacate and a tenant signed up for a new tenancy eagerly anticipating their move in date, looking to occupy the same apartment.

Not only is your good faith with the new tenant damaged, but they will no doubt in this day and age take to the Internet to disparage you, your leasing agency or management company, and your building. In addition, you are liable to the hopeful renter for their damages including incurred moving bills and expenses related to having to find comparable housing on short notice, which may include holdover rents, hotel fees and temporary lodging costs.

Thankfully the SFAA lease agreement provides for this situation and states that the tenant can rescind their 30-day notice within five days without penalty. It goes on to say after the five days if the tenant fails to vacate the premise on or before the expiration of the 30-day notice, they “shall be liable for any costs incurred by the Owner or any third parties (i.e. future tenants) who relied upon Tenant’s notice termininating the tenancy. Tenant’s failure to pay any such sums within twenty (20) days after demand shall be deemed a material breach of the Agreement.”

So you are protected? Not really. Many landlords know that collecting from tenants who usually have little to no assets is a fruitless endeavor. You are then stuck reimbursing the now homeless hopeful tenant out of your pocket. Therefore, we recommend not signing a lease with a new tenant until you are sure the departing tenant, including subtenants, guests, and other inhabitants, has vacated the apartment.

Indeed, even if the actual tenant departs as planned, if they leave behind subtenants or others, you have the same exact problem and the legal process to get these inhabitants removed could take months.

The irreputable damage to your reputation and potential liability to the new tenant will far exceed any profits you hoped to gain by signing a lease early.