"I am not going to pay
you any agency commission since I have had spent $20,000 renovating the apartment,"
said the Landlady.
Owing to a change of plans, the start up company wanted to break lease but has offered
monetary compensation.
The co-broking realtor representing the Landlady was willing to accept 50% or any amount.
The Landlady stated that she would pay only if she could get 5 months' rent as
compensation. I objected as professional services had been rendered and lots of time
had been spent in this case.
She faxed a letter ending with "trust me" and offering to compensate me
subject to her getting satisfactory payments. I rejected this offer although her
agent had compromised his position by verbally agreeing to suffer together.
The Landlady had signed a contract saying she would pay 1 month's rent of $4,000 for a
2-year lease secured. She had already got 2 months' rent as security deposit and 1
month advanced rent.
She wanted as much money as she could get to compensate for her time spent discussing with
the renovation contractor, the sale of her furniture, the renovations made and the loss of
income during renovations of over 5 weeks.
How much should the monetary compensation be?
It was a personal lease. The expatriate could just leave and it would be very
expensive and hard to sue him overseas.
Do realtors get paid only when the Landlady receive the whole cost of renovation
and more?
What's the legal position for the realtor? Be flexible and hope to get 50% or
less.
|
Could the Landlady
advertise for another tenant? Would this compromise her position?
Should the Tenant give a letter of release before advertisement?
How much should the Landlady get?
Is the realtor responsible for finding her a replacement tenant, if he is not given an
exclusive marketing right?
Would the Tenant disappear if negotiations get protracted? Actually he travels
a lot and it will be hard to locate him.
What are the solutions?
The best is not to get greedy.
There is no industry practice to state the amount.
1. By contract, the Tenant will have to pay at least 14 months (the diplomatic
clause kicks in after 14 months of stay). There are such cases of corporations
doing this, but don't expect an individual to pay $56,000.
2. The Tenant assigns the lease to another party at the same rent. This
was acceptable to the Landlady.
3. 5 months' rent as compensation would be $20,000. Was the Tenant
willing to do it? Most likely, his company would have to pay for it as he was
relocated at the last minute.
I asked the Landlady to substantiate her renovation costs and other claims with
proper invoices from her contractor.
She should get rid of all the legal terms in writing her letter demanding compensation.
Her sister is a lawyer but she isn't and a pseudo-legal letter would make negotiations
difficult.
The co-broking agent had asked her to just give a "lump sum" as renovation cost.
This should not be the way. Reveal the real costs which will make it easy for
the Tenant to get the company to pay compensation.
The negotiatiions were concluded in a happy atmosphere in this case. Hopefully, the
realtors get their professional fees. |
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