Honoring a lease cuts both ways

Question: My wife and I were leasing a house. We were about six months into the one-year lease when the owner told us he was placing the house on the market and that we would need to find another place to live.

Given today's rental market, my wife and I decided we needed to quickly find a new place to live. We were lucky to find another rental house in the same neighborhood. Given how quickly local rentals were being snapped up, we felt we needed to nail down the new house.

We signed a rental agreement with the owner of that house. We gave him $3,000 for the first month's rent and the security deposit. A few days later the owner of our current house told us he had changed his mind about selling and that he was expecting us to continue living there. We would be happy with either house, but how do we get out of having two rentals at the same time?

Answer: Since you were renting the original house pursuant to a lease, the owner's decision to sell would not have ended your lease. The new owner would have been required to honor it and allow you to stay until it expired, unless the lease had an explicit "escape" clause allowing the owner to void the lease upon sale.

Even if your lease included such a clause, your current landlord did not formally exercise it. Since the lease is still valid, you would be responsible for the rent until the lease expired, regardless of your decision to sign a second rental agreement. The only exceptions to this rule would be a mutual agreement, in writing, between you and the owner to terminate the lease early, or if you or the owner found a replacement tenant, or if the owner failed to make a reasonable effort to find a qualified replacement.

If you signed a lease for the replacement rental house, the same rules apply, because the second agreement is enforceable even if you were misled by the expressed intentions of the owner of your current home. This means your choices are not good.

You can decide which house to live in, and hope that the "break lease" rules will turn out in your favor. Given the hot rental market you describe, either the owner or you may be able to quickly find a qualified replacement tenant for the house you are giving up, which would end your responsibility to pay rent there.

Even if that is true, you will be responsible for the owner's replacement expenses such as advertising costs.

Eichner is director of Housing Counseling Programs for Project Sentinel, a Bay Area nonprofit. Send questions to info@housing.org.