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How do automatic renewal provisions work?



QUESTION:


I signed a 12-month written lease one year ago. I knew that the one-year term expires at the end of this month. I thought that as a courtesy I would tell the property manager two weeks in advance that I would not be renewing at the end of this month. When I told her I was leaving, she said I could not vacate because the lease has an automatic renewal provision. I now realize that I didn’t read the lease carefully. I didn’t notice this renewal language when I signed last year. Now that I have looked at it, I see that it appears to say that the one-year lease is automatically renewed for another full year unless I give the landlord 30 days advance written notice of non-renewal. Is this provision enforceable? I don’t want to stay and can’t afford to pay double rent. What are my options to contest the automatic renewal?



ANSWER:


The lesson you have learned the hard way is that you should read leases and other legal documents carefully before you sign. Reading these documents can be cumbersome, but you have learned the consequences of failing to fully review them. Luckily for you, there is a California statute that may provide protection for you. California Civil Code Section 1945.5 allows the party that did not draft the lease to void an automatic renewal clause in a residential lease, unless the non-renewal clause is set forth in “at least 8 point boldface type” in the printed form. In addition, the printed form must contain another reference to the existence of the automatic renewal clause, also in at least 8 point boldface type, just above your signature line. You need to immediately review your lease to see whether these conditions have been met. If you have any question about whether the requirements have been met, you should seek legal counsel. If you or your legal advisor believe that the Section 1945.5 conditions have not been met, the landlord should be given immediate written notice. The notice should outline the failure to comply with Section 1945.5 and it should state that you will be vacating no later than the date the lease ends. Even if the automatic renewal clause seems to comply with Section 1945.5, you have some alternatives to staying in this rental for another year. You can vacate as you have planned and deal with the resulting damages for lost rent. The landlord will probably apply your security deposit to future rent, and may pursue other lost rent in small claims, but the landlord cannot collect without proof that she made reasonable efforts to find a replacement tenant as soon as you vacate. If the landlord does find a replacement tenant, your obligation ends. You can also seek a replacement tenant yourself. Because of the uncertainty of determining how this process will play out, and if the compliance with Section 1945.5 is unclear, there is an incentive for both landlord and tenant to negotiate a written break-lease or lease termination agreement. In this type of agreement, the tenant pays a set amount in exchange for a release of any further liability. If you pursue this alternative, make sure the language releasing your rental liability is unconditional and that all future claims against you are waived. A local mediation program can provide help with this negotiation since these agreements are a common subject for mediation.

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