Q: My daughter turns 18 in a couple of months. We found an apartment in the town where she’ll attend school, and I am offering to be on the lease as a guarantor. But the agent is having a fit because my daughter is a minor. Can you suggest any way around it? I even told the guy I’d pay for the place and not have her move in until she’s 18. –Cynthia K.
A: Not all teenagers are savvy enough to understand what it means to sign a contract or are responsible enough to live up to the obligations that come with signing on the dotted line. To protect both the minor and the person on the other end of the deal, most states don’t let minors enter into contracts concerning real estate unless they are married, in the military, or legally "emancipated" (declared an adult) by court order. The law assumes that minors who fit into one of these exceptions are (or should be) responsible enough to appreciate the consequences of entering into various contracts. If a minor who doesn’t fall within one of the exception categories signs a contract, that contract is voidable. If the minor doesn’t live up to the contract’s terms, a judge will not enforce the contract. Your leasing agent is doubtless worried that if your daughter changes her mind, he won’t be able to enforce the lease.
However, there’s a big exception to the general rule that minors’ contracts are voidable, and it applies when a minor, like your daughter, turns 18. When an adult honors a contract she signed as a minor, she has ratified it. The legal theory, a bit strained to be sure, is that upon turning 18 and magically gaining the wisdom of an adult, this once-minor gave up her chance to escape her youthful commitment. So, if your daughter stays in the apartment past her 18th birthday, she might become as bound by that lease as if she had been an adult when she signed it.
We still haven’t addressed your agent’s worry completely, however. What if your daughter changes her mind before her birthday? In this situation, the ratification rule won’t help the agent, but putting you on the lease as a guarantor will. A guarantor obligates herself to the financial obligations of the lease, including the rent. If the tenant skips town, the guarantor is on the hook for the balance of the lease (or, in most states, until the landlord has re-rented or should have re-rented, using reasonable efforts). Or, if a tenant’s wild party causes damage that the tenant can’t cover, the landlord can demand payment from the guarantor. Although your daughter might be able to get out of her lease obligations during those first few months, you won’t. Because you signed the lease as an adult, it’s not voidable for you.
One final possible scenario deserves attention: Suppose your 17-year-old daughter misbehaves so badly that the landlord wants to evict her? Her status as a minor would hardly protect her — in fact, it might backfire, because the judge could simply void the lease (exactly what the landlord wanted).
Have another talk with that agent and try to get to the bottom of his concerns. If he’s worried about financial resources and will accept you as a guarantor, you should be able to win him over. But if his concerns are about a 17-year-old’s ability to live on her own, you’ve got some work to do. Approach this like a job interview or a college application: Gather high school transcripts, letters from teachers and coaches, letters from any employers, and anything else that will help you convince the agent that your daughter is mature and responsible. But keep in mind that if the apartment is attractive, the market is hot, and lots of qualified adult prospects are interested, the agent might not be willing to spend time on a complicated deal when straightforward tenants are waiting in line.
Q: I am a new landlord and have a family renting my condominium. Their lease says that rent is due on the first, and that a $200 late fee will apply if rent is deposited in the bank after the 10th of the month. My tenants have been there for two years and in most ways are perfect tenants, but in the last year, they have been late with rent (paying after the 10th of the month) on six occasions. Am I within my rights to deduct $200 from their security deposit for the six times they have been late? I have bank statements that show when the deposits were made. –Shari L.
A: You are making two fundamental mistakes common to many new landlords. First, your lease is unnecessarily generous when it comes to a rent due date. Many landlords do extend a grace period before their late-rent policy will kick in, and a few states require such a grace period, but allowing tenants to regularly pay you up to nine days late without monetary consequences simply tells them that the rent is due on the ninth, not the first. If you choose to keep these tenants, the first order of business should be to amend their lease (when it’s up for renewal) to provide for a much shorter grace period.
Second, your late-fee amount is unenforceable. If a tenant were to challenge you on your demand for $200 when the rent is 10 days late, a judge would probably side with the tenant. That’s because a late fee must reflect the amount of money you expect you will actually lose when the rent comes in late. To precisely measure those damages, you’d need to do a "time and motion" study, in which you add up the time you spend demanding the rent, dealing with the tenants if there’s negotiation involved, and adding in the interest you lose on the rent for the number of days it remains unpaid. There’s no way that late rent for 10 days would truly cost you $200. In legal terms, your $200 fee isn’t reimbursing you for anything; it’s just a penalty. And because penalties aren’t allowed in contracts, you won’t be able to enforce it.
Obviously, you should not attempt to deduct this overly high fee from the tenants’ deposit. Instead, next time they have not paid the rent on time, consider delivering a "pay or quit" notice, which (in most states) directs the tenant to pay the rent within a few days (three to five is common) or leave. Of course, you need to be prepared to terminate the tenancy if the tenants neither pay rent nor leave. If you don’t, your tenants will simply continue to call your bluff. In the end, you’ll need to decide whether these otherwise nice tenants are worth keeping in spite of their late-paying ways.
Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of "Every Landlord’s Legal Guide" and "Every Tenant’s Legal Guide." She can be reached at janet@sandbox.inman.com.
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