It Sounds Like a Wonderful Idea
Leases can be of any duration. The typical lease is one year, but sometimes tenants request leases that are longer. Sometimes owners request leases that are longer, and sometimes it just sounds like a wonderful idea. A nice, long lease — security for the owner, security for the tenant, everyone is happy.
It's perfectly legal to have a lease with a duration for more than one year. Florida law no longer requires two witnesses per signature for leases exceeding one year, so there's no extra formality standing in the way — which makes it even easier for owners to agree to a long lease without thinking twice. But just because it's easy doesn't mean it's a good idea. We need to start thinking about this a little more closely.
Tenants Can Walk Away — Owners Cannot
Should we have a lease for more than a year? Does it really benefit the owner of the property, or could it tie the owner to a nightmare tenant for a really long time?
In Florida, if a tenant wants to break a lease, they simply break the lease. And then if the owner wishes, the owner can try to sue the tenant for the lost rent. It often is just a waste of time and money. Florida is what's called a debtor state. The laws here in Florida are very protective of the debtor. This makes it difficult to collect against someone, even after you win in court. You have a judgment against them in court, and basically it's a piece of paper. You have to go through many steps in order to even begin the collection process. And then you might find out that the person is uncollectible, that there's exemptions that apply. The person might file bankruptcy.
A long lease doesn't really help the owner, because the tenant can break that lease — rightly or wrongly, they'll do it. But the owner has to honor the lease. Owners are actually quite collectible people. Why? Because owners own rental property. Rental property is non-homestead property. A judgment against an owner will attach to that property — it'll attach strong — and can potentially be collected against that property when it's sold. The tenant doesn't have non-homestead property in most cases. So you see, we have an unequal situation.
When Everything Goes Wrong
If everybody's happy, the tenants are paying rent on time, everything is being done properly, the property is being maintained — it's great. The tenant stays a long time, the owner collects the rent, and everybody is pleased with the situation.
But can you imagine an owner dealing with a situation where a tenant might not be desirable? Maybe there's some problems occurring at the property. Maybe there's some drug activity. Maybe there's unauthorized pets. Maybe there's unauthorized tenants. Maybe the tenant is simply violating the lease and causing a problem, but it doesn't quite rise to the level of eviction — it certainly rises to the level where the owner would not want to renew the lease. But they're stuck. They're stuck with a long lease. They're stuck with a problem, potentially for multiple years.
Our Recommendation
We recommend that you urge your owners to stay away from long leases. They don't help you, they don't help the owner, and they really only benefit the tenant of the property. It sounds like a good idea that often is a very bad idea.
Key Takeaways
- Leases over one year are perfectly legal — and no longer require witnesses, making it even easier to fall into this trap
- Tenants can break a lease and walk away — collecting lost rent is often a waste of time and money
- Florida is a debtor state — even with a court judgment, collection is extremely difficult
- Owners are collectible because they own non-homestead property — the tenant is not
- Long leases lock the owner into problem tenants who don't quite rise to the level of eviction
- A long lease really only benefits the tenant, not the owner or property manager
