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First let me say I have no legal experience...

I currently rent from a large property management company on Long Island (NY). About 1.5 years ago, I decided to pay month-to-month since I entered the housing market in search of a house (of course, not knowing that it would take this long to find a house). I found a house and I'm closing next month (August 15). The last short-term lease I signed with the company has a clause in the contract that states I must guarantee the month of September even though the contract is only valid through August. Basically it states that if a tenant can be secured for the month of September, the additional fee will be waived (the fee is equal to 1 months rent which is approx $2,500) if not, I will be required to pay it.

Is this legal? Would this hold up in court if I decide not to pay and let it go to small claims? This clause seems self fulfilling and unreasonable. Unreasonable b/c they are passing off the cost to the previous tenant because they can't find a tenant for the next month. Self-fulfilling b/c it is extremely unreasonable to assume that you can fill the apartment immediately for the next month since typically apartments are repainted, carpets cleaned/replaced, and not to mention the normal process of vetting and securing a new tenant (e.g. my contract expires August 31 and next month begins September 1; 1 day to clean, paint, replace carpets and find tenant). In addition, paying month-to-month comes with a 20% increase in rent. So I feel they are already absorbing their liabilities with the increase in rent.

If I fail to pay the Guarantee, can the property management company report my delinquency to the credit bureaus (e.g. will this effect my FICO score)?

Thanks in advance!

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Let's assume that you are right and the clause is unreasonable (personally, I don't think it is).

So?

You agreed to the clause. Contract law permits people to sign up to unreasonable obligations: it's called freedom to contract. The time to take issue with the clause is before you enter the contract, not after.

The law will only interfere if the clause is unconscionable: so egregious that no reasonable person would agree to it. This clause is nowhere near unconscionable.

However, this is a residential real estate contract and state law may give you additional rights that may make this unlawful. Also, as a consumer, there may be consumer protection law that interferes in the freedom to contract. I am not familiar enough with NY law to say: hire a lawyer.

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  • I agree that it's not unconscionable. On the other hand, you assume freedom to contract, but they might not have freedom to make that contract - places like New York might have rent controls, and making the person pay an extra $2500 on a short-term lease is pretty much the same effect as increasing the rent.
    – D M
    Jun 14, 2018 at 0:01

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