5

The vacancy rates in Bay Area are the lowest in the nation, and the rent much so often gets increased much faster than the inflation.

However, a lot of corporate complexes employ monthly pricing that's effectively set not on the number of total months you sign the contract for, but on the data mining and the moveout dates, e.g. both an 8-month and a 15-month contract might have the monthly rent be lower than an 11 or a 12-month one, and the total rate for X+1 months might as well be less than for X months, too!

However, California state law mandates that landlord must mitigate damages if tenant wants to get out of the lease, but at the same time, tenant is still liable for the whole duration of the lease as per the contract. Yet if the tenant wants to move out early, what would be the chance that the landlord would advertise the newly empty unit below the present market rate?

Unless the rent prices don't increase or the market isn't hot, doesn't it imply that a Bay Area tenant is pretty much guaranteed that their total expenses for premature contract termination with a corporate apartment complex (on-premises leasing office etc) will not be more than something like about 2 weeks worth of rent? I.e., that a corporate landlord with a 9-to-5 on-premises staff will pretty much never be able to prove in any Bay Area court that they've mitigated damages appropriately, past about 2 weeks of the unit being on the market?

Doesn't it then imply that if you only need a place for 5 or 6 months, it'll likely always be cheaper to sign a contract for 8 or 15 months (whichever random number of months is the cheapest per month) instead? Doesn't this, in turn, make the whole contract term somewhat pointless?

6

No, for two reasons.

First, your question seems to assume that the current level of (1) vacancy, and (2) rent, will continue unchanged for the indefinite future. A lot of people thought that in 1989, and 2000, and 2007, just before the last three Bay Area housing crashes.

The purpose of a long-term lease is to create certainty for the lessor. As the lessee, you are on the hook for whatever damages you cause by breaking the lease. As you say, right now, the complex will probably be able to mitigate fairly easily. That will change next time the market crashes. If you break the lease, you're gambling that it's still 1987...but there's a chance it's 1989 instead. If it is, you are on the hook, because the landlord exchanged a lower rent for certainty.

Second, you're thinking about what the landlord will be able to prove in court. This is almost never the most helpful thing to be thinking in a situation like this. If you get to the point where your lawyer is having to stand up in court and argue about the reasonableness of the landlord's efforts, you've already spent more than two weeks' rent (even at Bay Area prices) paying the lawyer. Realistically, if the landlord says it took six weeks to rent, and sends you a bill for six weeks, the cheapest thing for you to do will, probably, be to pay it.

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