Student has lease despite staying at home to study
Q: Our daughter attends the University of Illinois at Urbana-Champaign. After spring break, all classes were moved to an online format and she finished her semester at home. We continued to pay her rent on her apartment in Urbana and will do so until the term ends in August.
Our question is in regards to the fall 2020 semester. She has signed a yearlong lease on a different apartment with two roommates for next school year (2020-2021). We are not sure if classes for the fall will be online again. If classes are online, our daughter has no reason to move into an apartment in Champaign. Her roommates have already said they will not move in and they will not pay rent.
The lease is jointly liable. Will we be liable for a full year of rent even if our daughter doesn't ever move into the apartment? Can we terminate the lease before she ever moves in? Also, if she does move in and her roommates do not, we cannot afford to pay the rent on a three-bedroom apartment if they don't contribute their share of the rent.
Thanks for your advice on how we should approach next fall.
A: As I'm sure you are aware, there are countless parents and students in the same boat as you. Taking COVID-19 out of the equation, each party that signs a lease is generally liable for the entire obligation. So the fact that the remaining tenants do not plan to move in or pay doesn't negate your (or their) obligation.
If it becomes probable that classes will not be taught on campus next fall, I would suggest taking the lease to a local attorney specializing in this area to obtain his or her opinion of your daughter's obligation under the lease. It is also possible the school will offer assistance to students caught in your daughter's predicament by offering free or reduced legal services.
In the event the parties elect not to take possession of the property, notice should be given to the owner as soon as possible informing him/her of this fact. This then puts a duty on the owner to "mitigate" damages, meaning he/she must immediately attempt to find other tenants. Of course, if students will not be attending classes on campus next fall, finding replacement tenants will be a struggle. And to further complicate matters, if she terminates her lease and classes in fact do resume on campus, finding a replacement apartment may be difficult.
On the positive side, as we've all seen, numerous rules and laws, both on the state and federal level, have been enacted over the past couple months addressing the unfortunate situations folks find themselves in as a result of the crisis. It would not surprise me that in the event college campuses will not be holding classes as usual next fall, some legal relief would be forthcoming targeting this issue.
Even if your daughter and other students were to find themselves on the wrong end of a breach of contract case, it is hard to believe local judges would severely punish them for a situation that was out of their control. Also, parties generally don't file lawsuits without a clear expectation of not only winning, but collecting any damages awarded them. Presuming you did not co-sign the lease on behalf of your daughter, and her economic situation is similar to the typical college student, I would think most owners would find it unproductive to commence litigation against someone with little hope to collect a judgment.
One final thought, if you determine at some point your daughter will not be on campus next fall, it's probably worth a phone call to the owner to discuss a mutually beneficial resolution. For the reasons stated above, the owner may have no desire to sue your daughter. Perhaps, for a nominal amount, the owner would agree to terminate the lease. This would cost you something but perhaps there is an amount that you would find worth paying in exchange for the knowledge that your daughter is no longer at risk of being sued.
Again, though, I would suggest speaking to a local attorney before taking any action.
Clarification on 1031 exchange: My last column addressed the issue of a party participating in a 1031 exchange that could no longer purchase the property he timely identified and he was past the 45 days to identify another property. I responded stating I didn't believe anything in the code offered him any relief to save his exchange. I still believe that is true; however, it was pointed out to me by an employee of a local company that acts as a 1031 exchange intermediary, that pursuant to Notice 2020-23 (Additional Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic), that in the event the 45-day identification period ended between April 1 and July 14, 2020, the identification period is extended to July 15, 2020. This would give this exchanger additional time to identify a new property and could save his exchange so long as he was able to close within 180 days from the date he or she sold the exchanged property.
• Send your questions to attorney Tom Resnick, 910 E. Oak St., Lake in the Hills, IL 60156, by email to tom@thomasresnicklaw.com or call (847) 359-8983.