D. Individual Clauses In Rental Agreements And How They Affect You

1. The Joint And Several Liability Clauses

When tenants agree to be jointly and severally liable in a rental agreement, they allow the landlord the choice to proceed against them all, or to proceed against them individually. Let’s break it down with an example. Tim, Deadbeat, and Bum (the Tenants) agree to lease an apartment from Leonard (the Landlord). The rent is $600.00 per month, and they agree to be jointly and severally liable for all obligations under the rental agreement for one year. With one month left to go on the rental agreement, Deadbeat and Bum decide to move out and they leave the state of Ohio without paying for the last month’s rent. Tim cannot afford to pay the entire $600.00 by himself. It isn’t his fault that his roommates ran out on him, but since he agreed to be jointly and severally liable for the actions of his roommates, Leonard the Landlord can sue Poor Tim for the entire amount of the rent. The only right to recovery Tim has is against his former roommates who are long gone and probably without any money to recover anyway. Good luck, Tim.
You’re gonna need it.

The same thing is true if Deadbeat and Bum do a lot of damage to their bedrooms. Perhaps they kicked in their closet doors and broke some windows on the way out. It’s too bad, but Poor Tim is on the hook here too. Even if Deadbeat and Bum did the damage intentionally, and even if the damage runs into the thousands of dollars, Poor Tim is out of luck. He will have to pay for the damage if Leonard the Landlord sues him. So choose your roommates carefully. Most rental agreements have joint and several liability language in them.

So joint liability means that everyone is responsible for the actions of every other, and several liability means that you are only responsible for your own actions. What if your rental agreement does not have joint and several liability language, but does list several tenants? The presumption in Ohio is that if there is more than one tenant on a rental agreement, they will be
jointly and severally liable (meaning that landlord can pick which one he wants). A presumption means that the Court will start off with the belief that the rental agreement is joint and several, and it will be the tenant’s burden of proof to show that it was not.

The case on this is that of Spicer v. James (1985), 21 Ohio App.3d 222, wherein the Second Appellate District Court in Greene County Ohio held that:

Additionally, each appellant signed the lease agreement separately which established joint and several liability. Generally, an obligation entered into by more than one person is presumed to be joint, and several responsibility will not arise except by words of severance. 17 American Jurisprudence 2d (1964) 716, Contracts, Section 298. Therefore, appellants are liable jointly because no
severance language appears in the body of the agreement. See Western Ohio Bank & Trust Co. v. J’s Restaurant (Feb. 27, 1985), Miami App. No. 84-CA-22, unreported. Id. at 223.

2. Co-signer Clauses

Many landlords will ask that your rental agreement be guaranteed by your parents or by someone with sufficient funds to be collectible in the event of your breach of the rental agreement. Tenants take umbrage at this because they are on their own and they thought that they no longer needed their parents’ permission to do things. But it doesn’t have anything to do with permission from your parents. It has to do with finance. The landlord figures that most parents have money enough to cover for their kids if their kids run out on the rent or cause damage. The landlord figures that your parents own their own home, and if he wins his lawsuit
and your parents still won’t pay, he can go and put a lien on your parents’ house. Legally, a co-signer stands behind a tenant to guarantee that all terms and conditions are met, and agrees to be liable in a lawsuit if the terms and conditions are not met just as if the co-signer were the tenant.

If your parents are on your rental agreement as co-signers, don’t think that you can just disappear with impunity and run out on your obligations. Your parents will be left holding the bag, and they will probably deduct their losses from your eventual inheritance, if any.

3. Merger and Integration Clauses and the Parol Evidence Rule

Whenever you have a written contract, there is something that comes into play called the Parol Evidence Rule. I call this the Rule of the Lying Landlord. This rule states that if there is a written contract, a Court will not listen to testimony that contradicts the written provisions of the contract. Example time. If the landlord and the tenant orally agree that the landlord will put in new carpet, but sign a rental agreement saying that the tenant agrees to accept the apartment as is, the Court will not listen to the tenant’s testimony regarding the contradictory spoken terms at signing. The Court will not even listen to a tape recording of the conversation wherein the landlord promised the carpet orally. Landlords use this trick to orally promise you the moon and the stars, and a winning lottery ticket, knowing full well that you can’t get them on it because it’s not in the contract.

But if the Court finds that the oral statements cover an area that the rental agreement does not address, and that the situation is ambiguous, then the Court will listen to the testimony of the witnesses regarding what the landlord said. This is because the oral statements of the landlord at the signing do not contradict any provision of the rental agreement. They rather in this instance
explain an unclear term. This is especially true when the lease does not have one of the “as is” provisions in it.

Landlords hate being held to their promises, so this is where the merger and integration clauses come in and rescue the landlord. Merger and integration clauses are both the same thing, they just go by different labels. These clauses are usually found near the end of the rental agreement, and they state that the writing in the contract comprises the “entire agreement between the parties”, and that “no other promises or representations have been made between the parties.” If this clause is in your
rental agreement, it is tough to get in any spoken promises which your landlord may have told you about at the signing or showing regarding new dishwashers or carpet that aren’t in the writing. Any oral statements are automatically in direct contradiction with the
merger/integration clause. The Parol Evidence Rule will keep them out.

The word to the wise then is get it in writing. No careful Jedi Tenant signs a rental agreement which doesn’t have the promises in writing. If the landlord won’t put it in the rental agreement, then understand that it will never be done. If you put a condition into the rental agreement (for a new living room carpet for example) you should also insist upon a deadline (
specified in writing in the rental agreement) for doing something that is promised in writing.

My personal favorite is the landlord who suddenly whips out his cereal box law degree and says that there is no way that he can change the printed words in the contract, and that just writing something by hand on the face of the rental agreement wouldn’t be official anyway. Well I got my law degree from a more expensive cereal box than your landlord, and I am telling
you that handwriting on a rental agreement is not only permissible, it’s binding. In fact, if the pre-printed words on a rental agreement (often called the “boilerplate”) conflict with the handwritten words, the hand written words win out because the Court will see them as a better indication of the intent of the parties than the standard format language that appears in every
contract.

Be careful even when you get a landlord who is willing to handwrite something on the rental agreement. When you do handwrite something in or cross something out, everyone, including the landlord should initial each addition or deletion. Some rental agreements will have little bombs in them in the form of clauses saying that the owner’s agent has no power to modify
the rental agreement. If that’s the case, then there is a good argument that your additions and deletions won’t be enforceable unless they are signed off by the owner. At that point you must realize that you are dealing with a flunky and you need to get the owner to initial the changes. If you can’t get the owner, then walk.

4. Penalty Clauses/Liquidated Damages

Your rental agreement may require that you pay a pre-defined amount of damages if you breach it. For example, your rental agreement states that there are no pets allowed. It further states that if a pet is found in the apartment, then you will pay Two Thousand Dollars to the landlord.

The good news is that penalty clauses are unenforceable. Penalty clauses are also referred to sometimes as stipulated damages clauses or liquidated damages clauses. If you are trying to get one of these clauses declared unenforceable by the Court, you want to consistently refer to it as a “penalty clause.” If you are trying to get the clause to be found enforceable, you want to
consistently refer to it as a “liquidated damages clause.” Penalty clauses are invalid and unenforceable. Liquidated damages clauses are valid and enforceable.

In Lake Ridge Academy v. Carney (1993), 66 Ohio St. 3d 376, 613 N.E.2d 183, the Ohio Supreme Court illustrated the differences between penalty clauses and liquidated damages clauses. The Lake Ridge Academy Court recited the following three part test to determine whether such a provision constitutes an invalid penalty or an enforceable liquidated damages provision:

Where the parties have agreed on the amount of damages, ascertained by estimation and adjustment, and have expressed this agreement in clear and unambiguous terms, the amount so fixed should be treated as liquidated damages and not a
penalty, if the damages would be (1) uncertain as to amount and difficult of proof, and if (2) the contract as a whole is not so manifestly unconscionable, unreasonable, and disproportionate in amount as to justify the conclusion that it
does not express the true intention of the parties, and if (3) the contract is consistent with the conclusion that it was the intention of the parties that damages in the amount stated should follow the breach thereof. Id., quoting Samson Sales, Inc. v. Honeywell, Inc. (1984), 12 Ohio St. 3d 27, 465 N.E.2d 392, at paragraph two of the syllabus.

I know. I know. You got halfway through that little treat of wording and the eyes glazed over. In layman’s terms, the above passage says that firstly, the court will look to see if the damages from a breach of this penalty/liquidated damages clause are hard to calculate with exactness. If they are vague and difficult to specifically figure, then the Court will move on to the next part of the test. If they are easy to calculate, then the Court will throw out the clause as a penalty clause and only award the landlord the amount that he was actually damaged.

Under the second prong of the above test, liquidated damages must be “proportionate” (but not “exactly equivalent”) to the actual damages a party suffers. Lake Ridge Academy, supra, at 383-384. Otherwise, as the Lake Ridge Academy Court explained, a stipulated damages clause should be construed as an invalid penalty. Id. at 382. So the damages, even though they
are difficult to ascertain, must bear some reasonable relationship to the losses that the landlord actually incurred. In the case of the example we started with, that dog would have to be pretty huge to damage the apartment in the amount of Two Thousand Bucks.

Lastly, under the third prong of the test, a reading of the rental agreement must indicate to the Court that the parties intended to be bound by this damages clause and pay the amounts required. Usually, there has to be some evidence that the landlord and the tenant sat down together and talked about the fact that certain things were prohibited, and that if the tenant did them, it would cost the tenant a certain amount of money. There must be evidence that the tenant understood this and agreed to it. Now if you re-read the above passage from Lake Ridge Academy, it might make a little more sense.

Looking at another particular example from real life, in the case of Berlinger v. Suburban Mgmt., the rental agreement contained a clause that stated as follows:

NO ANIMALS, BIRDS, PETS, MOTORCYCLES, WATER BEDS, TRUCKS, JEEPS OR VANS shall be kept on the premises at any time. . . I agree that if I bring a pet, truck, motorcycle or van onto the property I will be charged by
management and pay to it the sum of $50.00 each time.

When the tenant moved out at the end of the lease, he sent his landlord his forwarding address, and the landlord sent a notice charging him $300 for having kept a motorcycle on the premises pursuant to the above clause. But the Court of Appeals found that this was a penalty clause. First, the Court looked at whether the damages were difficult to ascertain and determined that they were. This got the landlord past the first of the three hurdles, but the second hurdle proved impassable for the landlord:

However, the sum of $50 per day (which in a thirty-day month would amount to $1,500) does not bear a reasonable relationship to any loss which might foreseeably be sustained. A court could take judicial notice that the operation of a motorcycle might cause great damage to a landlord, because tenants who object to loud noise might move out. However, no evidence was introduced tending to show the amount of damages which might foreseeably result from the mere presence of a motorcycle.

Since the Court found that the landlord did not get past the second prong of the test, it did not have to go further and consider the last prong of the test, whether the landlord and tenant actually agreed that this was the amount that would be paid upon a breach of the lease agreement.