Is a contract valid if it is signed but no money exchanges hands?
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Is a contract valid if it is signed but no money exchanges hands?
Tenant delivered a signed lease to the landlord on the 24th of ast month for a long-term contract (13.5 months). Anticipated move-in was last week of this month. The contract stipulated that a security deposit, move-in fee, and pro-rated rent was due at execution. An attempt at payment was made but never completed (check was written then blocked by tenant). Landlord left apartment unrented from the 7th-15th in anticipation of tenant. On the 7th, tenant informed landlord that he had changed his mind. Is the tenant liable for rent from the 15th-30th or the foregone period from the7th-15th?
Asked on July 8, 2012 under Real Estate Law, California
Answers:
Cameron Norris, Esq. / Law Office of Gary W. Norris
Answered 11 years ago | Contributor
In order for contracts to be valid, there must be what is considered "consideration." Consideration need not be money exchanging hands, but rather can be legal detriment (burden/obligation). In this case, it appears the lease was a valid contract when it was signed. The tenant would be obligated to pay the rent amount from the move in date until the date when the landlord was able to "cover" by getting another tenant in that unit in their place. If they rented it to someone else right away, there are no damages and the tenant owes nothing.
I would suggest never doing a 13.5 month lease either as a tenant or a landlord. There are some special rules for leases greater than 12 months. If you have further questions, are a renter or the landlord I would suggest consulting the California Manual on tenant/landlord relations prepared by the CA Department of Consumer Affairs.
http://www.dca.ca.gov/publications/landlordbook/catenant.pdf
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