Liquidated Damages Clause Rental Agreement

Fourth, a well-worded provision on lump sum damages can avoid problems of performance. Colorado courts consider three factors in determining whether a clause purporting to award damages in advance is applicable: (1) The expected harm must be „uncertain or difficult to prove”; 2. The parties must intend to award damages in advance; and (3) the amount of damages claimed must be reasonable and must not be proportionate or harmful. A well-drafted lump-sum compensation scheme in a rental agreement could indicate why the damage caused by early leave is uncertain or difficult to prove. (See examples in the previous paragraph) The text could make it clear that the parties intend to determine in advance the harm caused by the tenant`s early departure alone. In order to increase the likelihood that the amount lost by the tenant will be considered „reasonable”, the language could indicate an amount lower than the deposit and perhaps predict a decreasing amount over time. (For example, if the tenant releases the first year of the lease, $10,000 of the bond would simply expire due to the early vacation, $9,000 would be lost for an early leave in the second year, etc. On September 10, 2013, Elisabeth Oldendick and her friend („Tenant” and „Complainant”) signed a one-year lease for an apartment in Cleveland Heights owned by Mr. and Mrs. Crocker („Owner” and „Appellees”).

The lease was to begin on October 1, 2013 and end on September 30, 2014 (the „Lease” or the „Lease”). Under the lease, on the first day of each month, a monthly payment of $860 was due and a deposit of $860 was also required. The court then concluded that the early termination provision was applicable, that it was not an unscrupulous sanction, and that, due to the tenants` breach of the lease, the landlords were entitled to retain the US$1,720 they had received from the tenants as the October 2013 rent and the early termination fee. Some time later, the tenants appealed the court`s decision to the 8th District Court of Appeals. . . .

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