Landlord asked to referee for roommates

DEAR BENNY: I own a town house and rent it to four individuals. Then one person left and brought in a new person to sublet. The fourth person is not getting along with the others, which is causing the other three to want to break the lease unless she moves out. The fourth person does not want to move out and believes things can be worked out. The other do not and want to be out in 30 days. They have five more months on the lease and things have become so heated, I do not want to jeopardize anyone’s safety.
I’ve been asked to be a mediator, which I have been willing to do to keep the tension level down. One girl is staying with friends because she is so uncomfortable with the situation.
I understand one option is to ask the fourth person to leave on her own. If she does not want to leave, I can terminate the lease by issuing a termination notice for all four tenants (all four names are on the lease). Once the 30 days are over, the three tenants who get along can sign a new lease and find a person more to their liking. I will return the fourth person’s security deposit in full.
Are the statements I made accurate? Are there any other options I may not be aware of? I treat my tenants very well. The laws in our city are very much on the side of the tenants rather than the landlord. I want to make sure I do the right thing and avoid any unnecessary litigation. – Barbara

DEAR BARBARA: Yes, I think you are missing something. What justification – what legal right – do you have to terminate a lease that has several more months to run? Regardless of whether your courts favor tenants or landlords, you cannot just cancel a lease without just cause – and without some form of due process.

And if the fourth tenant learns that you re-rented the property back to the three others, I suspect that she may want to file some kind of lawsuit against you, claiming such things are conspiracy and misrepresentation.

While I have some reservations about you trying to resolve the issues as a mediator – especially since you really are not an impartial, objective party – it certainly is worth trying. I would sit down first with each of the four tenants separately, and try to find out what is troubling them. Then, arrange a meeting with all four in the apartment, to see if there is a possible resolution.

If that doesn’t work, then I suggest you retain an attorney in your area that handles landlord-tenants matters. You need legal guidance before you take any action that could come back and bite you later.

I assume that the three tenants found the fourth. If that’s the case, you should remind them that they should have done their homework to determine – before she signed the lease – if she would be acceptable.

DEAR BENNY: You said in the Sunday paper that profit on a property “owned and used” for two of the last five years qualifies for an exclusion. Can the property be used for less than six months out of the year and still qualify? – Corky

DEAR CORKY: There are three exceptions that will allow you to exclude some of your profit if you have not owned and used your principal residence for two out of the five years before sale. They are:

*A change in place of employment that is at least 50 miles farther than your current home;

*Health issues, such as obtaining the diagnosis, cure or treatment of a disease, illness or injury;

*Unforeseen circumstances. This is a broad catch-all, but the IRS has some “safe harbors.” They include natural or man-made disasters resulting in a casualty to your home; death; divorce; and unemployment.

There is a rather complex formula to assist you in determining how much of your gain is excluded from tax and how much is taxable. For more detailed information, get IRS Publication 523, titled “Selling Your Home.” It is free from www.irs.gov/publications.

Benny Kass is a practicing attorney in Washington, D.C. and in Maryland. He is not providing specific legal or financial advice to any reader. He wants readers to e-mail him, but cannot guarantee a personal response. He can be reached at: [email protected].