Editor's note: thousands of Veeto readers have found this article to be particularly useful for terminating their leases early due to various pandemic-related causes. So, we've added some updates pertinent to COVID-19; and if you too find yourself in a tight spot right now, and you're looking for a way to get out of your lease early, just keep that in mind as you read. Hope it helps--and if you want to talk to a lease expert about how this applies to your particular case, you can book a micro-consultation at the end of the article.
What is a statement of account?
Although it can be referred to by several different names--a "full accounting" or "rent statement," for example--a statement of account is essentially the financial ledger for your relationship with your landlord. It dates back to the day that your relationship began, and it continues until the relationship ends. In between those dates, it would include a chronology of debits, credits, and adjustments made to your account. Each debit, credit and adjustment, in turn, would affect the balance on your account.
Before I explain why the statement of account is such a powerful tool for resolving lease disputes with your landlord, let me first give you a clear definition of each of those components, each in the context of a lease:
- Debit - a debit typically refers to a charge incurred by the tenant; and, thus, it's sometimes referred to a charge rather than a debit.
- Credit - a credit typically refers to a payment made by the tenant, or a credit given to the tenant by the landlord; and a credit is sometimes listed on the statement of account as a payment rather than a credit.
- Adjustment - an adjustment usually refers to a credit given to the tenant by the landlord (so, an adjustment is a type of credit, but a credit is not a type of adjustment).
- Balance - this is the total amount of money owed by whom to whom; for example, a negative balance usually means that the landlord owes the tenant that amount (as an absolute value), whereas a positive balance usually means that the tenant owes the landlord that amount.
What does a statement of account include?
Again, even though you might find some variability here with how landlords keep and produce these records, I'm going to tell you exactly what a thorough statement of account should include.
(And I've also included a few example statements from the UK, the US, and Canada, since Veeto handles lease cases from all over the world.)
The first thing a statement of account should include is some sort of customer reference. This could be an account number that is specific to your account; this could be the customer's name, the customer's address, or it could be all of those. The point of the customer reference is to make it clear that the landlord intends this statement of account to apply to your lease, your account, and to you as the customer or tenant.
The second thing a statement of account should include is start date and end date of the period covered by the statement. This is particularly important given the fact that it's easy to mistake a monthly statement for a full account statement. Why? Because, sometimes, landlords send you these other documents they call monthly statements, and monthly statements are not what you want here (for reasons I'll elaborate on later in the article). What you want is a full accounting of the entire relationship, synthesized into a single document. So, to confirm that the landlord has given you this after you request it, the easiest thing to do is look at the start date and end date of the period the statement says it covers, and compare that with what you know about when your relationship with the landlord actually began and ended (if it were not still ongoing, that is; which, in that case, would mean that you want an end date close to present).
In the image above, for example, you can see, inside of the yellow box, that the start date and end date of the period covered indicate a quarterly statement rather than a full statement of account. When you ask for a full statement of account, just be sure to check the dates to make sure that a full statement of account is what the landlord has given you.
The third thing that a statement of account should include is a full listing of all credits and debits to the account from inception to present. To give you a broader sample of some of the different ways landlords might present credits and debits on the statement of account, I've included one example in the image above and an alternative example in the image below. In the above example, credits are referred to as "payments," and debits are referred to as "charges." In the below example, debits and credits are referred to as directly as such. Notice also the important role that the description of each entry plays: it provides further details about how and why an entry occurred. Sometimes that description is found in a column entitled "description," as in the example above; while, other times, it is found in one or more columns referring to details about the associated transaction for each entry, as int he example below. The description is a vital part of the statement of account (again, for reasons I'll explain next); so don't let your landlord get away with not including it in some form.
The fourth thing that a statement of account should include is a full listing of all adjustments to the account from inception to present. In the example above, there are two adjustments in the amount of $32.59 each; but you might not notice that at first, because those adjustments are listed in the same column as payments--the other main type of "credit." So, to determine that the those $32.59 entries are actually adjustments, you would have to check the "transaction type" column and notice the description "credit" for each entry. In the context of a lease, this usually indicates an adjustment, and in this example, indeed, those $32.59 entries were each a refund of two previous charges. In contrast, the example below shows an actual "adjustments" column, which, of course, makes it easier to determine whether an entry in that column is an adjustment. To demonstrate why it's important to take full inventory of adjustments, notice what happens to the balance in the example above after the two $32.59 entries are credited: it goes up by $65.18, which means that the landlord attempted to pull a fast one on the tenant--initially charging two $32.59 in error, ostensibly agreeing thereafter to refund them, but then almost immediately tacking them back onto the tenant's account without further notice. This is a good example of the kind of funny business you can catch by obtaining a full statement of account.
The fifth thing that a statement of account should include is a running balance on the account. In the previous paragraph, which pertained to adjustment, you actually saw an excellent example of why having the running balance is necessary: because the balance is the landlord's conclusion to the question of who owes what to whom. And by having that conclusion stated on the same document as the landlord's premises for that conclusion--charges, payments, adjustments--it makes it easier for you to detect mistakes and understand what caused them.
Now that we've covered each component that a full statement of account should include, let's shift gears and talk about a couple of ways landlords sometimes try to skimp on their duty to provide you a proper statement of account.
What does an inadequate statement of account look like?
We already mentioned this first example briefly. It's when you ask for a full statement of account but get only a monthly or quarterly statement. To be fair to the landlord, sometimes this is an honest mistake, or simply a failure to communicate clearly (due to the shared word statement in both "statement of account" and "monthly statement"). But honest mistake or not, it falls short what you want you and need here. So if the landlord sends you anything less than the full accounting, just politely reply to reiterate your request.
For this second example, I included another visual (above) so that you can see what it looks like. Here, the landlord is likely either lazy or trying to conceal some funny business; because the so-called "rent statement" the landlord gave the tenant was not itemized in any way. Also, even though you would not be able to glean this just by looking at the visual above, the tenant had requested a full statement of account, which would have covered a period from 2019 to 2020; but the landlord only speaks to 2020 in the letter. But what's even worse is that this so-called rent statement omits key information that you typically would need to see in a full statement of account--details such as...
- How many total payments have the landlord received from the tenant?
- On which date the landlord received each payment?
- The total of each payment the landlord received from the tenant?
- The current balance owed on the account?
To correct these deficiencies, the landlord would need to itemize each accrual to the the tenant's account balance, including each charge, its description, and the date on which it was incurred--and so for the entire length of the relationship.
Thus, as you can see, generally speaking, a statement of account in paragraph form is usually not going to cut it. You're asking for a full accounting. So the document you receive should typically be in normal accounting format: a spreadsheet/table.
Why does asking your landlord for a statement of account matter when you want to terminate your lease early?
Because the statement of account can quickly reveal to you a number legal causes of action you didn't know about, but for which, by virtue of the statement of account itself, there is black-and-white, written evidence. A few common examples...
- If your landlord charged extra fees, and you never agreed to those fees, this could constitute either a misrepresentation or breach of contract.
- If your landlord charged you in advance of the contractual due date, this could not only constitute a breach of contract, but also could be a statutory violation based on how that payment was charged.
- If your landlord did any (what I've been calling) "funny business" on the accounting of your lease--of which we've highlighted a specific example above already--then this could constitute unfair and deceptive trade practices.
- In some jurisdictions, there are actually statutory requirements that landlords provide tenants a full statement of account upon request; so...the very act of asking for the statement of account could give rise to a way to terminate the lease on the spot if, for some reason, the landlord fails to comply with your request altogether...or even just sends you an inadequate statement of account like the paragraph-form example above. So, I guess it's sort of like, "ask, and ye might not receive," which could actually be a good thing in this case!
This is only a sample. But the point you should take away is that, when you want to terminate your lease early, it's common for people to think about the matter from a very narrow perspective; they think, "what has happened recently that might give me a way to get out of this thing now?" We've seen widespread example of this in the wake of the COVID-19 pandemic, as the entire economic cycle was disrupted, people lost incomes, fell behind in rent, and began looking desperately or ways to stop the bleeding. Our advice to the hundreds of tenants with whom we've done micro-consultations since the pandemic began has been to broaden their analysis of the matter: don't look only at recent events; look across the entire length of your relationship with the landlord.
Any problems, complaints, whether yet known or unknown to you, that you've had with your landlord, the property, or some aspect of the service (communication, repairs, accounting, etc.) could give you legitimate legal justification for not only terminating the lease immediately, but also recovering compensation for damages. Many tenants overlook this because they're too narrowly focused on this month, next month, and the most obvious causes for wanting to get out of the lease.
Bottom line: if you want to end your lease early, regardless of what you actual motivation is--COVID-19-related stuff, for example--the facts pertaining to your lease might hold a winnable cause of action that has nothing to do with your primary motivation--and that's OK, because both can be true simultaneously, that your motivation has nothing to do with your landlord's unlawful conduct, while your means to that end does. Asking your landlord for a full statement of account is an excellent place to start.
Attn: Tenants Looking To Get Out Of Your Lease Early...
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