tenants moved out without notice during lease term

[Joanne Tsai]

Hello BPers, 

this property is in TX. Tenants moved out on Nov 30th, and sent an email to PM saying they moved out after purchasing a house. Their lease doesn't end till the end of April 2022, so they lived there 7 out of 12 months. There is no early termination clause in the contract, basically they are obligated to pay for the remainder of the lease. if my PM finds another tenant before April, they would have to pay rent till then and pay the placement fee. But no surprise here, they stopped paying Dec rent. PM went to check the property, and apparently tenants didn't change AC filters, and that led to a significant repair two months back. AC filters were delivered to them monthly, but they never bothered to change it though it was also in the lease.

My Question is what can I do to hold these tenants accountable for the rent and placement fee till the next tenants move in? should I just hire attorney and let them know if they don't pay accordingly to the contract, a legal action will be taken against them? Let's presume the attorney fee is not a concern, is this the best way to go about it? I believe having a contract is to be able to enforce it, or else what's the point of having a lease. it's also the fact, they never communicated they were looking to buy a home and they pretty much used this house as a hotel while they shopped for a house.

any thoughts would be deeply appreciated! 

[Bruce Woodruff]

Yes, your PM should be handling this. Period. If they do not, fire them and give it to an attorney.....

[Corby Goade]

Sorry you are dealing with this- in all honesty, your PM should be leading the charge and just keeping you posted. 

If they don't voluntarily pay up via your lease, you are going to have to take them to court. You can try an attorney to nudge them, but most likely you'd end up in small claims court without an attorney. 

Keep in mind that is less than half of the battle. If you win, its up to YOU to collect, which is a new adventure on it's own. 

Best of luck!

[Bruce Woodruff]

Yes, your PM should be handling this. Period. If they do not, fire them and give it to an attorney.....

[Michele Fischer]

You should be able to keep the deposit and send them to collections for the AC and any unpaid rent.  It is not worth the energy and expense to try to enforce the lease, the only leverage you have is harming their credit, which they don't care about right after a home purchase.  I would love to have tenants who move out when they stop paying, you are blessed to have possession of the property back and another chance to find a paying tenant.  The PM should have cited negligence with the AC when the damage was found/corrected and invoiced them at that point.  The PM can contact them reminding them of their contractual responsibilitites, so they aren't surprised when they get a big invoice, but I would not hire an attorney.  This is a cost of doing business, move on.  Watch your dates, make sure the PM sends the security deposit itemization by the due date, even if it is a preliminary version.

[Scott M.]

Keeping deposits for starters and then getting a judgement in place for the balance of the funds owed.  Collections are generally not super successful but as new homeowners they may want to keep their credit clean.  Of course start with letters and payment demands but then move it to the courts, get the judgement and do what you can on the collections front.

As others have said PM should be leading the way on this  

[Matt M.]

@Joanne Tsai

They are gone. Re-rent and move on. Could have been much worse.

[Joe S.]

Originally posted by @Joanne Tsai:

Hello BPers, 

this property is in TX. Tenants moved out on Nov 30th, and sent an email to PM saying they moved out after purchasing a house. Their lease doesn't end till the end of April 2022, so they lived there 7 out of 12 months. There is no early termination clause in the contract, basically they are obligated to pay for the remainder of the lease. if my PM finds another tenant before April, they would have to pay rent till then and pay the placement fee. But no surprise here, they stopped paying Dec rent. PM went to check the property, and apparently tenants didn't change AC filters, and that led to a significant repair two months back. AC filters were delivered to them monthly, but they never bothered to change it though it was also in the lease.

My Question is what can I do to hold these tenants accountable for the rent and placement fee till the next tenants move in? should I just hire attorney and let them know if they don't pay accordingly to the contract, a legal action will be taken against them? Let's presume the attorney fee is not a concern, is this the best way to go about it? I believe having a contract is to be able to enforce it, or else what's the point of having a lease. it's also the fact, they never communicated they were looking to buy a home and they pretty much used this house as a hotel while they shopped for a house.

any thoughts would be deeply appreciated! 

 Count yourself bless. We have a house where the tenants have not paid for over a year and we have another house where the tenants have not paid for five months. If they didn’t tear up the house count yourself doubly blessed.

[Mary M.]

while the tenants are legally responsible for the balance of the lease you are required to diligently mitigate those costs by re leasing the unit up as soon as you can.   I dont know about Texas, but here the most we can charge a tenant is 1.5 months. 

IMO I would just get the place cleaned up ad get it leased asap. 

[Bruce Lynn]

Good news is, rent has probably gone up $200/month since they moved in, so maybe you can rent for more money.

You can keep the deposit.  Send them a bill for remaining time on lease and repairs.  You need to do this within 30 days of moveout generally.

Likely you can win in court or get default judgement, but collecting is always the tough thing.  Potentially your attorney can attach a lien to the new house, but you might only collect if they sell, so can be years or never.

Sometimes better to just put it on the market, get it rented again and move on.  Market is pretty hot here, so you're probably in great shape.

[Theresa Harris]

You have a PM, so they should be doing the work.  You are right that the tenants are responsible for the rent until their lease is up.  I don't get why people can do the simple thing like give proper notice (or change air filters).  Make sure your PM does NOT return any of the deposit.  Tell the former tenants that if they don't pay the rent or damages, they should have been billed for the repairs while they were still living there, you will take them to court.  You likely won't see the money, but it should be a wake up call to them.

[Nathan Gesner]

Agree with the others: your PM should provide you this answer and lead the way moving forward. You may want to consider a new manager.

Find a new renter as quickly as possible. Charge the departing tenant for any cleaning, maintenance, and unpaid rent or other costs up until the new tenant was placed. Apply the deposit. Determine the unpaid balance and whether it's worth pursuing. If you determine it is, send them notice and demand payment in full within 30 days. If they don't pay, take them to court and get a judgment, then turn that over to collections. Finally, write it off because you'll probably never see a dime.

[Michael Noto]

You can take them to collections, tell them they are on the hook for the lease/pursue legal action, etc. Once you look into the time and money associated with these options you will probably decide to just move on, and they know that which is why they ghosted the way they did. 

[Mary M.]

FWIW here is the actual legal wording for Texas 

"

If a tenant wants to move out early and break their lease for a reason other than one listed in the below, they continue to owe the landlord rent under the lease. They only stop owing rent once the lease ends or a new tenant is found.

Section 91.006 of the Texas Property Code describes a "landlord's duty to mitigate damages." This means that a landlord must try to find a new tenant and help reduce the amount of rent the former tenant owes under the lease. A condition of a lease that says that a landlord does not have duty to mitigate damages is void under this law."

https://guides.sll.texas.gov/l...

You MUST mitigate damages. 

[Maurice D.]

small claims for the unpaid rent (up until you find a new tenant), so do this after you find a tenant.  in the same suit you should collect for the damages from their filter neglect.  your property manager should continue attempting to collect the rent until they find a tenant, and building the paper trail for court.

Follow your state and local laws on the deposit.  for example here in Texas I believe a landlord needs to provide an itemized list of charges no later than 30 days after move out.   so even if you are "keeping" the deposit (which your should), you need to follow the law as far as notifications. etc

What Nathan said about getting a Judgement.  Even if you never collect, you have a tax write off (bad debt) from that shinny piece of paper..  it also hits their credit report and well, since they purchased a home, with the Judgement you can attach to the house (lien) and when they sell you will get paid w/interest..

Good luck!

[Joanne Tsai]

Thanks everyone for your response. I have been a renter myself in many states before, have changed jobs and relocated also. I have also purchased homes and moved out of my rental. I have never failed my obligation either to communicate or to pay till LLs found their next tenants. And there was not one time, the LL was not understanding the situation and wasn't willing to work with me to find a solution..... I would like to have a court judgement against them, because people shouldn't be getting away things simply because they can. How do we even teach our kids these days from right to wrong if there is never consequence to their behavior? I get your point though, ROI isn't worth of my time/effort.....

[Jerel Ehlert]

I'm going to call a flag on the play re: AC repairs.  There is 0% chance that 5 months of "no filter replacement" will, in any universe, lead to major repairs to the HVAC system.  You have no evidence of causation - that THESE tenants caused ALL of THIS damage.  Trying to raise that issue 2 months later and only after T moved out early raises credibility issues for any testimony.  As a lawyer, I can easily rip this claim to shreds.

Re: breaking the lease - Yes, T still liable for rent until end of lease, but LL has a duty to mitigate loss.  Make-ready and lease back up.

Final analysis: re-let, cut the losses, do a final accounting (don't charge for AC repairs).  Anything more is throwing good money after bad.

Check that your PM is not padding their bill to you.  You should have a property inspection done by *your* inspector/agent at least every 2 years, not by the PM.  Out of state owners are easy targets for this type of fraud.

Public policy favors home ownership over renting.  Honestly, Texas needs a statute specifically exempting the purchase of a primary residence from breach of lease disputes.

[Josue Vargas]

Agreed with most here, assuming this for at least 1-year residential lease which sounds it is, and in writing. 

The PM you hired is your employee, you are the employer, make them do their job.  

Good news is you should have a Texas Realtor residential lease -- Only if your PM is competent enough and filled-in the blanks appropriately you should be able to chase what they owe you.  

Read the PM agreement you signed and make them accountable for providing the service you hired them to do.   

[Josue Vargas]

@Jerel Ehlert

Interesting point of exempting tenants to get out from the contract if they are purchasing a homestead property.  I think is not needed, and I think is also fair for the landlord not to loose interest and compensation from such actions (or inactions) of the tenants.  I believe that's why the TR lease have and should have (or a contract prepared by an attorney) the Early Termination clause with an option for a assignee or subletting.  

That way both the tenant and landlord can have an option to mitigate income loss (for the landlord) or overspending (for the tenant).

Giving a somewhat free pass to Tenants on a 1-year lease if they are buying a homestead is an open Pandora box, just my opinion.  What happens if they are in a 1-4 residential purchase contract and they can't close due to financing etc?  How pays for my costs incurred looking for the new tenant?  What if I have a new tenant lease agreement to move in on Jan 1st, but current tenant won't vacate on or before Jan 1st due to something going on for whatever the reason?  I bet there are good reasons TREC has promulgated leases for up to 90-days... 

[Joanne Tsai]

@Jerel Ehlert Thanks for your input. I do have a diagnosis from AC company who did the repair and the potential cause of the failure was not changing filters. I didn't put it on the tenants, obviously because I believed they were good tenants who were paying rent on time before they completely disappeared.

my PM is currently putting it on the market and trying to have it lease it again, and afterwards we would be able to assess the damage. 

@Josue Vargas I agreed with you. When we moved back to NJ from CA, we knew we wanted to buy soon, and we wanted to rent before the purchase.  We simply told the LL, we probably would be moving out as soon as we found something so we asked for a shorter-term lease. We ended up paying a higher rent for 6 months, and that worked out great for us. I just don't understand why people couldn't be honest and upfront about this. Most LLs are understanding, and it's the deception that annoys me.

[Josue Vargas]

Originally posted by @Joanne Tsai:

@Jerel Ehlert Thanks for your input. I do have a diagnosis from AC company who did the repair and the potential cause of the failure was not changing filters. I didn't put it on the tenants, obviously because I believed they were good tenants who were paying rent on time before they completely disappeared.

my PM is currently putting it on the market and trying to have it lease it again, and afterwards we would be able to assess the damage. 

@Josue Vargas I agreed with you. When we moved back to NJ from CA, we knew we wanted to buy soon, and we wanted to rent before the purchase.  We simply told the LL, we probably would be moving out as soon as we found something so we asked for a shorter-term lease. We ended up paying a higher rent for 6 months, and that worked out great for us. I just don't understand why people couldn't be honest and upfront about this. Most LLs are understanding, and it's the deception that annoys me. 

Most of us have been there in some point of our lifetime (I did it!, however I paid the fee for getting out, it was not a free pass and I think to this day it was beneficial for both, the landlord and myself).  In Texas, FYI valid and enforceable contracts are in writing for leases of at least 1 year. Make sure you put anything in writing. Verbal agreements are not enforceable in court for leases over 1-year.  For future prospect tenants, if they verbally tell you they are moving out before the lease expired, just don't lease to them if you don't agree.  What I have done with such prospects when they are unsure when to move out is to charge a higher rent or make clear they understand the subletting and assignment clause.  

I most likely will negotiate with them, but from past experience they not always agree to the terms and have to negotiate with them and explain all over again.  One of them even threated me to court, after we had a binding contract addendum we both signed.  By the way he was an MD (doctor), not someone who was renting at $1500.  There are people, and there are scrupulous people of which you will never understand what is going thought their life.  

If they are subletting, the original tenant is responsible for all actions of the subletting individuals (I would recommend not to do this for many reasons).  With an assignment on the other hand, you will have a new Tenant that is responsible for carrying on the original lease, typically you will charge the original tenant a fee for transferring the lease to the other.  In the lease for subletting or assignment there is spaces you can charge for fees... Typically I put one month rent to cover for my expenses.

Get very familiar with the contract lease agreement. I know this is kind of a grey area for some, hopefully I convey my point here. Other that have your Agent/Broker explain to you or you can always talk to an attorney.

Whoever, Good luck!

[Bud Gaffney]

Respectfully, just be glad that they moved out. Tenants can literally live at places for a year without much happening here in Massachusetts. Its BRUTAL!

[Mary M.]

Originally posted by @Maurice D.:

 Even if you never collect, you have a tax write off (bad debt) from that shinny piece of paper..  

welll......  you can write off only those costs you actually paid for - not the lost income....  so really you cant write off anything more than what you would normally ....  so the costs for the court, the extra costs for the PM to file etc etc. but you cant write off lost income. sadly. 

[Guy Gimenez]

I recommend you don't get legal advice from those who are unfamiliar with Texas law and don't have a law license. Regardless of what state you plan to be an landlord in, you should become very familiar with the state statutes regarding residential tenancies and the contract form you're using. In Texas, residential tenancies are addressed in Chap. 92 of the Texas Property Code. Regarding the lease agreement, if you don't understand what you signed, or worse yet, if it doesn't address this situation, you should seek legal counsel, then get a rock solid lease agreement and read it over and over until understand every aspect of it.  

[Matthew Olszak]

Originally posted by @Scott M.:

Keeping deposits for starters and then getting a judgement in place for the balance of the funds owed.  Collections are generally not super successful but as new homeowners they may want to keep their credit clean.  Of course start with letters and payment demands but then move it to the courts, get the judgement and do what you can on the collections front.

As others have said PM should be leading the way on this  

Unfortunately I believe the opposite is true. They are already new homeowners, so they likely could care less about a silly collection. They've already consummated the largest transaction all their credit building has led up to. Plus if they are leveraged heavily on their new home, there are likely little or no assets available to target.

I'd total up the $ owed, send the debt to a collection agency (even if you'll owe them 50% of what they collect), and expect to receive $0. No need to spend thousands on an attorney who will get you a huge judgement you'll likely never collect on. Be grateful they are out, and get a new paying tenant in asap.

[Joanne Tsai]

@Mary M. @Nathan Gesner Not sure if writing off will benefit me to be honest. I can't take any loss in passive income as my W2 income is too high according to IRS (which I am sure it's not real inflation adjusted!) till I sell the property, I presume it would be the same case here..... 

[Joanne Tsai]

Yeah, of course, I don't have any delusion that they would voluntarily pay the rent till the lease ends. And my point is most of LLs are really reasonable people and will work out a plan if the communication happens. To move out without an advanced notice is not ok, esp they knew they had an offer accepted, doing a home inspection, the whole process takes at least 30-45 days for someone with decent credit. 

Originally posted by @Mary M.:

FWIW here is the actual legal wording for Texas 

"

If a tenant wants to move out early and break their lease for a reason other than one listed in the below, they continue to owe the landlord rent under the lease. They only stop owing rent once the lease ends or a new tenant is found.

Section 91.006 of the Texas Property Code describes a "landlord's duty to mitigate damages." This means that a landlord must try to find a new tenant and help reduce the amount of rent the former tenant owes under the lease. A condition of a lease that says that a landlord does not have duty to mitigate damages is void under this law."

https://guides.sll.texas.gov/l...

You MUST mitigate damages.