Should I refund $ to tenant who moved out & brought next tenant?

Question

We are brand new landlords with a class c duplex and had month to month tenants (4 young guys) who left the place in decent clean condition, gave notice on the 1st and moved by the 6th, paying through the end of the month.  Plus, as they were moving out, they brought friends looking for a place and who ended up signing a lease with us. So we are feeling so blessed right not that everything went as well or better than we hoped.  Some people are telling me we should refund part of their rent since they paid through the end of the month, to say thank you...  We want to run it like a business and also do right by our tenants. How should we handle that?

Andrew Syrios · Answer

Any time a lease ends you should do a deposit disposition and refund the deposit minus your expenses to repair (above standard wear and tear of course). The only exception would be a sublease situation where the deposit could be swapped (different managers do this in different ways). Try to be as consistent in the implementation of your policies as possible. That being said, if it was left in good enough shape for others to move in almost right away, they should probably get all or almost all of their deposit back.

John Myers · Answer

I would give them some of their rent back.  I tell my tenants that they are responsible until the end of the lease.  I will try to find a new tenant if they want to break the lease early.  I ask them to look for a new tenant also.  You might want to see if there are any laws in your state/locality regarding your situation.

Mike Dymski · Answer

I don't feel the need to double dip on rent; so, I would refund the prorated amount if the new resident moved in prior to the end of the month that was paid in full by the prior resident.

Ann Downer · Answer

@Ricardo R.

Thank you. You made good points.  I had not thought about the unfair enforcement between tenants and the Fair Housing act.

Andrew B. · Answer

Old tenants are responsible for the month they left, cause they gave improper notice. New tenants are responsible to pay for days they occupied. You are not ethically entitled to collect rent from 2 people on the same day. If the new tenants moved in before the end of the month where the old tenants left, you should refund those days.

Mary Smith · Answer

@Ann Downer I don't feel like you're obligated to pay them back a portion of their rent since they didn't provide you a proper notice when they chose to leave. It was definitely nice of them to help you find a new tenant too, so as a kind gesture, you can give them a gift card or something small as a token of your appreciation.

Theresa Harris · Answer

Did the new tenants move in before the end of the month?

You said the old tenants gave notice on the 1st and moved out 5 days later, so yes they should have paid rent as they didn't give 30 days' notice.  If you wanted to give them a small amount as a thank you, that is your choice, but I would not return their rent unless you were paid twice (ie the new tenants moved in before the end of the month).

Andrew Syrios · Answer

Absolutely. If there were a few minor repairs needed, it's OK to charge them for that, but definitely not double dip or try to pocket their deposit just cause.

Ann Downer · Answer

Thank you for all the great advice. Just to clarify the new tenants will not be moving in till the 1st of December so we will not be collecting from 2 at the same time.

Nathan Gesner · Answer

The law essentially says you can't charge two people rent for the same time period. If the new tenants moved in on the 20th, you should refund the first tenants from November 20 - 30.

Some recommendations:

1. Create a penalty for early termination. This could be a forfeiture of the deposit or it could be that you force them to pay rent through the 30 days (in this case, through December 5th).

2. Be careful when a tenant leaves early but brings a replacement tenant. Make sure you screen the new applicants like you would any other.

3. When Tenant A moves out and Tenant B immediately steps up to rent from you, that may be an indication your rent is below market and that's why they are excited to apply.

Should I refund $ to tenant who moved out & brought next tenant?

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