Ask penalty due to the early termination by the tenant

Member since 2023 · 1 post · 0 votes

The lease is for 3yrs, still 2.5 yrs left. Because the couple living there is getting divorced, they want to move out and terminate the lease by the end of Fed. I used a simple template of the lease agreement without any clause regarding the early termination and its penalty. I got the official notice today from them, can I ask one month rent or two as penalty of the early termination? And I don’t need them to find new tenants for me. Or can I require them to find new tenants for me and I will ask them keep paying rents till the new tenants take over the lease?

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Bjorn AhlbladPro Member

Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes

@Emma Zhang welcome to BP! My longest lease is 12 months- no way I would do anything longer. If there is an early termination I work to get a new tenant as part of my regular process.

No way I want my tenant to find a new one. In my experience it never takes very long to find a new tenant. So when they say they will leave the sooner they are gone the better. No big deal. All the best!

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Bjorn AhlbladPro Member
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
3y
@Emma Zhang welcome to BP! My longest lease is 12 months- no way I would do anything longer. If there is an early termination I work to get a new tenant as part of my regular process.
No way I want my tenant to find a new one. In my experience it never takes very long to find a new tenant. So when they say they will leave the sooner they are gone the better. No big deal. All the best!
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Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
3y
What does the lease say? If there is no penalty listed for breaking the lease, then they are responsible for the rent until you get it rented. But you must be actively looking for a new tenant. Tell them this and ask to do showings mid Feb to get it rented quickly. This means they need to keep the place in good condition for showings as well as make it available. Do your best to minimize disruptions (eg group showings).
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Patricia Steiner
Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes
3y
If your lease doesn't have an early termination provision, then State Law applies. If the property is in Boston: "While some states charge up to the entire amount remaining on the lease, most Massachusetts residents just have to pay a penalty of one or two month's worth of rent; 30 days notice is required." As of Apr 15, 2021 (End). What you cannot do is require them to become an agent on your behalf and find a tenant. I recommend:
1. Having them put their terminate request in writing (email is fine but no text as it is not acceptable in courts) stating the reason for the termination and that their last day will be February 28th by 5:00 p.m.
2. Respond that you will agree to accept early termination in consideration for a penalty of 2 months rent ($xxxx.), their cooperation in making the unit available for prospective tenant showings during that time, and that the unit will be surrendered on or before February 28th at 5:00 p.m. in the same condition as when they moved-in and free of all possessions, trash, and cleaned. Penalty payment shall be due upon acceptance of this agreement (or whatever you negotiate with them). It's important that you collect it prior to their departure because some folks have been known to skip the last month's rent and the penalty payment.
3. Arrange for a final walk-through with them once the unit is vacated before returning any security deposit;

4. Begin marketing the unit for a March 1st move-in at new market rent. Consider scheduling showings on one day like a Saturday at 1:00 as to not disrupt the current tenants from packing up and/or disrupting their peaceful use of the property as is their tenant right.
And, get a better lease. A 3-year lease is no gift to landlords as it prevents increase in rents for three years, results in more early terminations than a one-year term, and if you get a bad tenant - 3 years is a lifetime. A solid lease will have that early termination clause, require renter's insurance, and have an addendum stating the property rules (like "this is a drug-free/crime-free property" and more). I also recommend that you search online for your state's Landlord-Tenant Laws; they are readily available and you need to know them. There is no winging it if you're a real deal investor.
Hope this helps...
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Mike Dymski
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
3y
They are contractually bound for another 2.5 years. I doubt any court would uphold that. Regardless, I would work with them (because you have to) and get it marketed and re-leased as soon as feasible after their move out date...and they pay rent until the re-lease date. I don't feel the need to double dip...and you have no contractual right to a penalty.
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Galen Ikonomov
Member since 2021 · 256 posts · 213 votes
3y
Look at your lease. There is a clause that is regarding breaking the lease. If there is no explanation or numbers, you can't charge them anything and let them go free.
And NEVER, NEVER, NEVER, NEVER EVER sign a lease that is more than 1 year. Even I started noticing that 1 year lease could be a recipe for disaster in specific low income areas. Look into 1 year or less in a decent market and if you are in a low income areas, month to month. No disrespect to these folks, we just have to protect our businesses.
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Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
3y
Here's an explanation: https://www.nolo.com/legal-enc...
Scroll down to the part titled "Landlord's Duty to Find a New Tenant" for guidance.
The Tenant is legally obligated for the full term of the lease. However, you can always negotiate something different as long as both parties agree to it. I would start by talking to your tenant to see if you can negotiate a termination that limits your damages and allows them to move out. For example, they could pay rent through February, pay a penalty of one month of rent, and then you still have the deposit for cleaning/repairs. That gives you more than 30 days to look for a replacement tenant to move in shortly after these tenants move out, the termination penalty will likely put more money in your pocket, and the deposit can cover cleaning/repairs or be refunded back after termination.
Most states require the Landlord to make a "good faith effort" to find a new Tenant and limit damages to the Tenant breaking the lease. This means you will market it and do your best to find another qualified Tenant as quickly as possible. If you advertised on 10 websites to find the current tenants, then you should make that same effort to find a new one. Massachusetts apparently doesn't address this by law, but it's still the right thing to do.

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Cheng Bin Zhang
Real Estate Consultant · Boston, MA · Member since 2010 · 86 posts · 40 votes
3y
You can ask for a month worth of termination fee (even if it's not explicitly stated on the lease). Unfortunately, if they push back and leave without paying, it's quite difficult to get that money back. It's likely more expensive to take them to court than to just take the lost. You also should start looking for the tenant ASAP to minimize vacancy.
Moving forward, I would not do a 3 year lease (at least not for residential tenants). And include an early termination clause in the lease <- I learn this lesson the hard way with my first few rentals too.
Local Boston RE landlord here so happy to connect and chat too.
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Lien VuongBusiness Member
Real Estate Agent · Boston, MA · Member since 2018 · 2k+ posts · 1k+ votes
3y
I would request for them to find a sublease and they're responsible for that tenant until the lease concludes. You have to OK the new tenant.
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Eric Bilderback
Real Estate Agent · Sisters, OR · Member since 2014 · 1k+ posts · 1k+ votes
3y
@Emma Zhang don't be that lady, LOL. That is a very negative way to spend your time. Is there a reason you can't rent it out for about what they were currently paying you?

The last thing you want is for them to bring you new tenants they don't care who moves in. Have an open house so you can screen your tenants. With my rentals I never have held anyone to a lease etc. for their personal changes. People get married, divorced, have babies, parents get ill you name it that is what landlords sign up for. I'd tell to them make sure the place is nice and tidy so they can have their deposit back and tell them good luck.

Option 2: You can front the money for a marriage councilor and sit to ensure there won't be any future snags! LOL

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John T.
Rental Property Investor · Central U. S. A. · Member since 2013 · 296 posts · 149 votes
3y
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