Tenant wants to terminate lease early, should I make them pay the entire penalty?

Question

I have a tenant that has been in my home for almost 6 months. By all accounts they have been great tenants. They keep the home clean, pay rent a week early, and I haven't been called out to fix a single issue. They are a young engaged couple, and we actually have a few acquaintances in common (a connection we discovered when they were moving in). He just informed me he got a job in another city and may need to break the lease early. The lease says in this situation the tenant owes the total balance of the remaining term. But that feels a little harsh. I am pretty confident I can fill the vacancy immediately, and probably charge a higher rent as well. This would be close to a $15K penalty. I try to stay on good terms with people as word of mouth can always come back to bite/help you, and generally try to treat people with what feels right/fair.

I was thinking I charge a one-month penalty for breaking the lease, and they continue to pay rent until the unit is filled. Basically I get one month of additional rent for my troubles, and the rent is paid in full throughout (either by them or the new tenant)

Am I letting them off too easy? anything I may not be considering?

I was thinking I charge a one-month penalty for breaking the lease, and they continue to pay rent until the unit is filled. Basically I get one month of additional rent for my troubles, and the rent is paid in full throughout (either by them or the new tenant)

Am I letting them off too easy? anything I may not be considering?

Matthew Crivelli · Answer

I think the one month rent plus payment until the unit is rented is fair. The chances of them actually paying you the 15k without a major fight is slim. Do you want to go to court and pay for a lawyer? Also, morals do come into play, that is an aggressive policy to have in place. Everyone will walk away feeling OK if you amend the original agreement. What comes around tends to go around so doing right by someone would be the best play in my opinion.

Theresa Harris · Answer

It is up to you.  If it was me, I'd either have a $ penalty for breaking the lease (eg 1 month's rent) or have them pay the rent until it is re-rented and do my best to get it rented quickly.  The latter also encourages them to leave the place in good condition and to make it available for showings (with 24 hours' notice and grouping showings-never leave perspective tenants alone inside if the house is occupied).

David Krulac · Answer

@Craig McCarter  That issue should have been addressed in writting in the lease agreement.  Also some state/local regulations might be in play.  In general you can't double dip and charge the old departing tenant while alos collecting rent for the same unit from a new tenant.

Matt Devincenzo · Answer

It's either or in my opinion, either you charge a 'break up' fee and then you assume the liability of filling it quickly, or you don't charge and they assume the liability of paying until you can fill it. Your suggestion is a heads I win, tails you lose. If you get the fee and can fill it in 2 weeks instead of a month, then you should be rewarded for that but it should not come with an expectation that there's no downside for you and they'll pay the rent if it takes more than the month.

I'd see what they think as far as a possible moving schedule and coordinate a reasonable solution. If they can leave the 15th of the month but pay until the 1st following, then you have two paid weeks to get someone in there after it is vacant. That should be plenty of time, especially if they are agreeable and accommodating with showing it in advance. I'd suggest the 1 month fee in that case and know I can most likely turn it very quickly and get someone in sooner than the next month.

Andrew B. · Answer

You most certainly dont have a legal right to try to charge them a 6 month penalty. In practicality, your lease is saying that you have the legal right to charge the rent up until you find a new tenant because you have a legal obligation to mitigate your losses. This does not mean you can leave the unit vacant for 6 months (not that I'm accusing you of wanting that) but it also does not mean you can be forced to accept a less desirable tenant nor can you be forced to lower your rent. It means you need to make an honest, good faith effort to find a tenant in a reasonable time.

In real life it would play out with you telling tenant that it is in their best interest to keep the unit clean and assist with showings so you can minimize the number of vacant days. You charge tenant for rent as normal through the release process, and once you find a new tenant you can prorate the number of days vacant to make sure tenant and you are both whole. You can bill release fees to the old tenant.

Tenant wants to terminate lease early, should I make them pay the entire penalty?

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