Tenants request Early Termination and shocked at fees

[Chan S.]

I hate that this is my first post but I don’t know where else to get advice. We have had the same great tenants for the past 3 years. They have always paid on time and has kept the property like their home. The only complaints we have is that they were only allowed a small dog, however, they also added a rabbit and a bird without letting us know. We just let it slide because they were great tenants. In the beginning, they tried their best to get us to pay for some small things like refrigerator water filters and pest control. We did pay for one professional treatment for the wasp nests and told them everything else is in their contract and it is their obligation. I feel like we have also been great landlords to them. We have always been prompt to address or fix any issues and have never raised rent on them.

Last year around this time, they renewed their contract and signed another two year contract from June 2015-May 2017. They were debating on whether to sign one or two year and we told them we would charge them the same amount for either contract since they have been great tenants. I suspect they decided on the two year to protect their rent prices because the rent prices have continued to go up in our area and they wanted to lock in on the same price they’ve been paying. We went through a real estate company to find the tenants and they provided us with the contract and renewal contract. There is an Early Termination clause in the contract that requires them to notify us 60 days in advance, pay 2 months’ rent, and pay a $500 early termination administration fee.

They provided us the 60 day notice for early termination yesterday and included a sob story on why they have to move (third baby on the way, need bigger house, helping parents move to help them with baby, etc.) and asked that their deposit be used for next month’s rent. We drafted an early termination notice and agreement clearly listing all the fees that they will be charged (taken direclty from their contract) for early termination and they were shocked and surprised that we would charge all those fees. The fees are clearly in the contract. One of their arguments is that they were debating on whether to sign a one year or two year contract and if they had signed the one year, they wouldn’t be faced with all the fees. They likely signed the two year contract to protect themselves from potential rising rents. Yes, if they had signed a one year contract, they would not be charged with all the fees but they chose the two year contract in the end. We want to be understanding but we also want handle this from a business standpoint.

Do you think we are being fair? Should we be more lenient with the fees since they have been great tenants for 3 years?  Thank you in advance for your help!