Tenant wants to get out of lease early... help!

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Tenant wants to get out of lease early... help!

Megan A.
Mound, MN · Member since 2016 · 21 posts · 4 votes

We've had a reliable renter for almost 2 years.  She just renewed a 1 year lease last month on May 1st.  She is now saying she is being relocated for a promotion at work (not sure if this is an excuse to get out of the lease or not) and asked if we could work with her on some type of arrangement.  We owner occupy our duplex and would need to move our stuff into her unit when she moves so this will be a lot of work a lot earlier than we were expecting.  We can't move until end of September.  Is it fair to ask her to pay rent through the end of September as well as forfeit her damage deposit (it was $1,000)?  We do not have anything in our lease about what happens if a renter wants to get out of their lease early...I will be adding something for the future though.  So I didn't know if legally we can keep her damage deposit in MN if we agree to her moving out early?  It is technically breaking her lease agreement though. It is also a big inconvenience to us.  However, I am certain we can rent out our unit that we've been living in and remodeling for at least $300 more than what we've been charging her.  Any input would be greatly appreciated!  I assume we would just type up a document stating that we agree to her terminating her lease at the end of September and that she agrees to forfeit her damage deposit? Thanks!

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Matthew Olszak
Real Estate Broker · Chicago, IL · Member since 2015 · 1k+ posts · 2k+ votes
9y

@Megan A., why do you HAVE to move if she moves? What would you have done if she stayed the entire lease period, which would run 7 months past September? 

You are certainly in your rights to tell her that you won't agree to break her lease or that in order to do so she needs to pay 3 months (through September) + deposit. And I expect she'll just leave. If its true that she is being relocated, someone likely won't give up a promotion to hold their end of a lease. She's essentially telling you, "I need to break the lease, how can I make this easiest for both of us" and not asking for your permission to do so.

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  • Brandon Heimsoth
    Investor · Maryland Heights, MO · Member since 2016 · 55 posts · 36 votes
    9y
    Something similar happened on a unit of mine 6 months into a 1 year lease. My property manager gave them two options. 1. Pay 2 months rent. 2. Keep paying rent until end of lease or until new tenant moves in. In both options, they lose their deposit. I'm not sure you want to put anything in your lease. Legally, they're obligated to finish the lease. Then, you can give them options and be the nice guy. In my case, they chose option #1. Hope that helps.
    1Reply
  • Adam Demchik
    Rental Property Investor · Oxford, MI · Member since 2013 · 98 posts · 18 votes
    9y

    I always try and work with renters when they are going to break a lease.  I don't see the point of being the "bad guy" and telling them they are going to lose all of their deposit...that gives them no incentive to leave the unit in good condition or not to trash it on their way out. 

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  • Megan A.
    OP
    Mound, MN · Member since 2016 · 21 posts · 4 votes
    9y

    The only trouble is we really HAVE to have her pay through the end of September.  We can't move until then because of vacations we've had planned for a long time (we are in Europe the first 2 weeks of September, meaning we can't be showing our place or working on moving/preparing our unit for a new renter).  Our plan all along was to renovate the side we are living in then move into her side.  So we have the added issue of timing when is convenient for us to move.  We thought it would be next May at the end of her lease which would have worked perfectly.  We don't want to be the "bad guy" but we aren't let with many options because of the fact that we also live in the duplex and have to move too now.

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  • Matthew Olszak
    Real Estate Broker · Chicago, IL · Member since 2015 · 1k+ posts · 2k+ votes
    9y

    @Megan A., why do you HAVE to move if she moves? What would you have done if she stayed the entire lease period, which would run 7 months past September? 

    You are certainly in your rights to tell her that you won't agree to break her lease or that in order to do so she needs to pay 3 months (through September) + deposit. And I expect she'll just leave. If its true that she is being relocated, someone likely won't give up a promotion to hold their end of a lease. She's essentially telling you, "I need to break the lease, how can I make this easiest for both of us" and not asking for your permission to do so.

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  • Jerry Evans
    Investor · Minneapolis, MN · Member since 2017 · 23 posts · 7 votes
    9y
    Hello Megan A. I am also from the twin cities. I'd suggest adding an "Early termination Clause" to your lease for future references. Although I feel like your current resident may comply, having a early termination clause sort of negates some of that unknown reaction. My clause simply states: "The tenant agrees to give the landlord a 60 day notice, this notice will begin on the first day of the month after the notice was given. Because tenant wants to terminate the lease early, the landlord will suffer a lose. Therefore, tenant agrees to pay land 2 months rent. If sum is not equal to 2 months rent, landlord has the right to not agree to the termination of lease and can require resident to comply with terms of the lease...." I'd emphasis it when going over your lease as well. And maybe you should start marketing your unit for a new move-In. Especially if know this tenant is for sure moving.
    1Reply
  • Megan A.
    OP
    Mound, MN · Member since 2016 · 21 posts · 4 votes
    9y

    @Matthew Olszak we have been waiting until our renter didn't want to renew her lease to move to her side. I should have explained better... we took our side of the duplex and added a bedroom and family room in the basement (it was unfinished before) now we can increase rent for our unit. We want to do the same on her side. We just did an exterior renovation so we were fine with waiting until May to get to work on her side when her current lease is up. 

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  • Matthew Olszak
    Real Estate Broker · Chicago, IL · Member since 2015 · 1k+ posts · 2k+ votes
    9y

    @Megan A. I can understand that, but I doubt your tenant will. She "has" to move for a promotion, you "want" to move in September. At least that's how I expect her thought process to work.

    Talk it out and see how many months you can get out of her under the assumption she is going irregardless of a deal being reached. Let her open the bid - "I really expected you to stay the full term, but I understand your circumstances. What do you believe is a fair amount to break the lease, as I'll obviously have to re-rent the unit and absorb the vacancy in-between?" And I agree with @Adam Demchik, leave the security deposit out of it until the end as that's earmarked for other things (unless you have a ton of trust the unit will be left in great condition). If that's the case, wait till the end and throw out, "Ok, I can accept 1 month, but you'll forfeit your deposit, is that fair?"

    If you can get a month or 2 out of her, and your market is such that you can rent it short term until September or whenever you prefer and can do so quickly, you might actually make out better than if she had stayed.

    1Reply
  • Mike S.
    Rental Property Investor · Huntsville, AL · Member since 2013 · 419 posts · 323 votes
    9y

    In my state, you have to make reasonable attempts to find a replacement.  In practice, you are not allowed to use the security deposit unless there are damages or you have specific language covering early termination regarding the SD.  When my tenant left early, it took a while to accept it, but essentially a tenant can leave whenever, lease or not.  Luckily, I was able to place a new tenant within one week.

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  • John Woodrich
    Flipper/Rehabber · Minneapolis, MN · Member since 2016 · 1k+ posts · 1k+ votes
    9y

    The fact that it is bad timing for you is irrelevant in this discussion, vacations and personal matters have no bearing on the lease agreement.

    They are obligated to continue the lease.  As mentioned above, you can give them the option of subletting or you could take a settlement and agree to break the lease.  You could also tell them that you will do your best to rent the property, you expect it to take a month assuming they leave it in good shape, and that they are on the hook for rent until it is rented.  They aren't obligated to wait for you to move your stuff and try to rent the other unit.  That would be your decision if you wanted to jointly break the lease and swap units.  Right now they have a right to be there until the lease expiration.

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  • Clay O.
    Investor · Tulsa, OK · Member since 2017 · 102 posts · 88 votes
    9y

    If she is getting a promotion at work and they are paying for her to relocate then getting out of her lease should be a part of her relocation package from her company. That doesn't mean you don't have to negotiate but if you say "pay rent through September" and her company pays for it, then your in a win win situation. 

    1Reply
  • Megan A.
    OP
    Mound, MN · Member since 2016 · 21 posts · 4 votes
    9y

    Thanks for the very helpful advice and input everybody!! Just needed some other opinions! @John Woodrich I didn't think that vacations had bearing on a lease agreement ha we planned our trip intentionally in Septmeber, thinking we wouldn't need to move until May. So now we have 2 weeks where we won't be available to show our unit to potential tenants if we don't have one by the time we leave. That's the only reason I mentioned the vacation :).

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  • John Woodrich
    Flipper/Rehabber · Minneapolis, MN · Member since 2016 · 1k+ posts · 1k+ votes
    9y

    I understand, just wanted to make it clear.  I have had many poor timing things I had to suffer through over the past 10 years, our wedding was the biggest hassle real estate issue :)  Personally I would tell them they have to pay until it is rented, you letting them off the hook at that point will be a favor in itself.  That puts them on the hook for cleaning properly and I wouldn't return their deposit until you have a person moving in.  That will keep some skin in the game in case they bail on you.

    Maybe do month-to-month with your next tenant to give you flexibility on when you want to move.  Or you could offer a 6 month - 9 month lease?

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  • Megan A.
    OP
    Mound, MN · Member since 2016 · 21 posts · 4 votes
    9y

    yeah those are great ideas!!' I appreciate your input @johnwoodrich.  We are still just getting started with real estate investing and learning all the time!  Once we aren't living in the actual duplex and having our living situation depending on it I think things will be a little easier to manage.... ha maybe!  We are so glad we bought the duplex overall though. We just need to get into the other unit to fix it up so that we can move out of there all together!

    1Reply
  • Orita Issartel
    Real Estate Investor / Realtor · Miami, FL · Member since 2017 · 125 posts · 67 votes
    9y

    I'm a realtor in Miami and an investor. I jus had a tenant who moved in in February tell me he's moving out going back to his girlfriend in Virginia. I kept the 2 months deposit which was the early termination clause and put the house in the market. I lost one month rent and the place had to be prepared for the new tenant. The 2 months deposit covers the expenses for that.   Legally you have to go by what your lease allows you to do. Most leases have an early termination clause. 

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  • James Qiu
    Investor · Carlsbad, CA · Member since 2012 · 73 posts · 34 votes
    9y

    In most cases, you can't get more than the security deposit even with the early termination clause in the lease, unless the tenant damaged the property and the cost exceeds the deposit. When a tenant moves out early, the landlord is supposed to make reasonable attempt to re-rent the place, and normally allowed to keep the deposit to cover the rent lapses in between tenants and cleaning/damage costs, and refund the remaining amount. If your tenant does some research on the internet, the cleanest way to break a lease if the tenant intend to forfeit the deposit anyway is to not pay rent at all and wait for the 3-day notice. At which time, she can move out free and clear, because you "asked" her to. I don't think you want to go there, because she would leave on bad terms and most likely leave your place trashed. I have had to deal with early terminations a few times, and each time I let them go and kept the deposit to cover lapses. It actually worked out better, because if they moved out at the end of the lease, I don't get paid in between tenants. In CA, the fact that rent keeps going up makes early termination almost beneficial. 

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