How to handle tenants attempting to break lease?

Question

We have, currently, 18 units. All are rented and tend to, typically, do pretty well.  We do year-long leases with each tenant and currently don't offer an early termination clause in the lease. However, we have a tenant who has lived in one of our units for 16 years. We bought the property in May and had her sign a 1 year lease, and she got ahold of us yesterday and requested a written approval for HUD for a 30 day notice. We initially explained that we couldn't approve the request, because her lease wasn't up until May. She then wrote back a paragraph of "issues" that we were never made aware of, such as mold, flooding, sewage backup (basically a bunch of BS) and said it wasn't safe for her to live there or her kids, blah blah blah. You guys know the deal.

Anyway, we initially dug our heels in and stood our ground, stating that we wouldn't break the lease and that if she did, HUD could potentially terminate her  Section 8 voucher. (She is the only tenant that we have who is on Section 8.) She then wrote us an email basically begging to be let out, stating that she already found other housing and put down the security deposit, etc.

At this point, I don't want to keep digging in our heels and possibly have her threaten us with legal action or "withhold rent for repairs," etc. It just feels like it could turn into a headache.

In these types of situations (HUD or no HUD, all of our tenants are on the same lease terms with us,) what do you typically do when tenants want to break their lease?

Nathan Gesner · Answer

@Joshua D. it's very common for long-term tenants to start listing issues in order to break a lease. They may even threaten to sue. It's almost always an empty threat.

I've learned over the years that there is no point in arguing with the tenant. I have a very clear, written policy. When the tenant tells me they want to break the lease, I provide them with the written policy and let them know what options are available and the consequences of their choice. In short, they can:

1. Pay a fine, give notice, and allow me to try and find a replacement tenant;

2. Continue paying rent/utilities until a replacement tenant is found. If they don't allow me to show the unit, it may take longer to find a replacement tenant and they will be on the hook for more rent;

3. Break the lease and ignore their responsibility. I will eventually find a replacement and then take them to court and/or collections for the amount owed.

That's it. No back-and-forth. No negotiations. No drama. Give them the options, let them make the choice, and then act accordingly.

Corby Goade · Answer

Make sure you are familiar with your local laws, especially if this is an area that isn't covered in your lease. In most places, the tenant is responsible for lost rent until you can fill the vacancy, but you have to be able to show you've made a reasonable effort to rent the property.

In your case, the tenant being on section 8, even if you did have a couple months of lost rent, the chances of recovering that loss are next to nothing. Personally, I'd probably not fight this battle, there's nothing for you to win. I'd let them go, clean it up and get it rented again asap and consider any loss as what you paid for the learning experience and make sure you button up that hole in your lease for the future.

Best of luck.

Gil Olsen · Answer

Is your market strong enough to rent ASAP?  If so, try to turn the property with little to no vacancy.  Focus on getting a solid tenant that wants to be there long term (another 16 years!!).  Could be a win-win-win.

Mary M. · Answer

@Richard Sherman this sounds like a low income situation. Seems like it would be an undue hardship to ask someone who is on housing to hand over cash to vacate?

If this were a high earners kid in student housing? Then maybe....

Sam Shueh · Answer

Let her go. It is time for a renovation and get a lot more rent.

Mary M. · Answer

My heart so far has helped me in instances where things went sideways. I always try to mitigate my risk and i always look at things as an opportunity to make more in the future.

I also would return their deposit minus standard cleaning - why? Good luck proving the condition of the unit when they moved in.

I figure the loss of a months or twos profit is better than legal bills  ;)

Richard Sherman · Answer

They signed the lease, they are getting housing they clearly are trying to manipulate the situation and it costs real time and money and hassle.  I am not running a charity I am running a business.  I agree with your heart, but I think in this situation there should be some compensation for letting them out of the lease.  They can STAY and get their other deposit money back, there is no gun to their head.  Now, if the OP wants to let them out sure, do that, its fine, just remember that leases are there for a reason and you WILL have costs associated with this renter deciding unilaterally to just ignore the written lease.

Richard Sherman · Answer

I 100% agree with @Nathan G.    For future leases put in some kind of a break fee where you are happy and they are happy.  2-3 months rent is what we have depending on the unit.  We just say, that's what the company does, we can't control it...they do not know the company that owns the company that owns the property is me...bwahahahah...and I am not lying, I am strict!  ;)

In this situation, try to get 1 month break fee or something, maybe $500 whatever and let her out.

Mary M. · Answer

Also, legally you need to know the laws in your area. Where i am it makes little sense to fight a tenant as we have strong tenants rights re lease breaks.

I just figure i will use it as an opportunity to update/clean up the unit, raise rent and get a better tenant.

How to handle tenants attempting to break lease?

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