Tenant Backing Out of a 2 Year Lease After 3 Months!

[Caleb Anderson]

Hey BP community!

So my tenant is backing out of their 2 year lease, and they've only been there 3 months. The reason for leaving is "getting married and moving in with new spouse". My cash investor owns the home, and I was handling management and money organization piece. The tenant has been great so far with no complaints. Trying to get some feedback and ideas on best ways to handle the situation. 

First thought was to- My party keeps security deposit. -Have tenant pay rent for the current month. -Have them pay cost of finding a new tenant.

Myself and investor were also considering selling the property, which we would make a profit from. We already have other properties that look interesting that we were planning on going for anyways. I know the tenant is responsible for the lease, but them leaving in the situation we are in almost seems like a good thing.

Thanks for any help! 

[Nathan Gesner]

Of course he's been great. He's only lived there three months which is hardly time to screw up!

Your lease should include a penalty for early termination. It sounds like you're missing that so the next option is to simply enforce the existing lease. That means you notify the tenant - in writing - that they are responsible for the full term of the lease or until a replacement tenant takes over, whichever occurs first. You (or the owner) have a legal obligation to make a "good faith effort" to procure a new tenant. Once that tenant takes over, you have to release the old tenant.

The other option is to negotiate something new with all parties concerned. For example, you could contact the tenant and tell him he's responsible for the remaining 21 months but you're willing to release him if he pays two months as a penalty. Make him pay the penalty fee up front! Don't offer to take it out of his deposit because he may fail to turn the unit over in good condition and then you've lost all leverage.

Pay the termination fee and sign a written agreeement

After he vacates, inspect for cleaning and repairs

Apply the deposit and/or refund, as necessary