What to do when a tenant wants to break lease

Question

I’ve dealt with these in the past and they have mostly been case-by-case but wanted to know what you all might do.

We have a tenant who wants to leave (because of a new job out of town) a whole 9 months before his lease is up. It’s not worth the money trying to go to court and get all of that back but that was a hard place to lease and we even think the sec deposit will have to be used on cleaning and damages from them just being there those few months.

Do we talk big and ask for two months “or else”? (By the way, they won’t pay Feb rent because they will be out by this weekend but we all know how that goes)

Patricia Steiner · Answer

What does your lease say about early termination of the lease?  I recommend hand-delivering a letter to their unit to detail the cost of early termination and what funds are due and payable now - including February's rent and rent through the notice period.  It's not okay for them not to pay you and meet their contractual obligations.  Be sure to document everything; it might be worth a Small Claims filing to get what is owed you.

Paula Steimel · Answer

Hello,

I have a similar situation on two properties right now.  The first thing I did was to congratulate the tenant on their new job, because it truly is a great thing for them. I explained that it is very hard for me to find people who want to move in during winter months when it is below zero and between university semesters. I then forwarded them articles about the laws regarding subletting in our state.  I offered to work with them to find a suitable sub-letter (one who meets my standard criteria) and explained that until the current lease expired, they would ultimately be responsible for the rent, utilities, and any damages that occurred in the property during their absence. If an eviction was needed, they would be legally responsible for the costs. One of my two tenants chose not to take the risk on a stranger and is paying the rent until the end of the lease. The other is actively looking for a sub-letter, but as I mentioned, we have not had many prospects during these winter months.  I did give good references to the tenant as they moved out.  I can't say how this will end, but that is how I approached it.  Would I file a claim for unpaid rent?  Yes.

Frank Geiger · Answer

Refer them to the paragraph in the lease that states what happens if a tenant decides to break early.

The tenant should be responsible for the rent until you can find another qualified tenant to rent the property. That months rent should be prorated by both parties. This should not be something you have to negotiate. It either states it in writing or doesn't.

Bryan O. · Answer

@Harrison Liggett it isn't about "options" right now, it's about requirements. If your lease addresses early termination, then that is the current requirement. If it does not, then your state has a default early termination which is your current requirement. Explain the requirement to the tenant. If it is something you are willing to work with him/her on then you can negotiate from there. The lease is an agreement between 2 parties that can be modified if both parties agree... First, find the requirement. Second, decide if you will negotiate it.

Colorado's default requirement is that the tenant is responsible for rent and utilities until it is re-leased. The landlord is responsible for attempting to mitigate. My lease states that an early termination is a 2-month rent fee. Since my lease addresses it, that is the requirement. If it did not, then Colorado's default would be. I have worked with tenants in the past, but only if they earned it by being good tenants and because I would still benefit. If not, I would have simply explained the requirement and enforced it.

Kelly A. · Answer

Just went through this with a tenant 2 months into a year lease. I gave them this option which they accepted, rather than go through court.

-If they were out by end of current paid month, I would let them out of their lease with 2 additional months rent payments & the agreement to give up security deposit. If they were still there on the 1st day of the next month, they would owe 3 months plus security. They were out quickly and I was able to rent unit out again within a week netting 3 months bonus rent.

Omolara Dairo · Answer

Here is what I did for my last tenant who had to leave because he got a promotion at work and had to move out of state.

Of course I knew I could rent it easily. I actually rented it within that month of December when he paid me and he was not in the condo.  He only had 3 months to go on his lease.

"Congratulations on your promotion. That's good news

I am willing to work with you on this.

Plan- list unit for rental , if I find a tenant you are not liable for the rest of the lease but you will forfeit your security deposit.

If I don't find a tenant , you will pay half of the months rent and forfeit your security deposit.

These terms will be effective from Jan 1st.

You will still have to pay full rent for Dec.

I would like you to help in making the place available and show-worthy while I show it to prospective tenants. Of course I will give you 24 hours notice."

Michael Noto · Answer

To avoid this happening in the future write an early lease termination clause into your lease. It outlines what exactly would need to happen for them to be let out of their lease early. Typically we use the equivalent to 2-3 months rent as a fee amount in our leases.

Nathan Gesner · Answer

@Jim Cummings I'm a company so it's very simple. I set up an account with the collection agency. She. I want to submit a tenant for collection I fill out a form and provide as much supporting documentation as possible. They take it from there.

As a private individual, you may have to get a court judgment first. Just talk to a collection agency or two and see what they require. And keep your expectations low because their success rate is less than 20%.

Nathan Gesner · Answer

@Harrison Liggett it's difficult to make things work when you're in the midst of it. I would recommend trying to get the fire out and then developing a plan on how to deal with this in the future. You can actually make a lease break profitable!

For the current situation, I would contact the tenant in writing and remind them they signed a one-year lease and are contractually obligated for that term. I would give them two options:

1. Continue paying rent and utilities and taking responsibility for the rental until a new tenant is placed. If that takes until March 15th, they won't pay much of a penalty. If you can't find a tenant until June 15th, it could be real expensive.

2. Give them the option of paying an Early Termination Fee. This could be as much as two months worth of rent but you have to decide what you're willing to push for. Since you have no written policy, I recommend a lower amount like one month's rent.

Here's my policy.

If the tenant breaks my lease, I have the following policy/requirements:

1. Provide 30 days written notice;

2. If the tenant has more than 180 days remaining on their lease, they must pay an early termination fee equal to 60 days of rent at the time notice is given. If the tenant has 180 days or less remaining on their lease, they must pay an early termination fee equal to 30 days of rent. We will not accept the early termination notice until the fee is paid;

3. Participate in all showings during their final 30 days of occupancy as we attempt to find a new renter.

4. After the tenant has met all these requirements and vacated the home, we will inspect and deal with the security deposit like we would with any normal termination.

Say a tenant tells me he's leaving in 40 days and breaking his lease with six months remaining. If he pays the early termination fee, I'm going to give him a good Landlord reference for anyone calling to inquire about him. If he doesn't pay the termination fee and intends to break the lease and walk away from his obligation, he will get a bad Landlord reference and may even end up in collections.

Do not ever use the security deposit to cover last month's rent or a termination fee or anything else. The deposit should always be protected until the tenant is out and then applied towards unpaid charges, cleaning, and repairs. If you apply it towards anything else, you lose leverage over the tenant and they are more likely to fail to clean, make repairs, or even pay their last month of rent.

One last note: some tenants will never agree to this fee structure. They want to break the lease and walk away without penalty. You can't force them to pay this early termination fee, even if they've contractually agreed to it. However, you can still hold them to the terms of the agreement until a new tenant takes over. I had a tenant last year that broke their lease and it took 40 days to find a new tenant. I charged the old tenant with 40 days of rent and utilities. I applied their deposit to the charges which only left me about $300 shy on what was owed and I let it go. If it is more than $500 then I will typically send them to collections.

I hope this helps!

John Boychuk · Answer

In my opinion when a tenant needs to move, they are going to move. Obviously this may very per market, etc. but in my area with the tenants I deal with, we do not turn it into a lose-lose situation.Tenants are offered two options, both involve a $350 fee. One is to move out in 30 or 60 days and forfeit their security deposit (paying rent until last day of move-out month). The other option is that they rent until they or we find a tenant to take their place.

What to do when a tenant wants to break lease

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