How to discourage tenants from breaking lease early in CA?

Question

Hey everyone, I could use your help and advice on how to discourage tenants from breaking their leases early.

Context: I own a single family home in Oakland and rent out 3 of the 4 bedrooms. So far, my net vacancy rate is 0% since I've been able to find roommates. However, I've had 4 tenants break leases early over the last year and every time, it takes time to find a new roommate.

What I currently do: My current lease stipulates that I keep their 1 month security deposit to cover vacancy if I'm unable to find a suitable replacement after they move out, but that hasn't really deterred tenants from breaking their leases early.

What else can I do to deter breaking leases early? Few things I've considered are below, but not sure what is works the best and is legal, especially in tenant friendly Oakland:

• Impose an additional 1 month penalty if they break lease early
• Make the tenant responsible for finding a suitable replacement

Thanks in advance for your tips and advice!

Arwen Lothlorien · Answer

Why are they breaking their lease early? Several people in a year out of 3 bedrooms, sounds like there is a problem. Solve for that first.

Eric Li · Answer

Hey @Tony Lin, thanks for the feedback. Will add a clause to make it explicit that they're responsible for rest of lease until another tenant is found. From what I've read, this is the default in California, but hard to enforce unless I sue or try to collect.

@Ryan Landis, thanks for input! Is a break lease fee legal / common in Oakland, CA? If so, is this something that'd be collected and held upfront or when / if lease is broken? I imagine it'd be hard to collect a break lease fee at the end when / if lease is broken, right?

@Arwen Lothlorien and @Lauren Kormylo: good questions. 3 of the tenants have left early because a long-distance partner moved to the area and so they wanted to get their own place. The other tenant left early because they left their job, wanted to save money, and wanted to move back in with parents to cut costs. Since the move outs due to long distance partners, I've started asking prospective tenants what big life changes they anticipate in the next year and if they're planning to move in with a partner in the next year.

Ryan Landis · Answer

@Eric Li I would agree with what @Tony Lin said in regard to language around them being required until a substitute tenant is found. You can also play around with the break lease fee.

Something you are seeing though is the reality, there is not too much to enforce on someone if they decide not to pay unless you want to go down the collections/eviction route. People don't talk about it enough, but just because it is a year lease doesn't always mean they are staying for a year, unfortunately.

Tony Lin · Answer

I would put clause in there where they're responsible for the entire duration of the lease in the event that a substitute tenant isn't found. Also collect first and last month security is doable in the Bay Area.

Rob B. · Answer

Hi Eric, sorry to hear you're dealing with this challenge. Usually, it is a good idea to let them know that they'll be responsible for the portion they have due for the remainder of the lease until they help find a replacement. Side note-- I'm not from Oakland so I don't really know what local law stipulates as far as being able to charge a tenant for their remaining portion of the lease. Having said that, I would include something that makes the tenant responsible for finding a suitable replacement. Outside of that, maybe consider getting feedback on why there's such high turnover? / reasons for leaving?

Bob Weber · Answer

One thing to keep in mind is a party must make a reasonable effort to minimize the effect of a breach of contract. So, while you can say the tenant is responsible for finding a replacement, it doesn't change that the landlord has to make a reasonable effort to find a tenant as well. The nice thing about a well-defined clause like the tenant owes X amount is there's no debate about what's reasonable. You might even find a tenant early sometimes and get double the rent for a bit, which can help offset those times when it sits empty.

Ryan Landis · Answer

@Eric Li back in the day when I was a property manager for clients (it feels like yesterday lol) I didn't do room rentals so I am not 100% sure how it would work in that scenario with you living in one of the bedrooms. That being said, good, quality tenants, will typically do anything in their power to avoid an eviction/judgment/etc.  it would be a bit of a process, but they would be obligated to pay you if it is in the contract. I am almost positive you would not be able to take it upfront (there are restrictions on deposits in CA for furnished and unfurnished rentals and if they break the lease 2 months into a 12 month that just wouldn't work), but in general it is better to increase vacancy slightly to get better quality tenants (or lower price if you must - the alternative isn't very much fun).

How to discourage tenants from breaking lease early in CA?

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