Early Termination of Lease

[Carley M.]

I recently purchased a 4-unit property (like a week ago). While I was moving in, one of the tenants gave me notice that she would be moving out in 45 days. I reviewed her lease and it has significant penalties for early termination: 1) The remaining rent due and payable (offset by re-renting of course - pretty standard), 2) A fee of 1 month rent to compensate me for my time/efforts to re-rent the unit, 3) Tenant is responsible for all expenses to re-rent including repairs, painting, advertising, legal fees, etc.

The tenant has made it clear that she has no intention of paying the penalties and wants me to just treat this as if her lease normally terminated. She has 8 months remaining on her lease. She stated her reason for moving out is because I'm having another tenant's bathroom gutted and she feels that the noise from the construction will make her unit uninhabitable for her because she's a grad student and studies at home.

I know I can legally pursue the full amount of the lease and penalties. Collecting it is another story. I'm not sure that it's worth the aggravation.  On the other hand, she has put me in a bad position where I not only have to juggle moving and the upcoming holidays, but now I also have to interview applicants and show the apartment.

There has to be some middle ground between total aggravation (housing court) and doormat (waiving the penalties) but I'm not seeing it.  Any advice for a brand new landlord?

[Michael Seeker]

@Carley M. - welcome to landlording!  There are a few different approaches you can take here.  The last thing you want to do is alienate a tenant, especially if they are living right next door to you.  At the end of the day if she absolutely doesn't want to live there anymore, you should figure out why and then find a way to let her out of the lease on agreeable terms.  Here are some suggestions:

1. Find out her study schedule and agree not to do construction on the bathroom during those hours.

2. Outline the early termination clause to her and let her know that she signed the lease through July and she has a legal responsibility.  If she doesn't want to fulfill that responsibility for any reason that she should either make a reasonable offer for termination or be prepared to go to court, have a judgment against her and have her credit score severely impacted.

You said "I'm not sure it's worth the aggravation".  Well, there are a lot of things you'll have to do as a landlord that are aggravating.  If you don't step up and deal with them, you'll get taken advantage of.  A lot.  

If this were my first property, I would have let this person out of the lease and just tried to find a new tenant.  But today with several years of experience under my belt (and countless aggravations) I would give them some options that I feel comfortable with and if they don't want to work with me then I'd be prepared to take them to court.

On a related note: I got a check for ~$1200 about 6 months ago from a 3 year old settlement against a contractor.  I never thought I'd see a dime of the $4K he stole from me, but wanted to make sure he had to carry that judgment on his credit if he chose to be dishonest and shirk his responsibility.  It wasn't pleasant taking him to court, but I would be very disappointed in myself today had I not done it.