Mid-Term Rental Cancelation Policy - what do you do if a tenant shortens their stay?

Question

Hi there!

Long-time reader, first-time poster. I'm curious how you handle situations where a guest wants to modify their reservation and leave early? Do you use specific language in your rental agreement to address shortening a stay?

I have a guest who signed an agreement to rent from Oct 15-Dec 15th 2025, but now wants to leave Nov 27. In this case, he gave us ample notice to (most likely) fill that slot, however, I'd like to protect us in the future. Do any of y'all have language in your agreements about shortening stays? Thanks in advance.

Miguel Del Mazo · Answer

My advice probably isn't the one that will maximize your return, and it may not even be what I will follow as we continue to grow our portfolio, but here it is.

My wife and I manage 5 units (4 we own, and 1 we arbitrage), and we allow anyone to give us 30 days notice to vacate at which point they can be let out without penalty. We will try to find a qualified tenant to take over during those 30 days, and if we can secure someone, then we will refund back to the original tenant for the overlapping days once we get paid by the new tenant.

So how is this working out for us? We're happy with this so far. No one has abused the policy as the only residents who've activated it have done so during a period of their own hardship (e.g. RN contract being canceled early).  We've always managed to fill vacacies quickly, often with a rent increase (we return to the original tenant based on their rent, not the new).

Is this the "best" policy? Probably not, but it keeps us happy and sleeping well.

Bonnie Low · Answer

It does happen, particularly when renting to travel nurses who are at risk of having their contracts shortened by the hospitals or recruiting agencies. I do two things: 1) I put specific language in my lease agreements that I need 30-days notice for early termination and 2) I also put language in the agreement that the security deposit can be kept if the renter terminates early. I do this more as a CYA than anything. I've only ever had this happen once - my very first guest had her hospital contract cancelled early and I had no language at all in my agreement because I was too new to know it was a risk. Since then, I increased my security deposit to cover more than a half month's rent should I need to use it. Fortunately, it hasn't happened again. Check your state laws to see what is allowed and use a state-specific lease.

Don Konipol · Answer

If you’re running a MTR more like a STR, then you can decide to charge the full boat as agreed or, if you desire (possibly to obtain a good review) find a substitute renter for the period in question and credit the original renter.

If, like me you operate a MTR more like a LTR just for a shorter period of time, you probably use a specific rental form provided by either the state real estate commission of the local NAR affiliate.  In that case the rental contract spells out specifically the obligations of both parties.

What I personally do with all my rentals is that I regard the rental agreement as a contract that both parties are obligated to fulfill.  Just as the tenant won’t voluntarily move out before lease termination because I found a tenant willing to pay more, I won’t suffer a monetary loss because they can’t or won’t fulfill their contractural obligation.  What I will do is attempt to find a QUALIFIED substitute tenant, credit the original tenant with the rent paid by the new tenant LESS one or two months fee for the extra work and effort, but I will NOT release the original tenant from liability should the substitute tenant default.

Look, the bottom line is that renting to tenants is a business, just like any other business.  However, government officials, pandering to populist sentiment, hold landlords to standards and responsibilities far more restrictive than any other business.  And in many cases this may be warranted as health and safety issues may be present.  But IF the property in question is in compliance with all code, and provides a safe and secure environment, all problems are timely addressed and corrected, and the property is maintained on a professional level, then the investor who has a large capital investment in the property should be entitled to enforce any contracts providing him with the agreed to cash flow.

Sarah Rosko · Answer

Hi Lisa, we manage mid-term rentals in the Indianapolis area, primarily serving traveling nurses. Our lease agreements allow tenants to leave without penalty if they can provide proof of contract termination. For any other reasons for early departure, we require payment of two months’ rent as a fee.

Sylvia Santelli · Answer

It happens. Nothing to be offended by or feel scammed by.

My contracts say 30 days notice but most of the time I will enforce a 2 week "paid notice" minimum. If a nurse or construction worker has their contract cancelled, I like to meet in the middle.

Nicole Heasley Beitenman · Answer

What's their reason for wanting to leave early?

Lisa Laursen · Answer

Thanks so much for the quick feedback, I appreciate it. :)