The renter has decided to end the lease early. So, what's next? But, they signed a legal contract agreeing to the terms. It includes paying rent until the move-out date the landlord sets. However, just as the lease protects the landlord, there are rules in place to safeguard renters who want to leave.
As a landlord, one must understand how to handle these circumstances. This way, it's easy to communicate effectively and fairly, follow legal protocol, and, ultimately, achieve the bottom line.
Why is the Tenant Requesting an Early Lease Termination?
Tenants wish to break their leases for a variety of reasons, including personal, professional, and landlord breaches. Depending on the circumstances, the landlord may be required by law to release the renter without compensation. This is as long as the tenant follows protocol. In other cases, being compassionate and working with the tenant to find a solution makes sense.
Domestic Violence
Landlord-tenant laws in several states allow victims of domestic abuse, sexual assault, stalking, or unlawful harassment to break a lease and relocate if necessary. Consult the state laws to learn what the obligations are if the renter sends an early termination of lease letter citing this as the reason. Even if the state does not protect victims, forcing the tenant to stay in an unsafe circumstance is not a good idea.
Job Loss
It makes sense to be empathetic in this situation. It makes no sense for the renter to stay if they can no longer provide the revenue that allows them to pay rent. Allowing someone to break their lease is far less time-consuming, difficult, and costly than pursuing an eviction or involving a debt collector. Work with the tenant(s) to come up with a solution that is beneficial to both parties.
Also Read: How Can You Improve Your Tenant Relationships?
Damage Protection is your Responsibility
Most states require landlords to find a new tenant (legally referred to as "mitigate damages"), This is when the tenant sends a formal early termination of lease letter and plans to vacate the unit before the lease expires. One can't legally hold the renter to the terms of the lease and collect rent from them while the apartment stands vacant until the lease expires.
Even if the renter decides to break the contract during the off-season or at a time that is inconvenient for the landlord, they must try to re-rent the property. One may need to go through the same steps they did at the beginning of the season. Such as marketing the rental, showing the apartment to potential renters, and so on.
The Buy-Out Option
The early termination of lease clause will assist establish the parameters for a buy-out option—that is, the sum the renter would pay to get out of the lease. To negotiate a buy-out, the landlord does not need to have an immediate termination of lease clause.
Because one can charge the tenant rent until they locate a replacement, tenants may want to pay a non-refundable fee to stop the arrangement and move. As previously stated, this charge is usually equal to 2 months' rent. This may appear to be a good deal if the tenant has more than 2 months left on their contract.
One also doesn't have to refund the tenant a partial fee for the time there was overlap if they find someone in less than 2 months. One can't go back to the original tenant and ask them to pay extra if they've been looking for a new tenant for more than 2 months.
Should You Let the Tenant Terminate their Lease Early?
It all depends, as it always does. One's reputation as a landlord and their relationship with the tenants are just as important as the bottom line. One can't force them to stay, but they can remind them of their lease duties. Also, hold them financially responsible until the unit is filled. A robust lease will assist landlords and ensure that they are rewarded when tenants wish to vacate.
Additionally, contact an attorney if one believes their rights and responsibilities as described in the original lease may have changed. Or, if one wants to prevent a lawsuit (initiated by either landlords or the tenant).
