Every property manager and landlord, at one time or another, find themselves dealing with a tenant looking to terminate their contracted end date. This may be a difficult issue to handle, but with good investment property management practices, a favorable resolution may be achieved quickly. If they’ve signed a lease agreement, they’re legally bound o its terms, which includes paying rent through the move out date on the contract. Yes, the lease is meant to protect the property owner from tenants making decisions that can create financial problems. However, laws are also in place to protect tenants who want out.
Both the property manager and the landlord should be prepared to handle this kind of situation to avoid making any decisions or creating hostility between themselves and the tenant while the issue is sorted out according to legal protocol. By arming yourself with a solid understanding of tenant/landlord rights in your state or community and keeping the channels of communication open between yourself and the tenant in the interim, you stand the best chances of prevailing when it comes down to the tenant’s responsibility to honor the contract they signed.
There are many reasons tenants request an early lease termination. They may need to move for their job, they could have an ill relative in another area who needs care taking or they may find themselves unable to afford the rent at your property any longer. Depending on the reason they provide, there may be legal stipulations in place that require the landlord to allow the tenant to leave without any financial or legal repercussions. Some reasons may be legitimately out of the tenant’s hands, in which case working out a compassionate solution with the tenant may be in everyone’s best interest. However, if their reason for leaving isn’t valid, you’re probably legally entitled to hold them responsible for the term of the lease—and you should do just that.
Some legitimate reasons a tenant may need to move out early include:
If a tenant is called for military or active duty, they can legally terminate their lease under the Service members Civil Relief Act, which allows members of the armed forces, National Guard, the National Oceanic and Atmospheric Administration (NOAA), and the U.S. Public Health Service to break their lease in order to report for active duty, or if their orders require them to relocate 50 miles or more from their current home.
Still, the tenant must first provide a 30-day notice, effective 30 days after the date the next rent payment is due. In other words, if the tenant departing due to military orders gives you their notice on September 12, they are still responsible for paying October’s rent as well, and their tenancy obligation ends as of November 1.
In some states, including Nevada and Washington, landlord-tenant laws allow survivors of domestic violence, sexual assault, stalking, or unlawful harassment to terminate a lease in order to relocate elsewhere. If your tenant requests an early lease termination due to one or more of these grounds, check the laws in your state to clarify your obligations. However, even if your state does not support the tenant under these circumstances, it’s highly advisable that you allow the termination rather than force the tenant to remain in an unsafe situation.
This is another situation with no easy answers. While your tenant remains obligated to the terms of the lease if he or she no longer has the income to pay rent you may be better off cutting your losses and moving in a new tenant. If they were screened properly during the application process and passed the financial and background check criteria at that time, they probably didn’t see this coming. Agreeing to an early lease termination under the circumstances may prove far less time-consuming and expensive for you in the long run than pursuing an eviction or enlisting a debt collector. Talk to your client to see if together you can find a solution that works for both of you.
Divorce or facing a serious illness of a loved one or can severely impact a tenant’s financial situation. Again, while you’re not legally obligated to terminate their lease ahead of time, under such extenuating circumstances providing them with an out can certainly make all the difference to them in an already tough situation. It may be the best decision for you as well, for the same reasons it makes sense for a tenant who lost their job.
In addition, if the divorced tenant shared the apartment with he spouse prior to their split, sharing rent payments after one has moved out could become a serious source of contention, which could cause problems for your other tenants or even create a potentially volatile situation you don’t want any part of.
Many tenants have no control over whether their employers decide to transfer them elsewhere. Check your state laws to see if yours is one of those that allow tenants to break their lease for this reason.
Landlords are legally obligated to provide safe and habitable living conditions for tenants. If one or more rental units are rendered unlivable due to a violent weather event, burst plumbing, a fire at the property or other damage that cuts off vital utilities such as gas, heating, and electrical, systems, sinks and toilets become unusable, the roof leaks or any other conditions exist that render the living conditions unsafe, tenants can legally terminate their lease without further financial obligation.
Sometimes tenants decide to leave because they no longer feel safe or they feel their privacy is not being respected by investment property management staff, the landlord, or other tenants. Property owners and managers should always give tenants at least 24 hours’ notice before entering a unit unless it’s an emergency. If a tenant has legitimate complaints along these lines, you may choose to grant them an early lease termination since taking them to court could be costly and you may lose to boot. However, before tenants can break their lease, they are legally obligated to submit a formal written warning stipulating that unannounced visits from the landlord or property management staff to their unit without at least 24 hours’ notice will no longer be permissible. Courts rarely allow tenants to break their lease without a written complaint on the books.
In most states, when a tenant submits a formal request to terminate their lease early, the property owner is obligated to search for a new tenant. Legally, landlords and property managers cannot hold the tenant responsible to the terms of the lease and collect monthly rental payments from them if the unit is left vacant without attempting to find a tenant for the remainder of the lease term. This is non-negotiable. As a landlord or property manager, you are required to make an effort to find a new tenant. However, you are not obligated to rent it just anyone who shows up to view it; a new tenant must still pass your screening criteria, including financial and criminal background checks. As long as you are actively seeking a qualified tenant, you can continue to collect rent from the lease-breaker through the months remaining on the lease until you either move a new renter in or the lease term expires.
While you’re searching, your tenant is still responsible for paying rent. And in a few states, you can hold the original tenant liable for all of the monthly rent payments due through the end of the lease’s term. However, once you fill the unit, your previous tenant is off the hook. Collecting double rent payments on the same unit is downright illegal.
If the exiting tenant offers to help you find a new tenant, it may expedite the transition, so why not? Any referrals your former tenant sends your way will still need to be screened like every other applicant, so you’ve nothing to lose. However, decline any offers the former tenant may pitch to sublet the unit. You don’t want a former tenant who may or may not have a dog in this fight to make any tenancy commitments on your behalf. The only people who should have any control over who lives in your property is you and your property manager.
Investment property management, like most things, has its pluses and minuses. Tenants wanting out of their lease early are bound to happen, but you can decide how it’s going to go down in the end. Landlords and property managers should keep up with current landlord/tenant laws in your state so that when your first lease-defector comes along you already have the appropriate script in your head. Show compassion when you know it’s the right thing to do but hold your ground with renters who have no legal or compelling grounds to break their lease. You didn’t decide to become a landlord to enrich everyone else. But of course, you already know that.