Tenants Wants To Break Lease 2/3 Early.
Howdy all,
I am in a situation where my tenants want to leave the unit. I have them on a three year lease, and only one year has passed.
Thinking about this, ive come up with a few scenarios.
1) legally (i hope), they are bound to the lease, and must stay. But in doing so, they might become angry tenants and stop paying rent on time (for which they have been doing since day 1. ) which could lead into alot of lost rent, and an occupied unit.
2) I let them go. and find some more.
3) I let them go, if they can find a suitable tenant. They will have to pay rent until one is found.
The rent for the unit is over $2000. nice unit, high end builtins, etc.
If i do let them go, what do i need to think about in the transfer?
Get your deposit back from the replacement tenant?
can i charge for the cost of them trying to break the lease?
Any and ALL ideas, suggestions, are very much appreciated.
thanks!
Hello latestart,
How long did it take to find these renters? What is the average time that rental units stay on the market? How much deposit did they give you? How much will it cost you get the unit ready for you next tenant? How much of your 2k rental is cash flow for you?
As to your current tenant being legally bound to the unit for two more years, this is true. They must have a good job in order to cover the rental payment. Most times people in this high-end market don't want to have there credit damaged by something like this.
You could run an ad, show he unit before the current tenant move out. I had a tenant that informed me that they were purchasing a home within the next month, so I started showing the unit within days of this information. I have someone just waiting to get in there as soon as I can make the unit ready. Plus I will be able to demand more rent than I was collecting from the current tenant.
Just withhold the cost of painting/cleaning from their deposit. If you can get the unit rented within days of the current tenant moving out, I would not hold it against the current tenant.
That is just me. Word of mounth gets around as to what type of landlord you are. I find it best to be fair and understanding. Good luck
I have had this happen a one or two times and my leases have a loss mitigation clause.
Under the terms of my lease, the tenant is responsible for any rent loss I may suffer for the unexpired term of their lease. I am obligated to use my best efforts to find a replacement tenant as soon as possible to keep the tenant's liability as low as possible.
This means that I can charge the tenant leasing costs (advertising and leasing commission if applicable) and the difference in rent if the rent is lower, in addition to prorated rent for the vacancy period.
Ask the current tenant to cooperate in showing the property. Ask them to be sure that the property is always presentable, because you may show to prospective tenants in their absence.
Bad break.
Two very quick general points:
One, whenever possible avoid having confrontations with tenants. Always, always, always. It doesn't make any difference if the law is on your side or if you are morally right, an angry tenant is a whole world of hurt for you. A fifteen minute temper tantrum by the tenant can equal several thousand dollars in damages for you. If they think you are on their side and you just want to work something out (a Win/Win situation) , you are already half way to a solution.
Two, if something is not in the contract it is a good news/bad news situation. The good news is you can work out whatever the two parties will agree to. And the bad news is you don't know what will ultimately be worked out. I don't like the unknown, so I have a Early Termination clause in my Rental Agreement.
"You want to leave Mr. Tenant? Well that is no problem. I hope the new job/new house/new wife works out really well for you. Lets take a look at the contract...well I'll be...you are in luck. There seems to be a way for you to break the lease! I am so happy for you. Let's see you only have to pay two months rent as a fee."
Thank you all for your advice!
I agree that keeping a good relationship with your tenants is the way to go. They told me that they will find tenants, allow me to credit check them, and meet them.
All i want are good tenants, that pay on time. I want to keep my cash flow comming in.
Do you think i should also begin to advertise the property now?
is there anything i should be weary for my tenants to find my new tenants? Should i look for tenants at the same time?
About your lease, can you post your Early Termination clause? or any clauses which relate to my issue? Ive been cutting and pasting from many lease contracts to build my own lease. But i dont have an Early Termination clause. that sounds like a good idea.
thanks for all your help
here you go....
26) Early Termination: Resident may terminate this agreement prior to previously stated Termination Date by doing all of the following: a) Giving Management sixty (60) days written notice, b) Paying all monies due through new Date of Termination, c) Paying an amount equal to the Security Deposit as an Early Termination Fee, d) Returning dwelling in a clean, ready-to-rent condition and e) paying a pro-rated portion of expenses for repainting and cleaning based on the ratio of the number months then remaining in the initial term to the number of months originally in the initial term.
I copied this from my Rental Agreement; the Security Deposit is two months rent.
I would start advertising immediately. If the current tenants are happy with you (and they should be because you are letting them out of their lease), that is a powerful marketing tool