Early Termination

What do you do when a Tenant Requests an Early Termination?

You have a great tenant who pays rent on time.  They take care of your property as if it was their own.  Everything is going along just fine and then boom!  They request early termination.  “They can’t do that,” you say. “They’ve signed a legal document binding them to the terms!”

While leases serve to protect landlords, there are also laws in place to protect tenants when they want out.  As a landlord, it is essential you understand what these laws and how to handle the situation reasonably with as little loss to both sides as possible.

Often tenants request an early termination due to an unforeseen event.  Rarely is there malintent.  So, what are some of the reasons?

Military Deployment – the Servicemembers Civil Relief Act provides protections for those who are called to military or active duty.  If a tenant is called to active duty or if their orders take them far away, they have the right to terminate their lease early.  However, you have protection, as well.  30-days notice to vacate must be given to allow time to help you try to find a replacement tenant.

Domestic Violence – while we hope it never happens, many states protect those who are victims of domestic violence, sexual assault, stalking, or unlawful harassment, giving them the right to terminate early.  It is important to know if your state provides the same protections.  Regardless, in such a situation, it’s advisable to terminate the lease early. A bit of compassion goes a long way.

Job Transfer – many times, a job transfer is not by choice, and even if it is, some states allow tenants to break their lease early in this situation.

Job Loss – no one ever plans to lose their job, but unfortunately, it does happen.  If your tenant no longer has the income available to pay rent, they likely will ask to terminate their lease early.  While there are no laws in place that protect a tenant in such a situation, a bit of compassion is warranted.  Releasing them from the lease is a much easier and ultimately cheaper solution than evicting them.

Divorce/Medical Issue – again, this is not a situation we wish anyone to face, but it does happen.  The tenant has no legal protections in this instance, but a compassionate heart will go a long way here.

The final two reasons are on you as the landlord and can be avoided entirely.

Uninhabitable Conditions – as a landlord, you are obligated by law to provide a safe and habitable environment for your tenants to live.  This includes ensuring gas, heating, electric, plumbing, toilets, showers, the roof, and walls are all in proper working order and free of hazard.  If your property violates any of these protective laws, your tenant has the right to terminate the lease without penalty.

Intrusiveness – even though you are the owner of the property, you do not have the right to enter at your pleasure.  Tenants are entitled to their privacy.  Many states require you give tenants 24 to 48-hours notice before entering the property unless there is an emergency.  Intrusiveness is rarely a reason for breaking a lease early, but if it does arise, tenants are required to give written notice asking you to stop coming over unannounced.  If you continue, and we hope you don’t, to “show up,” your tenant has the right to early termination without penalty.

So, what do you do?

Many states have laws prohibiting landlords from holding a tenant to the full-term of their lease once the property has been vacated.  As a landlord, you are obligated to make every effort to re-rent the property promptly.  This doesn’t mean you have to rent to the first person that comes along, but you must show you’re making every effort possible.  While you are searching for a new tenant, your “soon to be ex” tenant is responsible for paying rent, however, once a new tenant is in place, the previous tenant is no longer accountable. No double-dipping on rent!

To sublet or not to sublet? That is the question!  You’re probably familiar with the term sublet and all that it entails.  There’s a chance that your “soon to be ex” tenant will offer their help in finding a new tenant – it’s in their best interest to get someone in there as quickly as possible, and most times, their offer of help is made in good faith.  However, and we can’t state this enough, do not let your tenant act on your behalf by informally finding a sublet.    Accept their help, but don’t relinquish control over your property.

Tenants who ask for early termination of their lease are likely facing a stressful life event, and as a landlord, facing a vacant investment property can be stressful as well.  Many property managers recommend including an early termination clause in the lease, laying out the reasons why and the steps needed to be taken to make the process as fair and smooth as possible for everyone involved.   The terms often include minimum notice requirements, cost of early termination and what happens if either party does not fulfill their obligations.

In the end, you can’t force a tenant to stay.  Why would you want to anyway?  Do you want a tenant who doesn’t want to remain living in your property?  A bit of discretion and compassion goes a long way when faced with the possibility of early lease termination.  More often than not, your tenant will work with you to arrive at a fair and mutually beneficial agreement.

If all of this seems a bit overwhelming, we have a solution. Hire a professional property manager to do it all for you.  In the end, we can save a lot of time, stress, and money.

Topics: Property Management, Build Wealth, Real Estate

Call RentLife Property Management at 832-562-3600 or visit our website at www.rentlifepm.com

Mark Kallus –Broker/Owner, RMP®, TRPM®, TRLS®