When Tenants Wants To Break Their Lease: A Guide To Early Termination For Landlords
It is essential that you have a firm policy about early lease termination when you’re a property owner or manager. If you allow one tenant to break a lease and not another, you’ll be vulnerable to a charge of discrimination. If you allow all your tenants to break a lease when they want to, you’ll be opening yourself up to more frequent tenant searches and all the costs associated. Here’s what you need to know about early termination of leases.
Reasons for early lease termination
In some cases, you would be legally bound to allow your tenant to break a lease early. For instance, if a particular tenant is called to active military duty and they will be stationed more than 50 miles away, you are legally obliged to release them from the terms of a lease. Some states allow the victims of domestic violence or sexual assault to break the terms of the lease and move away for their own safety. Even if your state doesn’t have this particular stipulation, it might be best to allow the tenant to break the lease anyway.
Another case where compassion on your part might come into play is when a tenant has lost their means of income and can no longer pay the rent. Rather than involving some kind of debt collection service or going through the process of eviction, you’re much better off to simply allow them to walk away. Whenever any of your tenants has gone through a divorce or some kind of serious physical illness, it will undoubtedly affect their ability to pay the rent. While you may not legally be bound to release them from the lease, it is generally the most sensible approach you can take.
There are cases where tenants may be within their rights to arbitrarily break the lease, if you have not maintained a unit in a livable condition. This means having fully functional electric, heating, plumbing, and gas, as well as functioning showers, toilets, and non-leaking roofs. If the tenant can demonstrate that you have been unresponsive in managing safety issues, they will be within their rights to break the terms of the lease, and you will have no recourse.
There is another case where tenants are legally allowed to break the terms of a lease, and that falls under the category of intrusiveness. You are obliged to provide your tenants with 24 hours notice when you intend to enter their dwelling, and if you don’t do that, you will have violated their right to privacy.
Early termination fee
In most cases, the best approach you can take to early termination of a lease is to include a clause in the lease itself which allows for early termination. This will allow you to protect yourself, and it will provide the tenant with some means of breaking the terms of the lease. Landlords and property owners who include such clauses in their lease agreement will generally charge two months’ rent for early termination. If you charge more than that, you run the risk of having it considered excessive by the court system, and that could completely negate your early termination clause.
Some other clauses call for no actual fees to be paid, but they do require the tenant to continue paying monthly rent until a replacement tenant has been found. If you decide not to include any kind of early termination clause, the tenant will legally be required to cover your losses until another tenant has been identified. To avoid all the legal hassles however, it’s always best to include your policy right within the terms of the lease, so that it’s clear to tenants from the outset what the terms for breaking a lease will be.