For most tenants, renting is a temporary living arrangement. Whether tenants have signed a month-to-month lease agreement or have signed a yearlong lease, it’s expected that they’ll continue renting for the full duration of the lease agreement. However, this isn’t always the case.
Whether a tenant lands a job in another state or goes through a major life transition, there are times you’ll face a tenant breaking lease before the end of the term. Though this decision isn’t ideal for either party, it’s important for landlords to know how to proceed.
Not only are you losing a source of income that they may have relied on, but there’s also the difficulty of finding a new tenant. That’s especially challenging during these troubling times.
That’s why it’s essential for landlords and property managers to be proactive when it comes to preparing for tenants breaking a lease early.
However, it’s vital for landlords to comply with their local and state laws when it comes to handling this situation. This guide will break down everything landlords and property managers need to know about what to do when a tenant breaks the lease, whether you can collect rent, and what rights you have.
Know your rights and responsibilities as a landlordReview the lease your with tenantsPotential legal reasons to break a leaseRequire your tenant to give written noticeCollecting rent after a broken leaseGoing Forward
Know Your Rights and Responsibilities as a Landlord
It can be challenging to keep up with the ever-changing legal landscape regarding rental agreements and landlord rights. Not to mention, these laws vary by state and local ordinances.
So, if you happen to own multiple properties in the same state, if they’re in different cities, you may have to follow a completely different set of laws.
That’s why it’s best to consult a professional. In this case, your most valuable asset would be an attorney that is experienced handling civil disagreements and landlord-tenant laws. An attorney will be able to advise you on the best ways to proceed in compliance with local laws.
Your attorney will also need to view your lease agreement. That’ll heavily influence your next steps.
Review the Lease with Your Tenant
The importance of a lease agreement cannot be understated. Not only does this document legally-bind both you and your tenant to a certain set of standards, but it also gives landlords and property managers a chance to be proactive when it comes to how they intend to handle different situations.
Many tenants labor under the common misconception that there’s flexibility when it comes to the expectation that they’ll stay for the duration of their lease term. That’s why it’s imperative to have a set protocol regarding tenants breaking the lease in your agreement.
In cases when a tenant breaks the lease agreement early, you’ll need to review the lease agreement with your tenant. If you have terms that stipulate certain expectations for breaking a lease, including giving notice and any penalties, those terms will dictate how the situation is handled.
You’ll need to explain these terms to your tenant when they break the lease. But be sure to emphasize this at signing, as well.
Potential Legal Reasons to Break a Lease
Landlords and property managers are responsible for understanding state and local laws regarding tenant-landlord agreements and rentals. These laws typically feature sections regarding some of the legal reasons to break a lease. That can help you determine how to move forward with any legal action against a tenant or rent collection.
Here are some of the most common legal reasons to break a lease agreement:
1. Breaking a Lease for Military Duty: The Servicemembers Civil Relief Act (SCRA) enacted in 2003 protects a U.S. servicemember’s right to break a lease if they have been deployed or are ordered to move. State and local laws vary. However, tenants are usually required to provide landlords with a 30-day written notice and an official copy of their military orders.
2. Unlivable Conditions: The warranty of habitability secures a tenant’s right to live on a property that doesn’t present a danger to their health or safety, is acceptable for human life, and is in good condition. If you’ve failed to provide tenants with a home that meets these standards, they’re well within their legal right to terminate the lease.
3. You’re Intrusive: Tenants have a right to privacy guaranteed to them by the covenant of quiet enjoyment. If a landlord or property manager breaches this covenant, the tenant may legally break the lease agreement.
4. Domestic Violence: If a tenant is in immediate danger presented by cases of domestic abuse, some states protect a tenant’s right to break a lease without penalty so long as they provide written notice. These laws vary by state, so be sure to research your local laws.
Month-to-Month Lease: If you operate on a month-to-month lease agreement, tenants may break the lease, so long as they provide sufficient notice. Generally, 30 to 60 days of advance notice is required. But again, this varies by state and local law.
Reasons for Breaking a Lease Not Protect By Law
All the reasons for legally breaking a lease agreement without penalty aside, it’s important to know what reasons for breaking a lease aren’t protected by the law.
Reasons for a tenant breaking lease early typically do not include:
Loud NeighborsAccepting a New Job Inconvenient ParkingLifestyle Changes (moving in with a partner, buying a house, etc)
Require Your Tenant to Give Written Notice
Requiring written notice from a tenant breaking lease is essential for landlords. Not only does this give you time to begin your search for a new tenant, but it allows you to prepare for the vacancy and its impact on your income.
Be sure to include a clause in your lease agreement that requires tenants to provide you with an advance written request to terminate the lease agreement, regardless of their reasons. Tenants should detail all the reasons they intend to leave and the date the termination is effective.
Most jurisdictions require a notice of at least 30 days in advance. However, this number can change based on local laws.
Collecting Rent After a Broken Lease
Even in cases where a tenant provides the landlord or property manager with advance notice, there’s still the matter of rent payments. Tenants may be responsible for covering rent, even after they’ve moved out.
These rent payments may continue until the end of the original term described in the lease agreement or until a new tenant is found to fill the vacancy. If this is legal in your rental’s jurisdiction, then here’s what you need to do to legally collect rent after a tenant has broken the lease.
Document All Landlord-Tenant Communication: It’s important to keep a record of all the communication between you and your tenant. Not only can this serve as a reference to avoid confusion, but if you have to take legal action, this can act as evidence that you complied with the law. Send a Written Notice to the Tenant: You’ll need to provide your tenant with a reminder of their responsibility to pay rent. They may be under the impression that they are no longer responsible for the payments after they move out, so be detailed. Let them know that they must pay until you find a new tenant or their original lease term expires, whichever comes first. Inspect the Property: If possible, try to conduct an inspection prior to the tenant moving out. This inspection will allow you to confirm the condition of the unit before working to rent it out again or refund your original tenant’s security deposit. Work on Filling the Vacancy: Now that you have a vacancy, it’s essential to fill it. Start marketing your property to new tenants and get the unit ready for viewings. You may want to consider 3D virtual tours. Determine How Much Rent Your Tenant Owes: Take the time to calculate the exact amount that your previous tenant owes you for rent and any excessive damage found in the unit. Send a Written Notice to the Tenant: Your written notice should be as detailed as possible. It should include any and all remaining payments due, a list of damage and repair costs, copies of receipts for repairs, and of course, any other fees due. Be sure to include a specific due date for your tenant to cover these costs. File a Civil Suit: Unfortunately, it’s possible that a tenant won’t fulfill their responsibility and cover their rent payment. If your tenant fails to pay the amount due by the date on the written notice, let them know that you will be pursuing legal action in a civil suit to recover the total due.
Whether it’s your first time dealing with a tenant breaking the lease agreement or you have gone through the difficult process many times, keeping up with the newest best practices can help protect you in the future. Not only will you be better prepared to handle the situation, but you can provide flexible options for your tenant to help make the best out of a bad situation.
Moving forward, the most important thing that you can do is include an early termination clause in your lease agreement. This clause should detail the tenant consequences of breaking the lease agreement, tenant responsibilities, and your expectations.
Here are some terms to include in your lease agreements to help you mitigate situations in which a tenant breaks the lease.
Allow Subletting – This is a win-win for you and your tenant. If a tenant finds a subletter, they won’t be responsible for rent payments, unless the subletter defaults. Landlords benefit by maintaining their source of income even after a tenant leaves. Forfeit Security Deposit – This course of action relieves some of the financial stress placed on landlords. Early Termination Fee – This fee is usually equal to one month’s rent. It dissuades a tenant from breaking a lease early if they don’t have to.Remaining Balance Payments – Require tenants to pay the remaining balance on their lease agreement.
It’s vital to err on the side of caution. Always work to comply with your state and local laws.
If you’re unsure about how to legally proceed in the event of early lease termination, consulting an attorney can save you many headaches and potential consequences in the future.
While it’s impossible to completely avoid early lease termination, thoroughly screening all tenants can help to reduce the chances of you having to deal with it. Regardless, being prepared for a tenant breaking lease is the most important thing. So, to protect yourself, update your lease agreements ASAP!
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