Tenant wants to break the lease before lease start date

Tenant wants to break the lease before lease start date

Austin · Member since 2024 · 5 posts · 0 votes

I have rental property with signed lease (through Zillow) with starting lease date within a week. However the tenant is telling me they have personal issue and wants to move out of the lease or asking me options to break the contract. 

I checked the lease created through Zillow that does not show up any option for reletting but what I am aware (done it few times when one of my other property was managed by a property manager) is tenant could pay reletting fees (typically one month rental) that allows property to be re-listed. Tenant will continue to pay for utilities and any difference (or loss in rental) if home is leased for lower monthly rent than current lease term. 

I called Zillow and they told me they don't handle lease cancellation or changes but suggested to contact local attorney (I am in Texas/Austin). 

a) Take some penality and allow tenant to break the lease. 

b) take re-letting fees, list the house again and current tenant is bound to honor until it gets leased.

For both a) and b) I will still have to contact attorney as Zillow does not let me cancel the lease but only mark the lease cancelled once it is done. 

I would prefer b) for obvious reasons but let me know if there are other options. 

Appreciate any help/advice. 

Thanks,

Mohit

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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y

@Mohit Arora

Let’s also look at reality

Tenant doesn’t move in and then you have to “evict” a tenant not there and lose rent and try and collect something that doesn’t exist

Let them out of the lease, potentially keep the deposit and move on

This is why I also recommend a property manager - they typically will save you in the long run

7e investments53 Reviews
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  • Real Estate Agent · Henderson, NV · Member since 2011 · 1k+ posts · 550 votes
    2y

    @Mohit Arora You should probably check your state landlord/tenant laws before deciding what your options are.  

    Additionally, you may want to consider hiring a local expert moving forward to help mitigate these issues.

  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    2y

    What does the lease say?  They should have already given you the deposit, in which case find a new tenant ASAP and use the deposit to cover any prorated rent for June.  

    What I started doing is I take the deposit and if they don't move in, it is non-refundable.  If they move in, it becomes the damage deposit.  Of course all of this is in writing in the lease which they signed.

  • Austin · Member since 2024 · 5 posts · 0 votes
    2y


    Lease has following clause so no early termination clause.  Also unless there is any specific termination clause, tenant is responsible/liable to pay full lease term.

    I think there were specific outlier in Texas that allows tenant to exit without penalty, but it does not qualify for any of them...

    2.9.1. Default by Tenant

    Tenant will be in default (Default) if: (i) Tenant fails to pay any Monthly Rent by 7 days after Monthly Rent is due and does not cure the failure within 7 days of receiving written notice from Landlord; (ii) Tenant fails to pay any Additional Rent by 7 days after the Additional Rent is due and does not cure the failure within 7 days of receiving written notice from Landlord or; (iii) Tenant fails to comply with any other obligation or restriction in this Lease and does not cure the failure within 7 days of receiving written notice from Landlord. If Tenant Defaults under this Lease, Landlord may exercise all rights and remedies available under applicable law, including the right to: (i) terminate this Lease; (ii) regain possession of the Property through an eviction or similar process; (iii) recover from Tenant all unpaid Rent, including unpaid Monthly Rent, Additional Rent, Late Fees and, if applicable, holdover Rent for the period prior to Tenant’s delivery of possession of the Property to Landlord; (iv) recover all Rent payable under this Lease for the period from the date of termination for Tenant Default through the stated Expiration Date, less the amount Landlord is able to collect from any replacement tenants for that period; and (v) recover all

    reasonable costs and expenses incurred by Landlord in repairing any damage to the Property, caused by the improper use

    by any Occupant or any guests of an Occupant, less any amounts obtained from the Security Deposit. Additionally, to the

    extent permitted under applicable law, Landlord may recover from Tenant Landlord’s court costs and reasonable attorneys’

    fees and expenses incurred in connection with any legal proceedings against Tenant.

    To the extent required by applicable law, Landlord will use reasonable efforts to mitigate any damages resulting from Tenant

    Default.

  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    2y

    @Mohit Arora

    Let’s also look at reality

    Tenant doesn’t move in and then you have to “evict” a tenant not there and lose rent and try and collect something that doesn’t exist

    Let them out of the lease, potentially keep the deposit and move on

    This is why I also recommend a property manager - they typically will save you in the long run

    7e investments53 Reviews
  • Victor PatelBusiness Member
    Real Estate Broker · Cincinnati, OH · Member since 2022 · 133 posts · 89 votes
    2y

    Hopefully you took a security deposit.  If so I would keep the deposit and move on.  Even if the tenant decides to stay it will become a problem down the road.  Keep the deposit and cut your losses and keep peace of mind.

  • Austin · Member since 2024 · 5 posts · 0 votes
    2y

    Thanks for the suggestions. Sounds good. Yes, I did took the security deposit. 

  • Michael SmytheBusiness Member
    Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
    2y

    @Mohit Arora recommend you spend more time studying TX landlord-tenant statutes.

    Your lease is probably pretty basic as it didn't really cover this issue - and it probably doesn't really cover a whole lot more.

    Google & download as many TX leases you can find to copy & paste to improve yours.

    Logical Property Management4.9453 Reviews
  • Jaron WallingPro Member
    Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
    2y

    "I checked the lease created through Zillow" - Anyone thinking about getting into rental properties should build there own lease. You need to know the in's and out's of the lease, and at the same time you'll learn state laws that actually matter. 

    @Mohit Arora 99% chance you're keeping the security and letting them out of the lease. Don't waste your time trying to collect rent from tenants that never moved in. 

  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    2y

    If the lease doesn't address this, then you fall back on the law.

    According to the law in Texas, the tenant remains responsible for the terms of the lease until a replacement tenant is found. If the lease is scheduled to start June 1st but you find a new renter to move in on June 15th, then the original tenant can be held liable for rent June 1 - 15.

    Honestly, I would just let the guy go and refund their money. Focus your energy on finding someone new, not punishing someone for a few dollars.

    The DIY Landlord Book4.7248 Reviews
  • INDIAN HARBOUR BEACH, FL · Member since 2014 · 29 posts · 7 votes
    2y

    @Mohit Arora to gain some piece of mind in this same situation, I drafted a "Holding Deposit Agreement" document that is entered between the potential tenant and I.
    The purpose is to use the deposit to hold the rental until the lease signing and transition this Holding Deposit to a Security Deposit once the lease is signed and all other move-in funds are collected.
    You can message me privately and I can send you the doc I drafted.

  • Mackaylee BeachPro Member
    Real Estate Agent · Kansas City, MO · Member since 2020 · 1k+ posts · 492 votes
    2y

    I recommend getting acquainted with the tenant laws and regulations specific to your area. Consider creating your own lease agreement to fully understand its terms. For added assurance, have a local attorney review it.

  • Melanie ThomasBusiness Member
    Real Estate Broker · San Antonio · Member since 2022 · 1k+ posts · 489 votes
    2y

    Dodge the bullet, let them out. 

    RentWerx Property Management4.73300 Reviews
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