Early lease termination of 1 year lease

14 Replies

Hi All,

Currently renting property in Fresno, CA. Tenant moved in in 02/01/2015 and lease won't end until 02/01/2016. However, on 04/01/2015 tenant told me that she probably want to move out because of the work issue and her daughter/son in law who live with her want to move back to Mexico. Tenant expressed that it will be difficult for her to pay the whole rent if her daughter/son in law move out. ( they are not 100% sure if they are moving in August/2015).

The tenant is letting me know as a courtesy. My question is:

If she is letting me know a couple  month ahead like this, What should I do with the deposit? Give her back or take it? and terminate the lease agreement?

She also express that she can continue to live there if insist ( which i don't think i can force her) I'm afraid that if she continue to live there, she might not be able to pay the rent? 

Please let me know what the best solution in this case.

My preference would be to part on friendly terms.  I only do month o month lease because, as you're learning, a long lease isn't truly binding on a tenant.  That said, I do have an "improper lease termination" clause in my lease that specifies a "lease breaking" fee.  Its equal to the deposit.  That's more important when the tenant just disappears.  In a situation where the tenant is willing to work with me I would agree on a moveout date and treat it like a normal moveout.  If you have additional costs (advertising, showing) then I would charge those against the security deposit.

check California laws and your lease on what you need to do.  First thing I would do is get a firm notice. Is she officially notifying you she is leaving in August?  If it is wishy washy tell her to come back 60 days in advance of when she is leaving (or whatever your lease says) and to let you show the place so you can get a tenant as soon as she moves out. I would return the deposit deducting what is allowed in your state.  For the actual apartment rent unless you say otherwise in the lease you  typically could charge for lost revenue if you couldn't rent. if you have another tenant the day after she leaves you would not have lost revenue.   I am assuming you have no lease break fee in the lease.

I would ask for a firm move out date and find a new tenant.  Deduct any monies for any vacancies from her deposit.   This is why a good deposit is so important. 

Actually, I have a comprehensive lease agreement which include early termination and deduction from early termination. 

What  i am concerning here is the fact that she might not be able to make the rent, i guess i would ask for the firm date of moving out and looking for new tenant and will deduct any fee associate to filling new tenant and fixing fee.

Another question is that she has 1 month deposit if i can't fill by then, should i deduct the whole deposit?

Thanks all for your feedbacks.

As said, lease termination clause is KEY! 

If you have it written to keep the deposit, keep it, then just find a new tenant. No reason to force someone into something that they willingly admitted they can't make happen. Even if she did manage to make the rent it would be a resentful relationship and that's always more costly.

I deal with higher income but i have learned to enforce it 100%. The only time i didn't it bit me in the butt HARD

@Vannak Kann

 I found one of our tenants is going to break the one year lease and also in California.  I did some research and found the following: You can charge the tenant until you find a new tenant. Landlord is supposed to make a reasonable effort to find a new tenant as soon possible and the tenant is not needed to pay rent once you find a tenant.

Here is an link that might help.

http://www.nolo.com/legal-encyclopedia/tenants-rig...

@Vannak Kann , your link didn't work for me, but I think I have it bookmarked, and will include it below.

 In CA you can't have any non-refundable fees, other than the application fee, so no early termination fee allowed, and no keeping the deposit.  You can only use the deposit for unpaid rent, cleaning, and damage beyond normal wear and tear.  

Tenants have the right to break their lease in CA.  And you have a duty to mitigate their damages.  This means as @Vannak Kann said, that you can charge them rent until you find a tenant, but you must use reasonable means to do so, in order to minimize the cost to them for breaking their lease.  You can still adhere to your rental criteria, but you can't just sit around and collect rent.

This is an article on breaking leases, and refers to CA:

http://www.nolo.com/legal-encyclopedia/tenants-rig...

Be sure you follow the laws regarding the initial move out inspection and the written notice, and 21 day time frame, etc.  Here are the CA laws regarding security deposits:

http://www.dca.ca.gov/publications/landlordbook/se...

It includes info on what's considered wear and tear vs. damages, too.

I highly recommend you get this book.  It was my bible:

http://www.nolo.com/products/the-california-landlo...

@Sue K.

 I think you were referring to the link I posted above :). Thanks for posting the correct link.

I also wanted to thank you for referring to Nolo website in a different post.  I am new  landlord in CA and the  the website has great resources.

Originally posted by @Radhika M. :

@Sue Kelly

 I think you were referring to the link I posted above :). Thanks for posting the correct link.

I also wanted to thank you for referring to Nolo website in a different post.  I am new  landlord in CA and the  the website has great resources.

 I love the Nolo stuff.  Their CA landlord book includes great contracts and all the forms you need in CA.  Their contracts are really easy to understand, so they don't overwhelm tenants.  For around $35 it's a steal!

The Nolo, Landlords rights and responsibilities is invaluable. Highly recommend.  

I prefer to part on friendly terms as stated above, but  I think you need to ask yourself a couple of questions:

1. Do you want the tenant? I had a tenant that drove me crazy with nitpicky things. When she asked to break the lease, I was glad to let her go.

2. How hard is it to find a tenant to replace the old one? The house in the above example is never vacant. I got 30+ calls on the property (its a 3/2/1 SFH in the best school district in the state) last time I listed it and now have a great tenant.

3. Rent/ evictions/ opportunity costs: we all want to enforce the lease, but there is a lot of time, effort, some legal fees and a lot of lost rent if you have to evict, and you will never see that rent money. Yes there are vacancy costs including lost rent, cleaning, showings, possible unreported maintenance, but depending on the state eviction can take months.  

4. Angry destructive tenants: depending on the tenant, will they become destructive if you enforce the lease and make them pay for a place they don't want.  Property damage costs more than lost rent.  Criminal and civil charges will not help that. Even if you sue for damages, if they can't pay the rent will they have the money to pay damages or will you simply have a lien against them they never pay.

I would try to enforce the lease, but push comes to shove, I would consider the above if the tenant is admit about leaving.

Thanks all for the reply, here what I decided to do:

  1. Confirmed the date she is moving out by the end of this month, she plan to move out in August/2015.
  2. Give her back the lease as long as she cleans up and ensuring that the house is in the same condition as she moved in. 
  3. I will only deduct whatever needed to clean and fix up and give her back the different.

There is no point of me forcing to live in a place where she might not be able to afford it. I have a friend who own property and he will find new additional tenants. Anyhow, thanks all for your replies, it was very helpful and I've learned a lot from this discussion. Happy renting !