Terms for letting tenants out of lease?

11 Replies

Tenants who moved in with a 12-month lease in April sent an email today saying a parent is buying them a house, it happened quickly, and they will be moving out September 1, only 4 months into the lease.  They've been good tenants, if young and slightly needy, and after growling and kicking doors I calmed down to think about terms.  The lease does NOT include an early exit clause (how did that happen? no idea and need to edit the lease for next time). The lease does stipulate that if they don't want to renew a lease, or want to leave after going month-to-month at the end of a lease, they need to give 60 days notice.  As it stands they're giving me 30 days. 

 The house is in unincorporated Decatur, Ga, a relatively popular intown area of Atlanta and probably won't be too hard to get new tenants (but what a pain)

I've  come up with these terms -- please give feedback --

I'll release them from the contract if we all agree in writing that:

1) they understand that they're breaking a  binding contract and legally they are responsible for the remaining 7 months of rent, HOWEVER

2) they are responsible for paying the rent in September, since they're not giving 60 days notice, BUT if a new tenant lease begins before October 1, I'll refund what they paid for September prorated for the days covered by a new lease.

3) I get to show the house to prospectives before September 1,

4) any costs incurred in getting the house ready for the next tenants will come out of the security deposit.

Does this sound reasonable?  Or should I just keep the security deposits and let them go? Is this legal in Georgia?

I haven't checked the Georgia Tenant-Landlord handbook to see if/what it says about this.

Thanks for your ideas on solving this situation.

I'm not sure you could mention #1 with within the letter you'll be giving them. You didn't have it in your contract originally so technically you can't require they pay up the remaining months unless its state law.

I think #2 and 3 are good but not #4. The way you've got it phrased could be suggested to mean that staging the house could come out of their deposit which is not what any ones security deposit is for. Simply let them know that any damages are repairs will be taken out of the security deposit.

I recently had a similar situation due to a family emergency from one of my tenants. They gave less that 60 day notice (30 I believe) so part of their sec. dep. covered the following month. The remainder of the sec. dep. would cover any repairs necessary. We simply talked it over and it was easily understood. Now if your tenants' deposit wasn't at least one months rent you may likely want to rely on a letter like you've developed with a few tweaks so far.

Usually you can only hold them respondsible for time it is not rented so you cant collect double rent. The most important thing is they have it neat and clean for you to show and you get it rerented. I just had tenants do this with like 5 days notice.there was a buy out clause in the lease but I wound Up discountiNg because I could find a tenant. They were crying about being out of work but I had my doubts about what was really goimg on.. Cut your loses and concentrate on efforts to find a new tenant. You probably cant charge make ready fees  only damages.

If you talk it over with them and they are agreeable to it, why not start showing the property this coming weekend. Make sure its clean and ready to go.   Make them understand that its typical to give 60 days notice and I would not put anything in writing.  

They owe the remaining 7 months, period. Getting the home leased and getting them out of there with minimal need to do any touch-up work in the house is your number one priority.   Inspect the property, list it for rent ready Sept. 7th or so, and show it asap. 

Keeping their security deposit, charging them for the remaining 7 months, and putting it on their credit is up to you. If they ask you for details on returning of the security deposit, say you return the deposits after a move-out inspection is completed upon them vacating at the end of their lease terms but, since their terminating the lease early, you need to check with your partner on how you handle this. 

I would pro-rate the rent for September, if your charge them the full amount they could drag their heels and take several extra days to move all their stuff and you don't want that. Encourage them to leave by the end of August, the sooner the better.

Personally, I would not return the security deposit. 

Originally posted by @Anna Watkins :

Tenants who moved in with a 12-month lease in April sent an email today saying a parent is buying them a house, it happened quickly, and they will be moving out September 1, only 4 months into the lease.  They've been good tenants, if young and slightly needy, and after growling and kicking doors I calmed down to think about terms.  The lease does NOT include an early exit clause (how did that happen? no idea and need to edit the lease for next time). The lease does stipulate that if they don't want to renew a lease, or want to leave after going month-to-month at the end of a lease, they need to give 60 days notice.  As it stands they're giving me 30 days. 

 The house is in unincorporated Decatur, Ga, a relatively popular intown area of Atlanta and probably won't be too hard to get new tenants (but what a pain)

I've  come up with these terms -- please give feedback --

I'll release them from the contract if we all agree in writing that:

1) they understand that they're breaking a  binding contract and legally they are responsible for the remaining 7 months of rent, HOWEVER

2) they are responsible for paying the rent in September, since they're not giving 60 days notice, BUT if a new tenant lease begins before October 1, I'll refund what they paid for September prorated for the days covered by a new lease.

3) I get to show the house to prospectives before September 1,

4) any costs incurred in getting the house ready for the next tenants will come out of the security deposit.

Does this sound reasonable?  Or should I just keep the security deposits and let them go? Is this legal in Georgia?

I haven't checked the Georgia Tenant-Landlord handbook to see if/what it says about this.

Thanks for your ideas on solving this situation.

 Hi Anna,

I would tell them that you'd let them out of the lease pending they find another qualified tenant in their stead, and meanwhile you should hire a listing agent to market the property to show to potential clients. I would negotiate terms to allow access.. and if they are serious about moving out, they should be thrilled to accommodate viewings at reasonable hours.

I hope this helps.

Best,

Barry

Make sure it is clean and start marketing it immediately. Under state law, you may or may not be able to keep their security deposit. I have had a few tenants want to leave early and I usually tell them give me 30 days, leave the place clean and without damages, and I return their full deposit. Read your state laws to see what rights you have.

In regard to the security deposit, I would not keep any portion of it, UNLESS there are damages to the property.  By law, the security deposit is to be used for damages only.  If you have a savvy tenant and you keep the sd and they seek the advice of a lawyer, you could be looking at appearing in court and paying triple damages.  I wouldn't risk it.  If there are no damages to the property, you have no legal right to keep the security deposit.  

I would let them go.  They provided 30 days notice.  You have their security deposit, from which you can withhold any money owed for damage.  And you admit you should have no problem renting the place again.

The only loss is the "pain" of showing it and vetting new tenants.  I chalk that up to the cost of doing business as a landlord.  It's what I signed up for when I decided to become a landlord.

You won't be out of any real losses here.  No need to make your tenants have to deal with a loss.  My philosophy is, as a landlord I am in business to make money from tenants paying me money for living in my properties, not making money off them for moving out of my properties.

Hi @Anna Watkins

Hope you are doing well. Sorry to hear about the tenant breaking the existing lease but things like this will happen. No need to stress about this as these kind of issues will happen in the future. 

Firstly, update your existing lease to include an Early Termination or based on whatever legal advice you get from your attorney. The below text is simply for discussion purpose and I am no lawyer etc etc...(you know about this already)

  1. EARLY TERMINATION: TENANT may terminate this agreement before the expiration of the initial term by:
    1. Giving Owner/Landlord at least one/two (1-2) month’s written notice to be effective only on the last day of a given month, plus
    2. Paying all monies due through date of termination plus
    3. Paying an amount equal to one month’s rent or 1/3 of the total monthly payments remaining in lease term, whichever is greater; plus
    4. Returning residence in a clean, ready to rent condition, plus
    5. Resident must pay for advertising necessary to rent residence, not to exceed one hundred dollars.
    6. Management may terminate this lease with a 30 day written notice.
  2. I had the same issue last year and my resolution was as follows:
  3. 1. First thing I made clear that the tenant's security deposit will not be refunded if they were to terminate the lease and this was mutually agreed upon
  4. 2. They had to pay the month's rent in your case September
  5. 3. Tenant's would allow me to schedule an open house. Tip: I just do an open house and have people come during that time frame. More often then not I can rent during the open house. Instead of scheduling time with prospective tenants as people typically cancel their appointments etc. 
  6. 4. House was rented. The old tenant moved out. I got the security deposit + months rent.  I wanted to avoid any legal action because I did not have time or the energy to deal with any legal issues and besides I wanted to avoid any additional hassle factor. Just make sure to have all communication in writing in the event you have to take legal action. 

Hope this helps. 

Thanks to everyone to has offered advice.  @Azeez K. and @Ericka Parrott ,  I especially appreciate your Georgia-specific experiences.  I have been working all day getting #4 move-in-ready in Tennessee (lease starts Thursday!) and now have to cycle back to dealing with House #3 (with the lease-breaking tenants).  Whew!

I'll post a follow with how it goes.

Hi @Anna Watkins - Your lease has to be fair.  If you want 60 days to terminate, then you need to provide tenants with 60 days to terminate.  

My lease says something like:

Tenant may terminate lease for any reason with 60 days notice and by sacrificing security deposit as a turnover fee.  

In addition, I would pick up the phone and let them know you can work out a better deal than the lease if they cooperate with your marketing efforts.  

In the absence of this language, I would explain they're obligated to pay rent unless you're able to find a new tenant.  If the new tenant fails to pay rent, then original tenant can still be obligated to pay rent.  If they want to be relinquished from the lease, then you need to put something in writing, pay sixty days of rent and vacate in 30 days.  

@Azeez K.  I'm not sure your 'unbalanced' language will hold up.  

@Rick Baggenstoss -- thanks for another take on how to approach this.  I haven't presented terms yet to tenants (in Sewanee now, supervising last minute preps for Bluff House tenant -- he's named it "Trinity on Short") but have to do it soon. Like by tomorrow at the latest. They're good kids (and don't I sound impossibly old!!)

Get the Ultimate Beginner's Guide

Sign up today to receive the popular eBook for free!