Tenant Wants to Break Lease Early - New Jersey

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Tenant Wants to Break Lease Early - New Jersey

Ken Dayal
Investor · Jersey City, NJ · Member since 2015 · 88 posts · 31 votes

My tenant in Jersey City NJ is looking to break lease early. He states his reason as pending layoff - of which he is not sure but says it is inevitable in 2-3 months.  I try to be understanding and accommodate my tenants' various requests. The lease is a standard NJAR format lease.. I assume it would be ok to request this tenant for proof of his lay-off - in terms of a termination letter or correspondence, before I OK his lease termination ? 

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Judy Parker
Rental Property Investor · Closter, NJ · Member since 2015 · 884 posts · 722 votes
10y

In my opinion, let him break the lease. Be thankful he was honest with you and work with him to make a smooth transition. Get an exact date that your tenant plans on vacating, start looking for another tenant now, so that you don't lose any rent.  Been through this scenario a few times and it's not worth the legal fees to sue him for breaking the lease.

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  • Judy Parker
    Rental Property Investor · Closter, NJ · Member since 2015 · 884 posts · 722 votes
    10y

    In my opinion, let him break the lease. Be thankful he was honest with you and work with him to make a smooth transition. Get an exact date that your tenant plans on vacating, start looking for another tenant now, so that you don't lose any rent.  Been through this scenario a few times and it's not worth the legal fees to sue him for breaking the lease.

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  • Shannon Covington
    Investor · Newark, NJ · Member since 2015 · 53 posts · 4 votes
    10y

    I completely agree.

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  • Missy H.Pro Member
    Investor · Bloomfield, NJ · Member since 2015 · 207 posts · 121 votes
    10y

    @Ken DayalYou could request your tenant to provide proof of layoff but i guess that you should ask yourself "is it worth it?"  How much notice is he giving you.  Jersey City is a hot rental market and I am pretty sure that you could get it re-rented quickly.  

    Perhaps you could let him know that you will set an expected move out date and in the interim you will show the property to prospective tenants.  The alternative may be that you do not let him out of the lease but he ends up not paying the rent and you will have to evict him.  How long will an eviction take?  Is it worth it?

    Good luck.

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  • Kevin Zimmer
    Investor · North Hanover, NJ · Member since 2015 · 75 posts · 34 votes
    10y

    You can't really stop him from breaking the lease (that's why I tell people to rent...they are not wasting money, they are buying flexibility), but unless he is military and being transferred breaking the lease is breaking the contract.  So any loss in rental income could be deducted from his security.  It's a pain, but maybe he will cooperate to let you start showing to new prospects NOW.  If you are not at market rate this is the time to increase. If you are able to find a new tenant quickly he may not lose too much.   

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  • Shawn McenteerBusiness Member
    Realtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
    10y

    @Ken Dayal I agree with @Judy Parker.  Let your tenant go, no one wants to be forced to do something they don't want to do.  Right now he is flat out telling you he may not be able to afford your unit.  Really it comes down to why do you want proof of lay  off?  If he proves  he is getting laid off he leaves if he can't prove he is getting laid off then things get awkward and he creates a new excuse to punch out. Best of luck.

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  • Jim Adrian
    Architect · Papillion, NE · Member since 2015 · 1k+ posts · 840 votes
    10y

    This is reason why I added an early termination clause to my lease.  Let them leave happy as can be in hopes they don't destroy the property.  Not worth the hassle. Charge a penalty to break lease.  I would verify with employer if possible but this may just be for entertainment value as this couldn't be verified until after he lost his job or moved out.  I wouldn't want to stir the pot at work for him if he was a good tenant.

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  • Elizabeth Schellhammer
    easton, PA · Member since 2015 · 45 posts · 19 votes
    10y

    I agree with everyone. Let him leave on good terms, as long as he is giving you enough notice to find a new tenant, what's the harm? If you tell him that he must abide by the contract and that he is unable to break the lease, he may react angrily and mess with your asset.

    1Reply
  • Jacob Sampson
    Investor · Topeka, KS · Member since 2015 · 1k+ posts · 1k+ votes
    10y

    If my tenants give at least 30 days notice then I don't really care.  I just ask that they accommodate me showing the property immediately.  Although I use a 12 month lease, it's mostly out of habit.  I sometimes question why I do it for the following reasons.

    1.  I don't want bad tenants to stay.

    2.  I don't want anyone to stay when they don't want to.

    3.  Tied to #2 I'm going to let good tenants break the lease, anyway, as long as I get at least 30 days notice.

    I've had past, good, tenants whom I let out of a lease come back and wait for one of my rentals to become vacant.  That's a win/win.

    3Reply
  • Gail K.
    Augusta, GA · Member since 2014 · 1k+ posts · 1k+ votes
    10y

    Since your tenant has indicated his lay off is coming (but not here yet) you two can begin the process of finding a replacement tenant when this does happen.  He can understand that you both can be starting the process of advertising the rental property with showings with the understanding he will keep you informed of the actual date he is leaving.

    This may seem early but, depending on your market it may take several months of showing for you to find a suitable replacement for him.

    I did this once with a tenant who informed me they wanted to break a lease for a different reason.  This was before I began putting in a termination clause in my lease (30 days notice; two months additional rent).  I began the process of advertising the rental and giving the tenant adequate notice when someone wanted to view the property.  At one point the tenant commented this was a "hassle" to them.  I did point out the other option was that they could continue paying the rent until the lease would normally expire and that I was doing them a favor allowing them to break this contract and they shut up about this "hassle" business.

    Gail

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  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    10y
    Originally posted by @Jacob Sampson:

    If my tenants give at least 30 days notice then I don't really care.  I just ask that they accommodate me showing the property immediately.  Although I use a 12 month lease, it's mostly out of habit.  I sometimes question why I do it for the following reasons.

    1.  I don't want bad tenants to stay.

    2.  I don't want anyone to stay when they don't want to.

    3.  Tied to #2 I'm going to let good tenants break the lease, anyway, as long as I get at least 30 days notice.

    I've had past, good, tenants whom I let out of a lease come back and wait for one of my rentals to become vacant.  That's a win/win.

     I agree with you, but there is one situation to consider. I had a great tenant who planned to stay in my home until retirement which was going to be 5 years. When his 1 year lease came due he asked me about signing another year lease. I told him it was not necessary because the lease just goes month to month. Three months later they gave notice. It turns out they stumbled across a place that was closer to his work and newer. If they were in a lease, they would have never bothered looking. Since then my new policy is to put any good tenant in a lease when their old one expires or charge them more to go month to month. I would still let someone out of a lease if needed, but a lease keeps someone from looking.

    1Reply
  • Amit Patel
    Investor · Somerset, NJ · Member since 2012 · 95 posts · 45 votes
    10y

    @Kanishk - I have 16 units in Jersey City (3 buildings total) and this inevitably happens as a lot of people just rent for jobs and if jobs change,etc. they move out. I charge a $900 lease break fee and make them show the apartment.  

    I tell them that they can't break the lease until we get someone else and they are motivated to show the property. The $900 covers cleaning cost and compensates us for the hassle and we get a tenant who will be in there and will be happy and will be able to pay.


    I suggest you get him out as quickly as possible to avoid non-payment (technically if he doesn't pay it will take a while to evict anyway and you'll spend a lot of money). 

    1Reply
  • Naresh C.
    Rahway, NJ · Member since 2015 · 1 post · 0 votes
    10y

    Kanishk, 

    I agree with others on this. In few scenarios like for example, multi tier consulting , it can be challenging for people to procure a proof for their layoff. Besides in a market like Jersey City, you will get another tenant easily, considering the notice period he has given you. 

    0Reply
  • Monica George
    Real Estate Agent · Moreno Valley, CA · Member since 2015 · 23 posts · 5 votes
    10y

    I experienced almost the exact scenario recently and didn't have anything in my lease about early termination.  So I know how jarring it is the first time this happens.  Just remember that your tenant is probably also very stressed at prospect of losing their job, so best to try and work together to find replacement tenant quickly.

    Tell him you expect the home to be kept clean and setup a schedule for showing it.  Ask him to work with you and explain that you cannot break current lease until a new tenant is confirmed  (that means you have a signed lease and deposit from new tenant).

    And just remember, this also gives you a chance to raise the rent (if necessary), which can take the sting out of hassle of tenant searches.   Hang in there Kanishk!

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  • Jules Frames
    Tech Exec in Mobile and eCommerce · Jersey City, NJ · Member since 2015 · 17 posts · 0 votes
    10y
    You could also ask him/her to accommodate showing the apt early to potential renters and even to help you find a tenant (that you would screen of course).
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  • Sunny Suh
    Real Estate Investor · New York, NY · Member since 2014 · 81 posts · 46 votes
    10y

    Don't mean to offend but is it possible you got lucky with a paying tenant for a poorly located/conditioned unit?

    Curious to your reasoning as I don't understand why you'd want proof since Jersey City rentals get snatched up quickly, then again I am a noobie so my reasoning can be way off and I apologize in advance.  

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