Early Termination of Fixed Term Tenancy: Portland, OR

Early Termination of Fixed Term Tenancy: Portland, OR

Real Estate Investor · Portland, OR · Member since 2016 · 9 posts · 1 vote

Hi there, 

I've been a part of BP for about 6 months now and this is my first post. The hosts always say to post questions and you'll get answers. So here we go!

I have a rental house that a lovely young couple moved into about 6 months ago. I got a text last night saying they were breaking up and wondering what they are on the hook for. They signed a 1 year lease and now want to break it basically. I'm trying to understand the legal jargon on my Rental Agreement so I know where I stand and have a basis for coming to a win/win agreement with them. Here is what it says:

"Upon any failure of Resident to occupy the Premises for the full term of a fixed term tenancy, for any reason other than as provided in ORS 90.453(2), 90.472 or 90.475, Owner/Agent may charge Resident either:

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A)all of the following: i) all rent, unpaid fees and other non-rent charges accrued prior to the date that Owner/Agent knew or reasonably should have known of the abandonment or relinquishment of the Premises; ii) all damages relating to the condition of the Premises; iii) an early termination fee in an amount not to exceed one and one-half month's stated rent and which is due on the earlier of the date Resident gives notice to vacate or the date the Premises is vacated; iv) interest on the above amounts at the statutory rate from the date each was due, and v) all other amounts due at the times specified in this Rental Agreement; or prospective buyers or B) all actual damages resulting from the early termination, including but not limited to: i) repayment of concessions; all rent through the earlier date the Premises is re-rented and the lease termination date; ii) advertising and administrative costs to re-rent the Premises; iii) concessions given to re-rent the Premises; iv) the difference in rent if a lower rental rate is received from a replacement resident during the remaining term of the original Rental Agreement; v) damages related to the condition of the Premises, and iv) interest on all amounts at the statutory rate.

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What's your take on that or your experience on this? If they truly want to leave, I'm tempted to just get them out asap, and get new people in and just charge them for the days in between.

Love to hear some other thoughts/experiences on this.

Thank you!

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Real Estate Agent · Portland, OR · Member since 2013 · 154 posts · 67 votes
10y

What I usually do is tell the tenants that if they help me avoid any gap in the tenancy then I won't charge them for breaking the lease.  In order to do this  they need to let me conduct showings whenever I want and they also need to leave the property in immaculate condition for the tenants who will be moving in the day after they move out.

I've never had a problem with doing it this way but my rentals are all Class A and Class B.  It can be tempting to tax them for breaking the lease but I usually avoid it.  Plus, in this market I'm always happy for a turnover because I can raise the rent with impunity.

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  • Mike NussPro Member
    Real Estate Entrepreneur · Portland, OR · Member since 2014 · 451 posts · 328 votes
    10y

    @Mike Biewer you have a pretty common termination clause for our market area. It gives you the "option" to do quite a few things, 1.5 month's rent of fees is one option. However, you get the choice to hold them to the lease or let them off light, it's your prerogative. 

  • Real Estate Agent · Portland, OR · Member since 2013 · 154 posts · 67 votes
    10y

    What I usually do is tell the tenants that if they help me avoid any gap in the tenancy then I won't charge them for breaking the lease.  In order to do this  they need to let me conduct showings whenever I want and they also need to leave the property in immaculate condition for the tenants who will be moving in the day after they move out.

    I've never had a problem with doing it this way but my rentals are all Class A and Class B.  It can be tempting to tax them for breaking the lease but I usually avoid it.  Plus, in this market I'm always happy for a turnover because I can raise the rent with impunity.

  • Real Estate Investor · Portland, OR · Member since 2016 · 9 posts · 1 vote
    10y

    All good points. Thanks. There is silver lining here for sure. I want to understand this so I can go to them and be like, "this is what I can, legally do, but I'm a reasonable guy, so this is what I think we should do to have it be win/win for all of us."

    @Mike Nuss Where do you interpret in the legal wording that I can hold them to the whole thing?

  • Mike NussPro Member
    Real Estate Entrepreneur · Portland, OR · Member since 2014 · 451 posts · 328 votes
    10y

    @Mike Biewer by "hold them to the lease" I mean you can enforce the penalties that the lease clearly states.  Howver, there is nothing wrong with letting them know what you can do, but let them know what you're willing to do to make life easier for everyone. 

  • Real Estate Investor · Portland, OR · Member since 2016 · 9 posts · 1 vote
    10y

    Ok. So my understanding of the lease then is that I can only charge a termination fee of a month and a half's rent. So, why would anyone ever give a 60 day notice. They could just leave if they wanted and save half a months rent...at least, that is what I understand in the jargon above...

  • Boston, MA · Member since 2013 · 99 posts · 28 votes
    10y

    I am not a lawyer, but it seems like option "B" would make the tenants liable for rent until the property is re-rented, or until the lease ends (if the property isn't re-rented before then).  Option "A" lets you change the termination fee, and then the Tenants are basically off the hook.

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