Tenant wishes to terminate lease.

8 Replies

I apologize if this question has been answered but I was unable to locate a response on point.

Issue:

Our tenant wishes to terminate our 12 month lease agreement at month five; although our lease clearly states that the tenant does not have the right to take such action.

Little more detail:

He wishes to give us 60 days notice (which would take his remaining lease requirement from 7 months to 5 months.)  He also states he will not be in the property for the remaining 60 days and that we are free to show the property to new prospective tenants at anytime.   As soon as we rent it, he will move out his belongings.

Can I / Do I somehow hold him to the remaining 5 months of the lease ($7,750) or do I just move on and find a new tenant?

I would like there to be some middle answer where he pays me for a portion of what he has remaining beyond his 60 day notice, say an additional two months and if I find a new tenant tomorrow he still owes me these funds to cover my costs to list the property and find a new tenant.

I would think there should be some penalty to breaking a lease.

Thanks.   Phil

Unless there's language in the lease, there's nothing that requires you to allow him out of it. Ultimately it would be his responsibility to pay the remainder of the lease. That being said, you can always negotiate. A few different options:

  • Negotiate a flat fee for lease cancellation based on how long you think it will take you to re-rent the place given your current market conditions. 
  • Tell him he needs to find a replacement tenant/subleasee for the remainder of the term. If he can leverage his friend group to your benefit, so much the better. 
  • Go ahead and market the place, but get a written acknowledgement that he will be responsible for marketing (and holding) costs until the lease is fulfilled. If someone rents, great, but if you can't find an acceptable renter, you don't want to be out that cash. 

You can see where I'm going with this - try to put the onus for fulfilling the lease on him, as it's really his responsibility. The best option is likely to be some combination of the above. One additional thing I would recommend is to get in the unit frequently throughout the next 60 days. You want to make sure you're aware of any damage if the relationship gets contentious. 

Caveat, I don't live or own property in GA.  This is more a general "what courts usually do".  You really can't hold your tenant to pay for the remaining 7 months of the lease.  It would be pretty draconian but, more importantly, courts won't allow that anyway.  A court will require you to mitigate your damages, ie find another tenant.  Your current tenant would be responsible for any rent, until that happened.  But, if it were to go to small claims court, you'd need to show proof you tried to mitigate your damages.  My guess is also that a court wouldn't just allow some carte blanche amount of time either, even if it did legitimately take a long time to find another tenant.

A court also doesn't care that it is often a lot of extra work for a LL to find another tenant.

The way I get around that is to have a "break lease" fee in my lease agreement, plus require a tenant to pay up to two months of rent after they have vacated.  For example, if a new tenant moves in the next day, the old tenant pays just the break lease fee.  If a new tenant moves in one month later, the old tenant pays the break lease fee, plus one month's rent for the time the unit was vacant.

I'm assuming there aren't any terms outlining the consequences for breaking the lease in your rental agreement.  In that case, I would try to get the tenant to agree to move his things out NOW and pay the rent for the next two months.  Cut and dry, regardless of if/when a new tenant moves in.  Both you and the tenant can just move on.  Chances are, you'll have a new tenant anyway before the two months.  It's a real win-win for you, if it only takes a few weeks.  It's also a win-win for your tenant because he's going to be on the hook...even by a court...for at least the next 30 days.  So paying for two months is fair and he doesn't have to worry about past that.

Funny enough, I had this exact same scenario happen to me a few years ago.  Before I had a "break lease" fee in my agreement.  Fixed that since, lol!  Long story short, my tenant who had just moved in a few months earlier wanted to break his lease.  For what it is worth, there was no bad blood between us and it was for legit reasons.  He told me this in the last week of May and that he was moving out the next weekend.  I told him if he paid June's rent and then let me keep his one month security deposit (assuming the house was left in good condition), I'd let him out of the lease.  He agreed.  We put it in writing.  New tenants moved in one month later.  Sure, it was extra work to get new tenants, but at least I came out ahead financially and the previous tenant was also happy and thankful with the arrangement.  Win-win. 

If you want there to be a penalty for breaking the lease, this should be stated in the lease.  Our leases carry an early termination fee for just this reason.  Life happens and sometimes even the best of landlords cant prevent it.  If a tenant gets a job offer in a different area, most of the time a lease is secondary in that decision making process.  In this case we have had the new employers pay the termination fees, etc as part of the relocation package.

If you dont have a early termination clause, I would talk with the tenant and explain he is responsible for rent until you find a replacement tenant.

You need to show the property ASAP, and once you find a new tenant you cant charge the original tenant any more.

Thank you all very much.  I have been a lurker on this site for some time.  An amazing amount of knowledge so that one does not ever have to "reinvent the wheel" when it comes to landlording decisions.

This post has been removed.

Your situation is very common, tenants commonly leave mid lease. The term of a tenants lease has very little bering on when a tenant will move. You need to have penalty language in your lease which hopefully a tenant will respect when they decide to break their contract.

Using M2M leases will allow the landlord somewhat more control over their property. Although it has no breing on when tenants will choose to leave it eliminates most mid night runs and allows the landlord more control over dealing with problem tenants.

I also vote for month to month rental agreements over leases.  Tenants leave when they want regardless of the lease.   You could take them to small claims court -- and probably win, but collecting your monetary damages would be a whole 'nother matter.   

We focused on making our units easy to turn-over, but have have not found that we have higher turnover due to month to month rental agreements.  Tenants settle in and stay.  They leave due to job relocations or moving in with new boyfriends.

I approved the tenants request to terminate the lease early, and put a couple conditions on the approval.  1) they must vacate the property by Dec 1 and they must pay an early lease termination fee of 3x rent.  Which they agreed with.  So assuming the money shows up this all worked out as well as I could have hoped.  Thanks again! 

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.