Early lease termination fee charged to Military with orders?
Rental Property Investor · West End, NC · Member since 2016 · 98 posts · 32 votes
Hey fellow investors and professionals. I have a question about charging early termination fee and wondering if anyone knows the correct legal answer. In my leases I include an early termination fee for those who decide to break their lease term. It is written in the lease, and all tenants sign to acknowledge agreement of this potential fee.
Many of my tenants are active duty military, and some receive orders to move to a different duty station in the middle of our lease term. I'm aware that military can legally terminate a lease early if they have a Deployment of over 90 days or a permanent change of duty station (PCS) further than 50 miles away. What I'm not sure of, is if they can be charged an early termination fee or not. Does anyone know what the law says about this?
Input is greatly appreciated!
Tags: Fort Bragg, Fayetteville, North Carolina
I would not charge them. Even if legal, give them a break. They are the ones that are putting their lives on the line. Respect them!
No, they cannot be charged a fee. You can ask for a copy of their transfer or deployment orders.
I thought when I got my lease while active duty there had to be a clause for deployment or order changes. I think it was from the housing office as a requirement. It;s been quite a while though so don't quote me on it. I think if you try and force it though you may find that they start warning soldiers about your properties and you get "black listed".
I would not charge them. Even if legal, give them a break. They are the ones that are putting their lives on the line. Respect them!
@Kirsten Ostby I do not know the correct legal answer, but I would guess you cannot charge them
Also, I think you'll find it's bad practice to try.
Also also, orders are "faked" all the time to get out of lease agreements and used for all sorts of stuff....(ask me how I know). You can ask friends who are veterans to confirm legitimacy if you're every unsure.
Good reason to avoid renting to military if you have any other options. Not much point in having the protection of a lease break option if it is of no value. I would assume most military tenants would actually break their lease due to transfers. Not the most reliable of tenant pools.
A single month or two of vacancies could easily eat far more than your cash flow will support.
@Kirsten Ostby I do not know the correct legal answer, but I would guess you cannot charge them
Also, I think you'll find it's bad practice to try.
Also also, orders are "faked" all the time to get out of lease agreements and used for all sorts of stuff....(ask me how I know). You can ask friends who are veterans to confirm legitimacy if you're every unsure.
You can call the bluff on fake orders... although you are right they happen often.
You can independently verify by calling the primary directory for the installation and requesting contact information for the Public Affairs Officer of your tenant’s unit. They should be able to direct you to the appropriate person to verify your tenant’s PCS/deployment orders. Understanding and being willing to work with one of the more stressful aspects of military service, in a way that also protects your rental property investment, is a great way to generate referrals and powerful word of mouth recommendations as a military-friendly landlord.
http://blog.ahrn.com/what-to-do-when-your-tenant-has-orders/
@Kirsten Ostby I do not know the correct legal answer, but I would guess you cannot charge them
Also, I think you'll find it's bad practice to try.
Also also, orders are "faked" all the time to get out of lease agreements and used for all sorts of stuff....(ask me how I know). You can ask friends who are veterans to confirm legitimacy if you're every unsure.
You can call the bluff on fake orders... although you are right they happen often.
You can independently verify by calling the primary directory for the installation and requesting contact information for the Public Affairs Officer of your tenant’s unit. They should be able to direct you to the appropriate person to verify your tenant’s PCS/deployment orders. Understanding and being willing to work with one of the more stressful aspects of military service, in a way that also protects your rental property investment, is a great way to generate referrals and powerful word of mouth recommendations as a military-friendly landlord.
You can call a bluff on fake orders, but how do you know what's fake or not? Truth is I was making a sublte personal offer to Kirsten since her and I both invest in the same area and she knows I'm prior service ;) ;)
You're right though, you can always call a service member staff duty or chain of command to verify. When renting to military, we always ask for contact info for both.
@Kirsten Ostby I do not know the correct legal answer, but I would guess you cannot charge them
Also, I think you'll find it's bad practice to try.
Also also, orders are "faked" all the time to get out of lease agreements and used for all sorts of stuff....(ask me how I know). You can ask friends who are veterans to confirm legitimacy if you're every unsure.
You can call the bluff on fake orders... although you are right they happen often.
You can independently verify by calling the primary directory for the installation and requesting contact information for the Public Affairs Officer of your tenant’s unit. They should be able to direct you to the appropriate person to verify your tenant’s PCS/deployment orders. Understanding and being willing to work with one of the more stressful aspects of military service, in a way that also protects your rental property investment, is a great way to generate referrals and powerful word of mouth recommendations as a military-friendly landlord.
You can call a bluff on fake orders, but how do you know what's fake or not? Truth is I was making a sublte personal offer to Kirsten since her and I both invest in the same area and she knows I'm prior service ;) ;)
You're right though, you can always call a service member staff duty or chain of command to verify. When renting to military, we always ask for contact info for both.
Well, when you call about the orders and they don't have any.... the orders they are using to break the lease are obviously fake. Most areas near bases have "normal" or "busy" times for rotations of people and if something happens outside of that.... chance it could be fake. Or if you really wanted to you could just verify every time orders are used to break the lease...
Granted you'd have to have a pretty crap relationship w/ a landlord to have them think you're faking orders to get out of a lease.... I managed 6 years AD w/ out pissing off landlords...
Good reason to avoid renting to military if you have any other options. Not much point in having the protection of a lease break option if it is of no value. I would assume most military tenants would actually break their lease due to transfers. Not the most reliable of tenant pools.
A single month or two of vacancies could easily eat far more than your cash flow will support.
I find most military tenants are great to rent to, that was my experience while in the Marines. And a bonus about the military is if they ever miss a rent payment, you can contact their unit and they will garnish the paycheck to cover rent. Since the military gives housing allowance to service members who live off base, they're required to pay.
Good reason to avoid renting to military if you have any other options. Not much point in having the protection of a lease break option if it is of no value. I would assume most military tenants would actually break their lease due to transfers. Not the most reliable of tenant pools.
A single month or two of vacancies could easily eat far more than your cash flow will support.
I find most military tenants are great to rent to, that was my experience while in the Marines. And a bonus about the military is if they ever miss a rent payment, you can contact their unit and they will garnish the paycheck to cover rent. Since the military gives housing allowance to service members who live off base, they're required to pay.
and you can look up BAH rates online....
I wouldn't care if it were legal or not, the right thing to do is NOT to charge them. They work for peanuts to protect our country and have no choice but to go when they have their orders.
Maybe it would be best to explain to them when they move in that if they have a change in orders to notify you ASAP, then you will be advertising and showing the unit so that you can lease up very quickly.
This practice may even get you the reputation as "military friendly" and you can fill vacancies quickly by being on their advertisement board or get in tight with some of the base higher ups so that you can get some referrals. After all, they will most likely have a replacement who will need housing.
Thanks @Matt K. for the links you posted. One of them linked to the actual SCR Act where I think I've found the legal answer to my question:
``SEC. 203. <<NOTE: 50 USC app. 523.>> FINES AND PENALTIES UNDER CONTRACTS. ``(a) Prohibition of Penalties.--When an action for compliance with the terms of a contract is stayed pursuant to this Act, a penalty shall not accrue for failure to comply with the terms of the contract during the period of the stay. ``(b) Reduction or Waiver of Fines or Penalties.--If a servicemember fails to perform an obligation arising under a contract and a penalty is incurred arising from that nonperformance, a court may reduce or waive the fine or penalty if-- ``(1) the servicemember was in military service at the time the fine or penalty was incurred; and ``(2) the ability of the servicemember to perform the obligation was materially affected by such military service.
Maybe I should have added in my original post that I'm a military spouse of an active duty soldier of over 10 years service. So I've lived it and know the life all too well.
My intent is not to penalize my military tenants, but to simply know the law on this. I'm aware of folks who fake orders to get out of leases. I also know of military landlords who PCS back to their home base and "ask" their tenants to move out during the middle of their lease so the landlord can move back into their property. Suspect activity happens on both sides.
I appreciate and value my military tenants, and will continue renting to them regardless of the risks of losing them to PCS or deployment orders.
@Alexander Felice thanks for the tips on how to verify orders :)
Hi,
As a Mil member myself I can tell you most members are counseled and educated on lease terms and highly encouraged to ensure a "Military Clause" is in the contract or if not, is made as an addendum, using one provided by the installation housing office. All of them have it. Unfortunately many young folks hear the words but do not listen. They will sign a lease without paying attention or in some cases, they just don't care to get it or think, it won't happen to me.
In some cases I've seen landlords persuade them it's not necessary causing the young tenant to "trust" a not so ethical landlord then get a hard time if they need to get out of the lease due to a transfer. I have seen members get their deposits retained by landlords on several occasions and in two cases, landlords wanted full rent for the lease but we "Supervisors" were able to talk them off the ledge. In one case a member I know continued to pay rent and never questioned or fought it. Unfortunately most times if you have deployment or PCS orders...you don't have time or energy to deal with a landlord, tenant issue.
For protection: some units on an installation will have a very high deployment schedule. Some won't. I would figure out which ones do and understand if your tenants are assigned to those units. There are folks who love to live on the road and volunteer for every TDY they can and in many cases, get waivers to dwell time so they can go back more quickly than typically authorized. They will rent for a few months, get TDY orders (be gone for 6-8 months), put household goods in temp storage (save housing money), then return and repeat 2-3 months later. They will be gone more than they are home. For possible tenants, ask hard questions to try to see if the potential tenant is in one of those units and if so, ask em point blank...do you plan to do the above. Unless you own storage to rent to them (great idea), I think the honest transparent discussion in the application process will cause them to look elsewhere. I know allot of people that do this and as a landlord, if I knew up front that was there intent, I would rent them on a month to month and increase deposit and rent for the potential headache. They won't mind and likely would appreciate the flexibility that other landlords won't accept. (Start looking for storage rental options as that can be a cash cow at the right place with high deployment and TDY ops tempo's). I have bene looking for storage around Goldsboro for that specific reason.
The above does not help for duty location change. For USAF members, 1st time enlistees typically must stay on station 1 yr before they can PCS. 2nd term must be on station 2 yr minimum. If an enlisted person has been on station 2-3 yrs already, at most locations, they could PCS in a year so ask how long have they been there already and have they re-enlisted or plan to reenlist and if so, when. If they say, I will reenlist in 6 months....be aware they maybe moving sooner than you would wish. Once they commit to another service commitment of 4-6 yrs, this typically puts them to the top of the list for a PCS move because they have more service retainability than others and are eligible for any tour, anywhere in the world. USAF Officers typically serve 2 yrs and in rare cases 3. Some locations that have a unique mission, members can stay for a long time. Bragg is mostly Army so I can't speak to their PCS cycles.
Bottom line is there is creative ways to make rentals a "Win, Win" with Mil members on most situations. Just takes transparency and creative thinking to solve their problems "or more important" help them manage through their situation. If you make their situation easy and less stressful, it can benefit you as well. Many (most) do not want to get orders and are not volunteering to move, relocate or go TDY. Stressful times for them. Help by giving them solutions to make it easy.