If a Tenant breaks a lease with a few months left...

4 Replies

Hey Gang -

I've been having some turnover in some of my units as of late (which is always fun - haha). My most recent notice was from a tenant looking to break their lease 5 months early. I'm pretty lenient on security/pet deposits as long as everything is physically in order and they are able to find replacement tenants but my questions are as follows:

1. How does one go about charging a security deposit on the lease takeover? Should you require the same full amount required of the existing tenants. Not sure how much a proration makes sense, nor do I think it's a smart decision to bank on the fact that the new tenants will renew for a full lease so there are some hang ups there as well. 

2. Is there a specific way of doing things when assigning the old residential lease contract to the new tenants (ie an extra step or extra forms to consider)?

3. This last one is more specific to my situation: Should I allow the tenants to market online (ie Zillow) for new tenants or should I take on that responsibility and give the tenants the responsibility of facilitating the tour etc. I ask this because as much as I'd like to give total responsibility to the old tenants, the system I use for background checks and all is cozy so I'd either have to provide my old tenants access to cozy or I'd have to screen the leads that they attract myself and then approve the good ones and relay that to my tenants. In other words, I'm looking for a system or some efficiency around this process.  

Of course, I have mentors and contacts to answer these questions if need be but I know the power of community and that there will be others with similar questions. So in efforts to create some dialogue, I hope we can provide some value and lift as we climb. Thanks BP! 

I wouldn’t call it a lease takeover. Your tenant is cancelling his contract early, and depending on your lease wording, is on the hook for paying the remaining 5 months.

That said, it’s in everyone’s best interest to get a new renter into the place - on a NEW lease, at which point the old renter no longer has to pay for it.

I would say it’s your job to market and re-rent the place. But his job to make it easy to do showings and such. He can try to help get people to see it, but it’s ultimately your decision to meet them, screen them, and make a decision to lease to them.

If it were me, I would tell the tenant that they are responsible for the rent until a qualified replacement tenant that you approve of has been found.  I wouldn't transfer or assign the existing lease if the current tenant is completely moving out.  It'd be a brand new lease with the new tenant. 

Your tenant can recommend an applicant, but you should be screening the applicants not your current tenant.  You want to make sure they meet all of your criteria.  Your tenant has no incentive whatsoever to put a good tenant in there. 

Once you've found a replacement tenant, you should terminate the existing lease with the current tenant, do a walk-through, return the security deposit (minus any deductions for damage as appropriate), and then sign a new lease with the new tenant and collect a new security deposit.

@Kyle J. @Mike McCarthy Amazing advice. The both of you are spot on. I think it's best for everyone to have a clean break! That resolves all 3 problem without the headache. Well said. 

I'd love to hear other experiences anyone else has had with early terminations.. These are the types of things we don't talk about enough...

you shouldn't let someone take over, unless one roommate is leaving and another is moving in. what you should do is agree to break his lease early, under the condition you are able to find a suitable replacement. old tenant is responsible for every day up until new tenant takes over. you treat everything else as though old tenant is leaving on time

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