Someone asked me recently how I handle things if a tenant needs to break a lease. This person's father recently died and he didn't need to live in a 2 bedroom apartment anymore. He said there was a clause in his lease that allowed him to pay a penalty if he had to break the lease. I read through the lease agreement I had my tenants fill out and I have nothing in there about breaking a lease.
Should I add a clause in my lease agreement to address this? If so, what type of penalty would be appropriet?
First check your state landlord tenant regulations. Most will include language to hold tenants responsible for rent till landlord finds a replacement tenant. If not then you include language to cover potential losses. 60 days notice (also usually in codes) one months rent penalty etc.
There are a few major problems with lease break language. First you must be prepared to inforce it and second you must not show any compassion or weakness in regards to perusing your enforcement.
Most landlords do not have the back bone to inforce this part of the lease and generally have a defeatist attitude toward collection results. They make the rules then simply allow tenants to walk without consequence.
There is zero point in having lease language that you do not intend to inforce.
I prefer to have all tenants on M2M and find they are far easier to work with then trying to inforce a term lease. M2M tenants generally give plenty of notice when needing to move, those breaking a lease rarely have the curtesy to give much notice. They know they are facing penalties and will avoid them at all cost.
Penalties are rarely successful or enforced.
With the current tenant, it's up to you+tenant how you want to handle the situation. The law will enforce the lease agreement, as long as it legally abides by your jurisdiction's landlord laws.
For future tenants, adding a type of "escape clause" only benefits the tenant. Only add the possibility of ending the lease early if it could also be beneficial to you, e.g. 2 months rent if they want to end early.
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