My tenant is needing to break lease. Do they security deposit ba

17 Replies

my tenants moved in 2 months ago.  He got a job in Florida and is needing to break lease.  If I allow them to break the contract, do they get their deposit back? I've never done this before.   They are good tenants. 

paige, I would try and see if you could get a renter available as soon as he moves out. I like to only use security deposits for damages. He's taking an opportunity to better his life,, what would you want to happen if it was you?

Originally posted by @Paige Roberts :

my tenants moved in 2 months ago.  He got a job in Florida and is needing to break lease.  If I allow them to break the contract, do they get their deposit back? I've never done this before.   They are good tenants. 

 Paige,

First look at your lease, then what your States landlord tenant law says. I usually give them their deposit back if we re-rent right away and they leave the house in move in condition. We have thirty days to send their claim on deposit from the day they vacate via certified mail to their last known address or forwarding address (if they provided)

Originally posted by @Paige Roberts :

my tenants moved in 2 months ago.  He got a job in Florida and is needing to break lease.  If I allow them to break the contract, do they get their deposit back? I've never done this before.   They are good tenants. 

 Good to meet you Paige.

I always look at these situations as to what is fair for both parties.

I would certainly subtract the cost of releasing the unit, bringing it back to lease ready condition, lost rent, and any possible reduced monthly lease amount to the new tenant. 

It that is less than the deposit I would return the balance. If it were more than the deposit on hand I would ask God for advise and use his wisdom.

Happy House Hunting

As long as there was no damage and I could re-rent the place pretty quickly, I would give them the deposit back. A lot of people will say “it’s a business and it needs to be treated as such” but I think having a little compassion can go a long way, not just in RE, but life in general.

I would assume they'd be amenable to showings, scheduled at mutually agreed upon times, for new tenants.  That's what I'd do and try to get a new tenant lined up for when they move out or close to it.

Bottom line, they are responsible (within reason) for whatever time the place is vacant and that can be deducted from their SD.  But you also have to mitigate your damages.

For the purpose of my example, I'm going to assume they caused no physical damage to the place.  So, let's say they move out Sept. 30th and the next tenant moves in on Oct. 7th.  You can deduct that one week of rent from their SD and return the rest.  If you have any advertising costs for the vacancy, you can also deduct that.  I assume you don't have a break lease fee in your lease but, if you do, you can also deduct that.

After having something similar to your situation happen to me, I added a $250 break lease fee...on top of whatever other financial damages I have...to my leases.  Because my time is valuable and it takes time to do showings and vet new tenants, especially when it's only been a short period of time since going through that.

@Paige Roberts I have had several tenants move out and break the lease early. I inform them they are responsible for the term of the lease, but state law requires me to find another qualified tenant. the current tenant always helps as they are still responsible for lease. once the new tenant signs a lease, old tenant gets deposit back less any damage.

They've been there two months and they are leaving. I wouldn't consider them "good tenants".

If your lease doesn't address this then you have to be careful about what you charge. At a minimum, you should be able to hold them liable for the terms of the lease until a new tenant is placed. If you get a new tenant in 15 days, apply the deposit to the 15 days of vacancy and refund the remainder.

I charge a lease break fee and explain to them that they are responsible for the lease until a new tenant is placed. I will prorate back any money paid when the new lease starts. The lease break fee will save your reserves when they don't pay after they move out. Getting possession back and getting it re-rented is the most important thing. Once they are gone, if they don't pay you can take them to small claims court but it usually is not worth the effort. 

@Paige Roberts I dealt with this recently. I did not charge them for breaking it early, but I did have a conversation about how nice I needed the property to be upon their leaving. They went out of their way to have the carpets shampooed and the residence professionally cleaned after they moved their stuff. If they would’ve left it dirty or left junk in it, I would’ve charged them. I do not think punishing someone for being successful is good mojo so I couldn’t do it. Look at it like this, if they leave it clean and well-kept, you’re good. If not, charge them.

In my state, North Carolina, it is my understanding that you are not allowed to keep a security deposit for breaking a lease. It can be used for the time it takes to replace the tenant and for damages to the unit. But you must be able to show that you tried to rent the unit out. For example, "for rent " signs in the yard and listing it on craigslist, etc. You cannot simply keep the deposit because they broke  the lease. I find that most tenants are very reasonable when you explain to them that they are responsible for the duration of the lease and any by keeping the place clean and allowing showings in a timely manner, they are helping you, help them to get their deposit back. 

You need to change your lease to include an early termination clause that includes fees.  If they are military then you can't charge them a fee per Servicemembers Civil Relief Act (SCRA) but they must show you Orders to move.   Below is my break down on a 1 yr lease period.  Always review your state's landlord tenant laws.

  1. 0-3 Months: There is a penalty fee of one (1) month’s rent.
  2. 3-6 Months: There is a penalty fee of two (2) month’s rent.
  3. 6-9 Months: There is a penalty fee of four (4) month’s rent.

I would start looking for a new tenant and if you find one to move in right away, then give the deposit back. If not, then you need to look out for your business and keep the deposit. Don't let emotion get in the way. 

Since they just moved in 2 months ago, there should not be any wear and tear damage.

I would ask them to  pay for : carpet cleaning, cleaning (If needed when they are out) locksmith, cost of advertising new tenant, and any days not rented between tenants.

If they allow you showings and keep the place clean for showings, you should be able to rerent it with limited down time. In this case, the more they help you, the more it helps them. 

Your ability to keep a deposit will be based on what your lease says, and what your state landlord laws allow you to do.  If your lease is not clear, and you can't figure it out, you really should speak with a RE attorney in order to proceed correctly. 

I was that tenant 30+ years ago. Got a job transfer across country, and needed to break the lease.

I forget the exact details, but they cut me some slack. If not I would have moved anyway, and good luck collecting. It would not have been worth the effort to try from several states away, and I had little money at the time.

@Paige Roberts if this tenant had rented a property in regular apartment building, there would have been a clause for lease break. I paid 2 months of rent as lease breakage fee 12 years ago when I had to relocate to Bay Area.