Tenant wants to break lease

6 Replies

Hello everyone! I recently purchased my first property earlier this year and have been managing myself. The property is a owner occupied fourplex in Texas near the DFW area. 

I just received a call from one of the tenants saying that they want to break the lease and vacate the unit in two weeks. This lease was in place before I acquired the property and ends on April of 2019. I tried to look over the early termination clause in the lease but did not see any specific terms for early termination.

My question is, what can I do about this tenant breaking the lease? The tenant was under the impression that the only repercussion is loss of the deposit because the change of ownership. I informed the tenant that the lease is still in effect. I am unsure on what to do next. This is the what I found on the lease.

This is bad timing for me because I'm pretty limited on time with school, work, and managing the property. I was not expecting termination for another six months.I feel like it might be more difficult to find a new tenant especially with the recent weather and the colder weather coming in. 

Any tips and advice would be greatly appreciated. Thanks in advance. 

The lease looks ok ,  Tell the tenant to read it . They are responsible for the remainder of the term , But you do have to try to rent it in the mean time .

@Alejandro Barba . The lease looks like the standard TAR (Texas Association Of REALTORS) Lease. 

Read Paragraph 25. B. and then all the things enumerated below that. 

You can't prohibit the tenant from breaking the lease, and once the Tenant has broken the lease, you have a joint requirement to Mitigate the broken lease by attempting to fill the vacancy as soon as possible. This doesn't mean you have to take just anyone - they need to meet your criteria. The tenant is responsible for payment of rent until such time as you have another paying tenant in place. etc, etc. 

@Alejandro Barba The lease is very clear and specific as to what is owed. Paragraph 25 "Default" Section B says specifically that if the tenant "fails to comply with the lease" (as in early termination) will result in "default." So now you need to look at the sub-sections that will be relevant. 

Sub Section 2 "all unpaid rents which are payable during the remainder of this lease or any renewal period will be accelerated without notice or demand;" (they owe the remaining months rents up front to break it). Sub Section 4a "Lost rent" 4b "Landlord's cost of re-letting the Premises including but not limited to all fees and charges, necessary to re-let" 4c " repairs to the Premises for use beyond normal wear and tear" and 4e "all Landlord's costs associated with collection of amounts due under this Lease, including but not limited to collection fees, late charges, and returned check charges."

Seems like you are pretty covered. I highly suggest if you buy any more rental properties with existing leases, you take time to familiarize yourself with them. There are some turnkey companies out their that write super soft leases to get people in to the units and then sell them off. The leases are no longer their problem. It is just a word of warning. In this case, you are lucky that this is a pretty favorable lease for you.

ADVICE: I would work with the tenant. Tell them that you will get a for rent sign up immediately and post it on Craigslist but that they will be responsible for the lease (rent) until it is re-let.

Good luck with the transition. I would inform the tenant as quick as you can about the lease so they don't make too many arrangements before they know how much early termination will cost them.

Give the tenant two options:

1. They leave, you try to find a replacement tenant. The original tenant remains responsible for the terms of the lease until the new tenant takes over, whether that's in two weeks or two months.

2. Give them the option to "buy out" the remainder of their lease. If a tenant has more than six months remaining, I make them pay two months rent and give 30 days notice to vacate. If they meet this requirement, I'll cut them loose once they are out and they can still get a good Landlord reference. If they have less than six months remaining, I only charge a termination fee of one month.

Originally posted by @Alejandro Barba :

Thank you all for the replies. I have sent a letter and an email informing them on the terms of the lease. I gave them the option to terminate the lease with a "buy out". 

 We've found that adding a specific amount of money for early terminations has worked the best. We charge 2 months rent + the deposit. Some tenants will tell you to F*** off & move out anyway but the majority of them will reluctantly pay it.