Rental Property Investor · NJ · Member since 2019 · 59 posts · 11 votes
I'm wondering the best way to protect myself against a tenant breaking a lease early in NJ. It is hard to fill a vacancy in the off-season.
Either I can add an Early Termination Fee to the lease, or add nothing and just rely on the law which I believe requires the tenant to pay the remainder of the term until the unit is re-rented. However, I've read that usually requires suing the tenant which I want to avoid.
First, let me say you must, absolutely must, embrace the court system! That is your stick- do not ever be hesitant to go in to court, but always, always be prepared.
Month to month in NJ is giving a tenant carte blanche. With the NJ anti eviction statute they hold all the cards and can drop you with a 30 day notice. Landlords Are committed for life.
A 1 year lease provides you the ability to fill the vacancy at their expense. Otherwise they cut out in November, lawfully and you are stuck holding the bag in the toughest months. No increase will cover that.
Add to that the very real possibility that he may feel eviction proof if he is buying a home.
1 year lease. 1 1/2 months security deposit and if he buys a house you have something to attach a lein to!
@Adam F. Unfortunately, a tenant that is going to break a lease, is going to break a lease. The best thing you can do to prevent it, is have a rock solid screening process. Fees and lawsuits wont prevent it, since renters rarely have assets worth going after.
@Adam F. Unfortunately, a tenant that is going to break a lease, is going to break a lease. The best thing you can do to prevent it, is have a rock solid screening process. Fees and lawsuits wont prevent it, since renters rarely have assets worth going after.
I have a good tenant who wants to renew, but asked if I'd do a 6 mo lease. I want to only offer them a year lease, but also protect myself against them potentially trying to leave after 6 mo since they alluded to the fact that they want to.
@Adam F. Why do they want a 6 month lease? It sounds like they may plan on leaving in 6 months. A year lease wont stop them from leaving in 6 months if they want to leave.
I would just do a month to month at this point and raise the rent.
@Adam F. Why do they want a 6 month lease? It sounds like they may plan on leaving in 6 months. A year lease wont stop them from leaving in 6 months if they want to leave.
I would just do a month to month at this point and raise the rent.
I'm not exactly sure but I believe they want to buy a house. So it sounds like there's no way to prevent a vacancy in the off season in this situation?
Also, why wouldn't I just give the year lease because at that point, if they do break it, at least I'm entitled to some form of retribution by NJ law?
@Adam F. It whould be in poor taste to do that, if you know their intention was to leave and you locked them in so you could take them to court? Put yourself in their shoes....
@Adam F. It whould be in poor taste to do that, if you know their intention was to leave and you locked them in so you could take them to court? Put yourself in their shoes....
Yeah I understand. I definitely don't want to take them to court, just trying to prevent a vacancy in the off season. I'd hope they'd understand I can't do less than a one year agreement, and so they'd decide not to renew their lease based on that.
@Adam F. It whould be in poor taste to do that, if you know their intention was to leave and you locked them in so you could take them to court? Put yourself in their shoes....
I’m thinking it’s best to just be upfront with them. Tell them what could happen if they break the lease, and if they think they might then it may not be the best idea to renew but it’s up to them
@Adam F. since you know they only want 6 months, I would remove the one year option. Just give them a rent increase for month to month flexibility. You get a little extra money to help compensate if vacancy happens in the winter.
@Adam F. since you know they only want 6 months, I would remove the one year option. Just give them a rent increase for month to month flexibility. You get a little extra money to help compensate if vacancy happens in the winter.
Basically I’m thinking I’d rather find a new tenant this spring than in the winter. So they can decide not to renew for one year and I can find a new tenant now
You could try giving two options for renewal, one 12 month lease with standard rent and one 6 month lease with a higher rent. It may not always be easy to rent in the winter but even with a 6 month rent it could be better than having to drag through court in an attempt to gain a few dollars back.
I would even start to find a new renter earlier as well if no/minimal work is needed on the property. Start posting ads 30-45 days prior to the move out date, that could help with gauging your local winter market.
In the end you have three options; agree to a shorter lease term, risk loosing the tenant midway a 12 month, or decline to renew. How much do you trust your gut that the tenant would stay the entire 12 month lease term?
I ended up not giving them the 6 month and just gave them the option for a 1 year with an early termination fee and 90 day notice required. My feeling is they’ll use it at some point, but the fee is greater than the extra amount I would’ve earned over 6 months of raised rent. Decisions like these are tough when just starting out, but I’m learning that there’s no right and wrong here and there are really pros and cons to all the options. RE is a long term play so either way shouldn’t affect my overall goals.
First, let me say you must, absolutely must, embrace the court system! That is your stick- do not ever be hesitant to go in to court, but always, always be prepared.
Month to month in NJ is giving a tenant carte blanche. With the NJ anti eviction statute they hold all the cards and can drop you with a 30 day notice. Landlords Are committed for life.
A 1 year lease provides you the ability to fill the vacancy at their expense. Otherwise they cut out in November, lawfully and you are stuck holding the bag in the toughest months. No increase will cover that.
Add to that the very real possibility that he may feel eviction proof if he is buying a home.
1 year lease. 1 1/2 months security deposit and if he buys a house you have something to attach a lein to!
@Adam F. If the tenants want to leave in six months I would just let them know in writing you will not renew their lease. It will be easier to re rent it in the summer then in the winter months. You can’t prevent a tenant from leaving but with strict screening standards and by listening to your tenants, you can pick the best tenants for your property.
@Adam F. If the tenants want to leave in six months I would just let them know in writing you will not renew their lease. It will be easier to re rent it in the summer then in the winter months. You can’t prevent a tenant from leaving but with strict screening standards and by listening to your tenants, you can pick the best tenants for your property.
Hi Amy, I had already sent them a letter notifying them of the renewal and they have until 4/1 to let me know. I’m not sure I can go back on that now and tell them I won’t renew right? I didn’t know about the 6 months until after the notice was received by then
All good feedback from the community. At some point, you may want to consider purchasing rent default insurance to protect your investment. Abandonment and evictions are typically covered so you can recoup your lost rental income.
@Adam F. Hi, newbie here looking to learn about, acquire and rent properties in NJ.
I'm pretty sure if you already sent your tenants a notice, you'll have to abide by your words in that notice. As far as I know, they would need to respond within 3 busines days (so they have enough time for attorney review). Please keep us posted on how this goes. Best of luck!
Question for NJ investors; Someone mentioned "carte blanche" in this thread. Does that mean, in the state of NJ, month-to-month lease agreements can never be raised and a tenant can leave at any time? I'm guessing that also means the landlord can also evict a tenant (with proper cause, of course) within a short time, such as 30 days.
So the big question is, under what circumstances would someone want to offer a tenant a month-to-month lease agreement?
@Adam F.- but for the exempted properties (see anti-eviction act) your tenant Will automatically convert to a month to month if you deny them a 1 year lease renewal.
So, again, you are doing the right thing- they can either say yes to a year or no to a year- but if it isn’t offered they can stay for however long they like under a month to month. (Emphasis on they)
@Angelica Vargas unless you are exempted, a month to month puts the power in the tenant’s hands. You will have to demonstrate one of the enumerated violations to prevail in evicting a client and only after proper notice.
You can raise the rent once a year... again- it gives a tenant all the security and the landlord none.
@Angelica Vargas unless you are exempted, a month to month puts the power in the tenant’s hands. You will have to demonstrate one of the enumerated violations to prevail in evicting a client and only after proper notice.
You can raise the rent once a year... again- it gives a tenant all the security and the landlord none.
Unfortunate I had a clause in the lease saying they can leave early with 90 days notice and a fee in the amount of one months rent. I didn’t realize at the time I wrote the lease how this is worse for me than if I didn’t put anything in the lease at all regarding early termination (I’m still new to this). But oh well, its too late to go back on that now so I’m just hoping it doesn’t come back to bite me too hard!
@Adam F. That sounds like a good clause- 90 days is a lot of time even in November and you get a months cushion. The worst thing you can do is worry about something that has not even happened yet-
@Adam F. That sounds like a good clause- 90 days is a lot of time even in November and you get a months cushion. The worst thing you can do is worry about something that has not even happened yet-
Exactly my thoughts. We all make mistakes along the way and learn from them. This mistake could’ve been way worse