Tenant moving out before lease is up

13 Replies

Hi All,

I have a tenant who is moving out about 2 months before her lease is up. She gave 60 days notice so I have plenty of time to find a new tenant. 

My Q: Is there any paperwork that needs to be filled out when a tenant terminates their lease early? For example, if I move out of my apartment early, I would have a ding on my credit score and be responsible for paying rent until the owner finds another tenant. How would you handle the situation? Thanks!

@Jennifer Jackson   Have her sign a document that she's responsible for the rent until you find a new tenant and that she will make the home available for showings with proper notice.  Tell her you will get the place posted for rent ASAP. 

I would never ding a person's credit score unless they failed to pay the rent.

@Theresa Harris

Also, we will be keeping her security deposit (per the lease, since she is moving out before the terms of the lease are over). I don't particularly want to tell her this since it might affect her cooperation. Am I responsible for telling her that before the day she moves out?

@Jennifer Jackson I've had this happen before,never got a 60 day notice 4 months before lease end but had a tenant move out early. I told them I would try to limit the amount of money they would owe me if they would cooperate with showings. I ended up having open houses on 2 consecutive weekends and found a tenant. I got lucky and had no downtime, my unit had just been painted and only had to do some touchup. Same day move out as in. One of the not so horror tenant stories. 

Originally posted by @Jennifer Jackson :

@Theresa Harris

Also, we will be keeping her security deposit (per the lease, since she is moving out before the terms of the lease are over). I don't particularly want to tell her this since it might affect her cooperation. Am I responsible for telling her that before the day she moves out?

That's up to you.  When getting her to sign the termination, you can reference the lease and say aside from the end date, all the other terms of the lease continue to apply.

 

I will work with tenants who wish to leave early as they'll likely go either way, and it's better if they work with you to find someone new.  Most will allow me to advertise and have appointments in a 2-3 hour window on Saturdays until it's re-rented and agree to have the home show ready during that time.  If they are too messy, I'd just wait until they leave.  Either way, I have them sign an early release  addendum that states the terms of the early release negotiated, stating exact amounts due, when due, and date lease now ends, and that they will be responsible for all damages resulting from unit not being available after that date.  That way, I can feel comfortable signing another lease.  If you feel it will take longer to rent, then make sure it's in the addendum that they understand they are responsible for all rents due until former lease end or until unit has been re-rented, whichever is earlier.  

Moving forward, I've placed an early termination clause in my leases, which you can find examples of within these forums, that states a fee equal to 2-months' rent, notice required, and other terms if they want to leave early.  I've found it eliminates some of the requests (not the ones where they've taken a job out of state, but definitely the ones who are just moving locally), and it gives me more negotiating room for them to want to work with me to find another tenant, letting them know I'll refund some of the fee along with their security deposit if we find a qualified tenant with minimal vacancy before they leave.   

This is a fairly regular occurrence, so you need to have policies in place to cover these issues.  We allow a tenant to give a 60-day notice and if they cooperate with showings, they will be entitled to refund of security (minus any tenant-caused damages as usual.)

The rationale is if a tenant needs to move, they will move, regardless of how much time is left on the lease.  It is certainly better to have advanced notice of the move than to discover they moved out unannounced in the middle of the night.

In our area, there is no Judge that will allow us to collect or get a judgment for unpaid rent in a vacated residential unit. There is no paperwork we use upon early termination; when we receive the keys to the unit from the tenant we have legal possession.  

in our state, PA, the tenant must supply their forwarding address in writing, and we must send a detailed letter stating any deductions from the secuirty deposit to them within 30 days of possession.  Check you state's laws.

@Jennifer Jackson

Little late now! That clause should be in your leases and whomever should have initiated that clause!!!

People use generic rental agreements without thinking about the consequences... lesson learned.... cheap schooling...

Good luck with your future...

@Tim Herman @Theresa Harris

I went back through the lease and we have a specific clause, separate from the security deposit, stating that we will be owed 50% of one month's rent if the tenant breaks lease early but finds a replacement and 100% of one month's rent if the landlord finds the replacement. I think this clears up the issue. 

In our lease the tenant and I agree to a Early Lease Termination (ETF) fee equal to 6 weeks of rent (rounded to the nearest $10).  This is a "get out of jail free" card: so they are not responsible for paying any advertising, utilities, or rent by choosing this option.  They also do not automatically forfeit their deposit, though I can still deduct for physical damages or cleaning if needed.

I think this is a better option than just making the tenant forfeit their deposit.  What is their incentive to leave the place nice, clean, and to cooperating with showing if you've basically told them they're not getting a penny back?  Sure, you can bill them for damages...and try to collect.  But that is the "stick" approach, and I prefer to use the "carrot."

I sell is like this: other land lords will demand that you keep paying rent.  What's their incentive to find a new tenant when you're still on the hook?  How much will you owe for utilities?  Do you want to remain responsible for cutting the grass and ensuring no one breaks into the property and damages it while it is vacant?  The tenant is still on the hook for rent, utilities, damages, and advertising until a new tenant is found.  With my ETF (we call it the "No Worries Move-Out" fee), they are not responsible for any of those costs: I am.  It's a clean break with a known cost and helps them plan.  I also offer a positive reference to the next land lord just as if they had fulfilled their entire lease with me, because they did...they just exercised the option to buy out their contract. 

Contract buyouts are an industry standard for many services.  Think Cable TV, internet, phones....everyone does it.  Why not LLs?  

They still have to give me 30 days advance notice and pay rent for the final month, so during that time I market like crazy, even offering them a $100 "thank you" bonus if we can re-rent during the end of their tenancy.  

Of course, as you probably figured out, it's in my best interested to get the place rented ASAP, and we do not credit back any of the fee if we do.  Some may cry "no fair...double dipping" to which I respond, no, it is 100% fair.  I am advertising, screening tenants, taking calls, etc.  The Fee they pay me is for extra work and assuming a risk that would not be a factor if they had not wanted out early.

@Jennifer Jackson Your situation is fairly common so it is good to just have a policy, deal with it and move on. Always have the tenant sign an early termination agreement. This releases them (and you) from the lease and outlines the terms. I would include any cancellation fees in that agreement, even if they are already in your lease. You don't want a situation where the tenant expects their security deposit back, then you without hold and cite the lease after the fact. As far as how it will affect their cooperation. Good people will cooperate if you are up front and clear with them. Bad people will be turds no matter what you do. That is why good tenant screening is critical. If they have good credit, they will work with you to protect their credit. If they have bad credit, then they have nothing to lose by being uncooperative. 

As far as dinging credit, there is only two ways to do that as a landlord. 

1. If you have been reporting all rent payments to the credit bureaus, you can report delinquency, but only if they didn't pay.

2. If you take them to court and get a judgement, it will also show up on their credit report.

Also please note it is not legal to "double dip" for rent. In other words if they pay rent through August 31 and you get a new tenant in August 15, then you have to refund 1/2 month back to the old tenant. If you take security deposit, it is best to charge it as a "Leasing Fee". In other words, the expense for your time releasing the property prior to the normal lease duration. Anywhere between 1/2 to 1 months rent is typical for leasing fees in most markets. 

I would also remind you and other landlords that having clauses in your lease doesn't mean they are enforceable. Some landlords state in their lease that early termination requires pay out of entire remaining lease. Most courts would deem that invalid. Even if someone breaks the lease, there is an expectation that the landlord will make reasonable efforts to get the property re-leased - not just sit it vacant and charge someone. My point is don't assume because "my lease says X" that it means the court would enforce it. Try to work with people in good faith to get your property re-rented and only charge the person for actual damages you incur in the process. 

Also remember that being angry they early terminated does not get you money for pain and suffering. There is really only three things that legitimately will get you money if it goes to court:

1. Lost rents (actual loss, assuming you were trying to rerent)

2. Re leasing fees (reasonable leasing fees for your market)

3. Property damages or cleaning

I just want to point out that laws on this vary by state and some of the comments made that generalize to all situations are not really valid in all states. For example, Georgia is not tenant friendly and the LL does not have to mitigate damages if a tenant leaves early. Ethics should say that it’s good policy to do it anyway, but most don’t care (at least the big rental companies I dealt with in the Atlanta suburbs a few years ago).

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