Tenant wants to discontinue their lease with 7 months left

7 Replies

Hey everyone,

I was hoping to get some guidance here. I have a tenant that is about 5 months into a 12 month lease. She just requested that we cancel her lease, because she had a divorce finalized and now she says that she cant afford the monthly rent. I hate to be a stickler, but I passed up on several other qualified applicants to let her live in one of our units.

With the CT winter approaching, I know an eviction would take months. Although I sympathize with her situation, I'm not sure of the best course of action. Any suggestions would be appreciated. Thanks

You have 2 choices.  Let her out of the lease. Do you have anything in your lease about fees they pay or if the deposit is deducted from rent if they cancel the lease early?  

Or she pays you part of the rent or even none of the rent, you then take her to court and are out extra money each month as well as wasting time in court.

I would let her go and start looking for new tenants immediately.  Let her know you will be showing the property.  While this isn't an idea time to look for renters.  Now would be a better time than 2 months from now.

I've had this happen! I immediately put out a new ad for rental and told my tenant I could hold them to the lease by law but, will keep their deposit and they must pay for the new rental add and completely clean the rental upon leaving (to my satisfaction)!

They were totally happy with that deal!..... Just some idea's from my experiences.

@Ryan Rea   Tell her you will let her out of the lease, but she's responsible for the rent until you find a new tenant.  She needs to make the unit available for showings and you will do your best to cluster the showings to minimize the disruption.  In your lease, you may  have a penalty for breaking the lease in which case, also apply those charges.  

There is no way she didn't know about the divorce when she rented the unit.

Divorce is her problem, not yours.

You have a couple choices:

1. Hold her accountable for the terms of the lease until a new tenant is placed. This is common and doesn't require any special language in your lease. The law typically requires you to make a "good faith effort" to find another renter quickly and mitigate the old tenant's losses.

2. Negotiate. Let her know she is obligated to the full term of the lease but you're willing to let her go early if she... then give her some options. For example, you could let her go if she gives you 30 days notice, pays rent for that full 30 days, lets you market and show the property to prospective renters, and then forfeits her deposit as the penalty. Or you could ask her to pay $XXX and move out in less than 30 days.

Be creative. Keep your offers short and simple then let her accept or decide to counter back. You can usually make some money through this method because the tenant will pay a termination fee to be clear of the lease and then you can place a new tenant quickly.

This may make me a bad property manager but I always lean on the side of kindness. I know... I know... this is 'business' and 'contractual agreements'... but it really is all about people and profitability. 

When a person is already going through something traumatic like a divorce, family death, or other emergency I always try to make sure that their rental situation isn't just another stress on their life. I do inform them that they will not get their deposit back but I will do all I can to make their situation better by letting them move out when they need to. 

I love my approach (which I have been using for the past 10 years) because when you talk to someone and tell them not to stress about their lease their entire demeanor changes and a bit of relief hits them. They will be more than happy to return the favor by getting the unit as clean as possible and ready for the next tenant. Now, when they share the story with other they will tell everyone how great the property manager was and how thoughtful they were in the situation. 

Also... this approach make the best financial sense. If you try the intimidation method (aka 'I could make you pay $XXX for breaking the lease) you put the tenant on the defense and they will not going up and out of their way for you... they will do just want is needed to avoid your threatening hammer of fines. It also may spark some tenants to go to the extreme and end up damaging things on the way out because they feel like they were miss treated.

So... be kind and treat people like people, we all go through tough times. In the end you will make people's lives better and you will save more money in the long run.

For tenants that want out early we offer two choices:

1. Early termination. Tenant pays equivalent to two month's rent (this assumes they have a long way to go on their lease, not just a month or so) and walks away scot-free. This usually means that, assuming they haven't done any damage, they have to come up with one month since they've already paid the deposit. Then they get to get utilities out of their name, no more lawn care, etc. A clean break. Every tenant that we ever had that wanted to break early took this route. There's some risk to us if we don't get it re-rented within a month but the risk is small and overall it's fair to everyone, as it helps compensate the business owner for the cost of unnecessary turnover. 

2. They move out as soon as possible, we will get it back up for rent as quick as possible, they are responsible for rent payments, utilities & lawn care as provided by the lease until we get it re-rented. Could be cheaper for them if the timing or market is good or could be risky. 

In either case we are not going to accept a voluntary loss to our business. We are willing to compromise and try to find solutions for tenants but those solutions don't include accepting financial responsibility for the choices they make in their lives. You didn't tell them to get divorced; they could have waited until the lease was up. You want to be compassionate, but you can either run this like a business or you can be out of business. 

@JD Martin and @Nathan G both gave the right advice. There is two options, give them one or both. One is a fixed dollar amount with negotiated move out date. Usually the cancellation fee is 1-2 months rent and a 1 months rent for releasing. The second option is get out fast and pay rent+utilities+yard care until someone new moves in. I have done it both ways and it has worked out fine.

One other thing to remember is the tenant is telling you she got divorced and she cannot afford rent. It would be good to remind her and her ex-spouse that they are BOTH on the lease. Just because someone already moved out, doesn't mean they don't have contractual responsibility. If they end up owning you money, you take them BOTH to court.

What you don't want to do is force someone to stay in a property, because they wont. They will just stop paying rent, then you will end up in court. In the end you will loose way more money than just working out an agreement with them. One of my favorite quotes:

"Cooperate with the inevitable."

- Dale Carnegie

When something is going to happen, it is better to not fight against it. Find a way to modify the outcome so it works in your favor. She is going to break her lease and move in winter, accept that fact and get to work releasing the property.

@Nathan G.