Early Termination Fee?

Question

I have tenants terminating their leases early due to COVID-19 and inability to pay.  I have early termination fees in place, however I am not sure if I should enforce them right now.  I am curious what other landlords are doing with regard to this?

David Clay · Answer

I'd let it go. At least they're not trying to stay for free w/the moratorium on evictions.  I haven't had this problem, but I would be very considerate of anyone who found themselves in a bind and wanted to make adjustments. I don't think you're going to find it hard to find another tenant. Just keep part of the security deposit (not all as they may need it) and let them go.

Theresa Harris · Answer

@Mike Griffith  In this case, I would honestly waive it.  They are letting you know ahead of time and doing the responsible thing.  Hopefully they leave it in good condition and you can get it rented quickly.

Kyle J. · Answer

@Mike Griffith  I agree with @David Clay...personally I would let it go and not charge it.

There are so many stories on here about tenants who can't pay (and even some who can) but instead of leaving voluntarily they're just staying put and not paying because they know they can't be evicted right now.  I'd be grateful that yours are doing the right thing and moving out voluntarily because the alternative could get quite expensive for you.

Nathan Gesner · Answer

It depends on the situation.

My initial response? If they've communicated well and given me at least a couple weeks notice, I would probably let them go without the termination fee but I would hold them responsible for rent/utilities until a new tenant is placed. In my current market, I'm still able to find a replacement tenant pretty quick so it would minimize their loss. If they left the place real clean, I may even waive that requirement and just cut them loose with a full deposit.

Once unemployment and stimulus checks start rolling out, it's business as usual. Everyone in the middle-income class or lower, which is the vast majority of my renters, should be making MORE money from unemployment and stimulus checks and therefore has no justification for terminating early or not paying rent. If anything, most of them should have enough "free" money to pay a month or two ahead or sock away some savings.

But we all know the majority of them will throw that money right down the drain on cars, vacations, new flat-screens, the latest iPhone, or some cool kicks.

Filipe Pereira · Answer

I would waive it as well. If they have been good tenants, and are willing to clean up for you, then let them be free. As others have mentioned, they could play hardball with you instead and be total A-holes by just simply not paying you. Heck, I'd probably even send them on their way with a "best wishes" card at this point! LOLFollow your gut Mike, I think it's right on this one!

Mike Griffith · Answer

Thanks all of you who have replied.  I agree with the comments.

Kenny Dahill · Answer

@Mike Griffith, I have not had this issue yet.  The only concern I have is having a new tenant right now.

Personally, if they have been good tenants then I would do my best to work with them.  Have them do any repairs and a great job at deep cleaning the place.  You still have their security deposit.

If they leave the place in bad shape and have been bad tenants, I would charge an early termination fee.  Probably not the entire fee but enough to cover your time and any listing costs.

Early Termination Fee?

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