Auburn, WA · Member since 2017 · 305 posts · 88 votes
One of our tenants wants out of their lease in a couple months and they've stated their buying a new home. Crazy because they just signed a year lease the start of July. We're not totally opposed to letting them out as we could do some updates to the unit and get more rent. Only question is do we just make them pay half of the remaining lease and forfeit their deposit Or just charge them for the time to re-rent ie. repairs, lost rent, advertising etc. We know can't charge them for the rest of the lease term if they vacate without attempting to re-rent the unit, but we don't want to put ourselves in a bind during covid and eviction moratoriums. Any suggestions?
In your lease make sure you have an early out of the lease. In my area 2.5 times the rent fee is the norm. So if rent was $1000 it would cost $2500 to end the lease early. This buys you time to do repairs and find a new tenant. It should be in your lease.
I've done this before for 1-month's 'fee'. Makes it easy for them and helps reduce the vacancy on my end.
Pre-covid, I'd probably make them a deal to help show the house to prospective renters to reduce their fee, but nowadays, that gets a lot more complicated.
In your lease make sure you have an early out of the lease. In my area 2.5 times the rent fee is the norm. So if rent was $1000 it would cost $2500 to end the lease early. This buys you time to do repairs and find a new tenant. It should be in your lease.
@Remone Randolph both times this happened to me we agreed they are liable for the rent until I can fill it with another renter. They also forfeit the security deposit as it's a default of the lease. Was honestly very easy and worked out great.
@Michael Mulroy so after you rented out the unit did you have a hard time getting that back rent from the tenant? I’d think once they’re gone they may say forget it and not pay
@Remone Randolph they stayed until it was rented out. If they moved out they're still liable per the rental agreement. If they're physically there or not, they still owe until you get it filled.
They are on the hook for income until you find a tenant to replace them with a term lease. You will have to show to courts that you are actively trying to replace them. If you have a clause in your agreement for liquidated damages due to a lease break, then you can essentially keep the damage deposit to cover that cost.
For your next lease put an early term clause in it so you can charge two months of rent to break lease. You might have to bite the bullet this time around or hold them to the end of the term.
Under many jurisdictions, it is incumbent upon the landlord to attempt to mitigate your losses. This means, of course, you will “try” get it rented out ASAP, which may or may not cost the tenants anything extra.
Even if not in your lease, offer them 1 of 2 choices. They can wither buyout their lease (2 months rent?) and leave with zero consequences, or they can take their chances that you’ll be able to find a new tenant and it’ll cost them nothing. Ask them which they’d prefer.
Actually, I was thinking the buyout would profit you, but cut their losses. You should never take a loss on a tenant breaking a lease. At the worst, you break even (with a little extra work to rent the unit out again).
For example; I also had a tenant that bought a house. Four months left on their lease, at $1,500 per month. So, they were possibly looking at $6k left in rent. I offered to let them out of the lease, with no more utility charges as well, for $3,000. They said yes.
Two weeks later, I had a new tenant at the same rent rate. I took a chance that I would be able to rent the unit out quickly. Therefore, I made more money on the deal. But the old tenants also got the peace of mind of moving on and not worrying about their lease.
@Anthony Wick yes we definitely don't want to take a loss. they will have about 8 months left on their lease @1050 per month. So maybe as you've suggested offering them to pay half and let that be that. Covid and low interest rates have made things uneasy, but that's real estate.
I've not read other responses but I'll pass on what I've done the last 3 times tenants wanted to leave early.
I said ok if they will pay rent until new tenants move in. Then I release the old tenants from their lease and return their security deposit balance. In other words I asked only to be kept whole.
This has worked fine. In fact it worked in my favor since their was no vacancy between the old and new leases. The old tenants were happy to get out from under their lease too.
@Robert Haney yes I believe we will go that route. Thanks
Glad to be of help. I've always thought this was fair and how I would want to be treated if I was the tenant. It was well received by all my tenants as reasonable and fair.
First, check your local tenant/landlord laws, then read your lease. There may be rules about how this needs to be done and your lease may state the penalty.
Usually you need to rent the place as soon as can to mitigate costs to departing tenant. Also there is usually a limit to the “fee” you charge like2 months rent.
So, if someone wants to break a lease I let them know I will work diligently to show their unit and to get it rented as soon as I can. Usually I get places rented right away which is a be benefit to all
so.... check local laws, read your lease. Good luck!
I know its not really a proper answer for your situation, but more a curiosity with the covid bs going on. If your Tennant gets upset and feels you're being greedy could they not technically just screw you over all together by "not moving out", but also not paying rent. By technicality you cant evict right now right? So i would think try to be as reasonable as possible on both sides. Always best to not pour gas on a fire right?
I know its not really a proper answer for your situation, but more a curiosity with the covid bs going on. If your Tennant gets upset and feels you're being greedy could they not technically just screw you over all together by "not moving out", but also not paying rent. By technicality you cant evict right now right? So i would think try to be as reasonable as possible on both sides. Always best to not pour gas on a fire right?
They could definitely do that, but they won't. The OP said the tenants are trying to buy a house. They're not going to do anything to risk their credit if they're applying for a mortgage.
I know its not really a proper answer for your situation, but more a curiosity with the covid bs going on. If your Tennant gets upset and feels you're being greedy could they not technically just screw you over all together by "not moving out", but also not paying rent. By technicality you cant evict right now right? So i would think try to be as reasonable as possible on both sides. Always best to not pour gas on a fire right?
They could definitely do that, but they won't. The OP said the tenants are trying to buy a house. They're not going to do anything to risk their credit if they're applying for a mortgage.
But once the mortgage is signed your credit can go to crap. Its locked in at whatever terms right? Im not saying they would do that as i feel most people want to do right.