Do you go after tenants that break lease early?

14 Replies

A tenant wants out after two months of twelve month lease.  Does anyone go after tenants to collect on rent for terms of the lease?  In the past I just assumed it was tough to do.  What do you do?  Have you ever been able to collect money through garnishments, judgements, or law enforcement assistance?

Thank you.

I wouldn’t, but luckily my property manager does it for me. All you can really collect for is the time it’s vacant before someone else moves in. In this market that should be 1-3 weeks MAX. Just explain that to the tenant. Tell them the cleaner it is when they move out and if they allow showings while they’re still living there they will lose less money. 

My experience is you almost always win, then you need to garnish there monies.  That in it self is difficult.

I have had so many tenants say,  " get in line" for all the people that are garnishing their income.

If they have good employment and seem like they will pay you back,  you may have a chance.

If they are the Scum of the earth,  I would not put any effort in trying.

Good luck

Nowadays, with increasing rents in many markets, a turnover may not actually cost much. That said, many leases address breaking the lease (ie, what the penalty is)

Some states do not require that you attempt to mitigate losses and a tenant can be held responsible for the entire term of the lease financially...

If they leave the place in good order and pay you all the rents due, I'd just find another tenant.

What does your lease say about penalties?  I'd apply those and focus on getting it rerented.  If there is nothing mentioned other than the normal notice, tell them they need to make it available for showings (at reasonable times and you will group the showing to minimize disruption) and the sooner it is rented, the better for them.

As others said find out what current market value is and get it rented.  Now is a good time of year.

The least we can do is keep their security deposit and we try to get the tenant to pay one month of rent for one month after they move out and we tell them that paying that one month will negate taking them to court. We also get a $400 non-refundable cleaning deposit when they move in and this helps to clean and paint the apartment when they move out early. Otherwise, we never took a tenant to court for moving out before the end of their lease.

@Joe Miller

I’ve always been able to keep them paying until I’ve filled the vacancy.

For me it would depend on how much money I actually lost.

@Joe Miller Dependent on the your state, you should have the ability to attach an ‘Early Termination’ Addendum to the lease that allows the Tenant to terminate the lease for the fee of your choosing (one month’s rent, half month, etc.). We include this with every lease that we sign so that there isn’t a question of what is owed when notice is given or if tenant wants to terminate early. We feel it has given us the opportunity to provide the tenant with a little more ‘freedom’ in the lease in case life changes happen. We have been successful in collecting this fee since it was built in as part of the lease, but it is important to stress this document at the very beginning when signing the lease. We also make sure that the proper notice is given and that it falls at the end of the month - meaning if notice was given on the 5th of the month, the move-out has to occur at the end of the month following the 30 day notice. So, the tenants are still responsible for paying the month in which the gave notice and the next month - as well as the termination fee. You do get the occasional tenant that moves out on you in the middle of the night - but in that scenario, just forget it and move on. You will spend more time and energy trying to collect that fee when they are already gone and you have the opportunity to lease it.

@Joe Miller My experience in these situations is just to let it go. The ROI on my time is much better if I'm chasing deals instead of deadbeat tenants. Your mileage may vary.

Originally posted by @Joe Miller :

A tenant wants out after two months of twelve month lease.  Does anyone go after tenants to collect on rent for terms of the lease?  In the past I just assumed it was tough to do.  What do you do?  Have you ever been able to collect money through garnishments, judgements, or law enforcement assistance?

Thank you.

 Easiest answer we have found is we offer tenants two options for early termination:

Option 1: Sign early termination letter and move out ASAP. Pay early termination fee of deposit+one month of rent (assuming no damages), tenant walks away scott-free the day they leave.

Option 2: Move out ASAP. We put it back on the market to try to re-rent it. Tenant is responsible for all utilities, mowing, cleaning & other "make-ready" fees until it is rented.

I have never had a tenant that wanted to break early that did not take Option #1. It's clean, easy, and they're only coming up with one more month's worth of rent, and don't have to pay any more utilities, cut the grass, etc. *IF* we had a tenant opt for Option #2, and assuming they didn't pay the necessary costs - either it took longer to rent than they had on file with deposit+cleaning, or they owed money when they moved - we would get it re-rented, finalize our costs, and file a small claim suit against them, then turn it over to collections when they didn't pay. We would likely see nothing but filing small claims are easy and it at least has the ability to put a collections effort on their credit. 

M2M agreements, so no.  Tenants will leave when they need to leave.  M2M allows me the flexibility to deal with misbehaving tenants immediately, and they know it. 

well in a NORMAL market I always make them pay. I haven't had an issue with anyone paying up, but I am VERY careful with who I rent to. 
BUT in this market I kind of wish some would leave so I can re-rent at market, which is bigger by the minute in texas. Some of my leases are $500 or more under market at the moment. Ugh. 

Usually, I do not chase after the money because of the cost of doing so.  Mostly my time.

If a tenant asks me, rather than forces me to take the loss, I'll usually negotiate.  They give me an extra month of rent.