Tenant Breaking The Lease: Sublease vs. Find a new tenant

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Tenant Breaking The Lease: Sublease vs. Find a new tenant

Izzy Zeigler
Member since 2021 · 1 post · 2 votes

Hi all,

I have been an anonymous reader for quite some time, but this is my first ever post! I have learned a ton by all of your experiences and suggestions.

I own (and live in) a 3-flat in Chicago (north side - around Edgewater & Andersonville) with relatively long-term (3-4 years) tenants. One of my tenants candidly told me that they are buying a house and will need to move out at the end of September, though their lease ends at the end of April. I would like to be nice and fair to them without putting myself in a difficult position. Have any of you dealt with this before? I feel like I have 2 options:

1) Let them find a new tenant to sublease the unit (assuming the tenant goes through the same background checks).

2) Keep their security deposit (1month rent), and find a new tenant (assuming it may be challenging with an October start date in Chicago).

Is there also a 3rd option? Any suggestions would be very much appreciated!

Thank you!

Izzy

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Bryan Balducki
Real Estate Agent · Denver, CO · Member since 2019 · 161 posts · 176 votes
5y

@Izzy Zeigler the third option is to tell the tenant you will attempt to find a replacement, but if you cannot find one, then they are on the hook until a suitable tenant can be found. I would list the room right away so you can filter through the best candidates with ample time. I did this with a tenant and found a new one a couple weeks after he had moved out, so I still charged him for the days in between and he was more than okay with that.

Allowing the tenant to find a sublease can be tricky but could also work and make less work for you, though I’ve never gone that route. Hope this helps!

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  • Bryan Balducki
    Real Estate Agent · Denver, CO · Member since 2019 · 161 posts · 176 votes
    5y

    @Izzy Zeigler the third option is to tell the tenant you will attempt to find a replacement, but if you cannot find one, then they are on the hook until a suitable tenant can be found. I would list the room right away so you can filter through the best candidates with ample time. I did this with a tenant and found a new one a couple weeks after he had moved out, so I still charged him for the days in between and he was more than okay with that.

    Allowing the tenant to find a sublease can be tricky but could also work and make less work for you, though I’ve never gone that route. Hope this helps!

    2Reply
  • Scott M.
    Real Estate Broker · Rochester Hills, MI · Member since 2009 · 2k+ posts · 2k+ votes
    5y

    Follow your lease on what to charge for breaking the lease.  You retain control, do not allow subletting as the tenant will never be as careful as you would be.

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  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    5y

    They are responsible for the rent until a new tenant is found, plus all costs associated with marketing the property.  I tell them they are responsible to marketing and showing the unit, I will provide the rental criteria they need to use.  Once they find a good sublet option, I will run the app and credit check and if they qualify I can let them out of the lease and will just sign a new lease with the new tenant.  They do the work and I get a qualified tenant

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  • Brie SchmidtBusiness Member
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    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    5y
    Originally posted by @Scott M.:

    Follow your lease on what to charge for breaking the lease.  You retain control, do not allow subletting as the tenant will never be as careful as you would be.

     Unfortunately that is illegal here.  Landlord cannot deny a sublet

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  • John Warren
    Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
    5y

    @Izzy Zeigler in Chicago they have the right to find someone to take over the lease. On a more practical level, I would look to just move on from the tenant and get a new tenant who wants to be there. I am personally going through this now with tenants in one of my Cicero buildings who want to break the lease. I can probably hold them to the lease, but it won't be worth the aggravation and stress long term. 

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  • Jonathan KlemmBusiness Member
    Moderator
    Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
    5y

    @Izzy Zeigler- I'd follow the great advice above from @Brie Schmidt & @John Warren.  

    I personally wouldn't turn this into a big deal and might just try to find another tenant myself as the landlord.....especially since they are giving you ample time to find a new tenant.  Plus the rental market is trending in an upward direction here in Chicago after being pretty down over the last year and a half.  

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  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    5y

    I'd wish them well and find a new tenant yourself.  They've given you plenty of time to find a new tenant.  If there is a penalty for breaking the lease, you can enforce that.  They've been there 3-4 years which is a good amount of time.

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    5y

    Ah, good ol' Chicago where the wind blows, and so do their laws!

    Just talk to your tenant about the options. IF they've been good, work with them to find a replacement and let them go. Be sure any new tenant meets your screening criteria. I think Chicago still allows you to screen.

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  • Jason Albasha
    Lender · Chicago · Member since 2018 · 118 posts · 66 votes
    5y

    @Izzy Zeigler I'd side with @John Warren here. They have the right to find a sublet tenant yet it's not mandatory to exercise that right.

    You'd be finding a new tenant in April anyway, simply have to do it 6 months earlier. 

    1Reply
  • Daniel SmythPro Member
    Rental Property Investor · Rockford, IL · Member since 2019 · 471 posts · 342 votes
    5y

    @Izzy Zeigler

    I would forgive them and let them put of their lease if they can find a replacement.

    My idea of a replacement, is not a sublease, but a new lease.

    Let them clean-up on their dime and time, leaving perhaps some time for them to move out, time for repairs/painting.

    The ideal situation would be to have no lapse in YOUR cash flow.

    They get their deposit back, and get a letter of release from their lien when you get the new lease and new deposit from your new tenants.

    The only way I would agree to a sub lease, is with an addendum allowing such added to the lease, with the lease, payments, and additional responsibilities charged to the original lease signers. Perhaps an additional deposit?

    Now that I think about it, adding a sublease is extra work.

    I would allow the early release from the lease if new tenants signed a new lease and gave up a deposit, after being fully vetted by you or your people. Make the clean cut nice and crisp.

    That's the best. This IS Illinois.

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  • Sean McKee
    Rental Property Investor · Chicago, IL · Member since 2017 · 268 posts · 189 votes
    5y

    @Izzy Zeigler as you already now know Chicago requires you allow them to break lease with a reasonable sublet. Since you have plenty of time I'd just let them out of it and find a new tenant.  It's better than getting a text after you inquire about the rent and they reply "I don't live there anymore".

    @John Warren, @Jason Albasha, @Brie Schmidt- Do you know if this is in the new Cook County RTLO? I don't recall seeing it. 

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  • Jason Albasha
    Lender · Chicago · Member since 2018 · 118 posts · 66 votes
    5y

    @Sean McKee Sec. 42-809 - Under section B-2c.

    "If the tenant abandons the dwelling unit, the landlord shall make a good faith effort to rent it at a fair rental value. This shall include the acceptance of reasonable subleases. If the landlord succeeds in renting the dwelling unit at a fair rental value, the tenant shall only be liable for the amount by which the rent due from the date of abandonment to the termination of the initial rental agreement exceeds the fair rental value subsequently received by the landlord from the date of abandonment to the termination of the initial rental agreement. If the landlord makes a good faith effort to rent the dwelling unit at a fair rental and is unsuccessful, the tenant shall be liable for the rent due for the period of the rental agreement. The tenant shall also be liable for reasonable advertising and redecoration costs incurred by the landlord in re-renting the dwelling unit."

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  • Crystal SmithPro Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
    5y

    If you think of your 3 flat as running a business then loosing cash flow is not "nice and fair" to your business. I would let the tenants know that they are responsible for the lease until the end of April. Giving them the option to sublease is fair, but they must pay you until a tenant suitable to you, takes over the lease or signs a new lease.  Cash flow, cash flow, cash flow

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  • John Warren
    Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
    5y

    @Izzy Zeigler one of my mentors in this business has completely switched to month to month leases for this reason. His thought process is that it takes less time to find a new tenant than it does trying to force someone to live in a place they no longer want to live. I used to think that was a bad idea, but the more I have thought about it the more I like it. You no longer have annoying renewals to deal with (you just up the rent every year at a set time). You also are protected somewhat as a housing provider because you can always terminate a MTM lease just like they can... it is an interesting idea anyways. 

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