5 Legitimate Reasons to Allow a Tenant to Break Their Lease

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As landlords, we want some amount of tenant stability; after all, tenant turnover is a cashflow killer. Very rarely will we sign a lease for a term of less than one year or allow tenants to break a lease without a very good reason. We just want the general comfort of knowing that we likely will not have to worry about that particular unit for at least a year.

Sometimes, however, tenants want to break their lease. By “break” I mean move out before the lease term is expired. The reasons for this are often quite varied and range from “I just don’t like it here anymore” to “I lost my job.” With the first example, we have to get our tenants to face the hard reality of the lease by explaining to them again that they have signed a contract which we expect them to uphold. We make them understand we really cannot force them to stay, but that there will be penalties if they do not get the OK from us to break their lease.

The second example, however, is a different matter. There are times when we will let a tenant out of their lease, and job loss is one of those potential reasons. I explain why below and also provide you with four other reasons we allow a tenant to break their lease.

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5 Legitimate Reasons to Allow a Tenant to Break Their Lease

They Are Active or Reserve Military

Active and reserve military personnel can be transferred or activated very quickly. If they have to go, there is really nothing you can do, as Federal (and often State and local) laws allow these tenants to break any lease. In fact, you might even be required to hold their property for them so it will be there when they return. Be sure you understand the potential ins and outs of these laws.

They Get a Job Transfer

A job transfer is not the tenant’s fault, and it can often be a good thing for them. Many times they have very little control over where the particular company they work for sends them (unless they just up and quit), so there really is no reason trying to enforce your contract here. It is very unlikely that any sitting judge would actually allow you to do so anyway.

As a cautionary measure, it is wise to place a clause in your lease that allows for the lease to be broken due to a job transfer so long as the transfer is over 50 or so miles away. After all you don’t want them to move if they are just transferring to another local branch.

Related: Month to Month vs. Annual Leases: Which Protects Landlords?

They Lose Their Job

If a tenant loses their job and generally has no prospects of finding replacement income in the near future, we have found that it is best to generally let them move on. After all, you are not going to get blood from a stone. If a tenant has lost their income, their relationship with you is likely to become more and more strained as time goes on and resources dry up. Best to sever the relationship early, get your property back and move on down the road.

They Encounter Extraordinary Circumstances

Unfortunately, bad things happen to good tenants. We have had tenants get divorced, get diagnosed with cancer or suffer some other type of misfortune. These types of circumstances can cause radical shifts in income and outlook on life in general.

Suddenly the rent is not that big of a deal if you are fighting for your life or trying to survive a bitter breakup. It is best to have a bit of sympathy here and let folks move on and focus on whatever they might need to focus on.

They’re Simply a Pain in the Neck

Some tenants just end up being a pain in the neck. They seemed like a good fit during the application process, but once they move in, nothing is ever right for them. Nothing can ever be fixed properly, they complain constantly, they are late with the rent and other payments. They are just a pain in the neck and sometimes enough is enough.

When is that point reached? It is hard to say, but sometimes it is best to just say something like, “I do not think this is the home you are looking for, as I cannot seem to meet your needs. I will be happy to let you out of your lease so you can find something that better fits your needs.” They will either move and you will be rid of the problem, or they will tone themselves down. Either way, hopefully your problem is solved. Sometimes it is just better to get out of a bad tenant relationship.

Related: 17 Vital “Rules” Your Rental Lease Should Cover

Conclusion

In sum, we try not to let our tenants break their lease for foolish reasons, but we do understand that sometimes it is a necessity due to circumstances that may be beyond their control or for us to get some peace of mind. How and when you decide to allow your tenants to break their leases will be up to your local laws and your own personal opinions and business practices.

Whatever you decide, keep the lines of communication open and try to maintain a good rapport with your tenants. Let them know that they can come to you if they need to discuss any situation. Don’t get angry. Keep everything professional and business like. After all, sometime breaking a lease is good for both sides.

Now it’s your turn to weigh in: Have you been forced to break leases with tenants? If so, what were the reasons and were you happy with your decision?

Leave a comment below!

About Author

Kevin Perk

Kevin Perk is co-founder of Kevron Properties, LLC with his wife Terron and has been involved in real estate investing for 10 years. Kevin invests in and manages rental properties in Memphis, TN and is a past president and vice-president of the local REIA group, the Memphis Investors Group.

50 Comments

  1. Adrian Tilley

    Good article, and I agree with most of it, but I have questions about your first two points. First, do you know what federal law allows military personnel to break a lease and/or requires you to “hold” a home for them?

    Second, what is your basis for asserting that a judge would not allow you to hold someone to a rental contract because they got a job transfer? Is there some case to back that up? I would be shocked if a judge did that.

  2. I just had a MAJOR pain in the neck scenario that Kevin refers to. After two weeks, I offered to give tenants back their damage security & pro rate their remaining rent if they would JUST MOVE! they seemed good at first, but then it was endless complaints that were not legitimate–In one day I had an electrician, a flooring man, a carpet man, a plumber, and a home inspector–all people with 20-35 years owning their businesses and ALL of them said there is nothing wrong & all the tenants complaints were totally groundless. Nothing satisfied this guy, and then to top it off, we discovered that their dogs had already done major damage to the carpeting after only one week & they had hidden it under an area rug and not disclosed it —it was worth the money to get them out of the house–I have never paid anyone to move , but if someone is that BAD after only two weeks , what next? . A pain in the neck tenant who constantly complains is just NOT worth the aggravation–and unfortunately the Warrant of Habitability law that all landlords are liable under, makes it easy for tenants like that ,

    • Page Huyette

      I manage my units with the expectation that I will be responsive and available for emergencies, and will provide a clean, safe habitable place to live for my tenants. In turn I expect them to act like adults, not call me with every little complaint, notify me of a real problem and care for the unit as if they owned it. It’s pretty easy to spot those that are unclear on the concept, but unfortunately some slip through the cracks. I agree that getting rid of the major pains is worth a few dollars.

      • Roy N.

        Here its a bit gray – one of those unspoken vague topics – a residential lease would most likely be terminated in the event of death, but not that is not necessarily the case for a commercial lease.

        When it comes to institutionalisation, it would depend on the institution and the cause for the stay. However, unless their was mutual consent of the parties, you would have to go the eviction of abandonment route.

        • Kevin Perk

          Roy,

          I think it will depend on your state statute. Here in Tennessee, institutionalization is specifically addressed.

          Thanks for the comments. I do appreciate it,

          Kevin

  3. Great article. I think the key in landlord-tenant relationships is the golden rule – do onto others as you want others to do onto you. For good people who simply have bad luck, breaking their lease is sometimes just the cost of doing business.

  4. Scott Stevens on

    Regarding Military Members having to break their lease…. I’m in the Army myself and have a few rental properties. From what I saw in the SCRA, if a member provides the landlord notice on say September 2nd of a PCS, ETS, or deployment and the notice is either a copy of the orders or a memorandum from their commander, the landlord can still hold the tenant liable for rent due until October 31st. However, if notice was given on August 30th, then the landlord could only hold them liable until September 30th for rent. Basically, til the end of the following month that the notice is received.

    Due to deployment related training prior to being able to deploy and outprocessing tasks prior to PCSing (permanent change of station), military members generally have a good amount of notice that they will be deploying, or changing duty station, but I see a lot of Soldiers wait til the last minute to inform their landlord and expect the landlord to not hold them liable for any rent because they don’t understand the landlord has turnover costs and can’t relate to that.

    With any orders, the landlord can check with the local military installation’s Installation Management Command office to validate the orders. Sometimes service members do type up false orders to break a lease. Best to verify the orders are legitimate.

  5. Great article, Kevin. I am currently dealing with a lawsuit from previous tenants in regards to this type of situation. They needed out of their lease one year before it was set to terminate. I agreed to let them out, but kept their security deposit. They are suing me for keeping the deposit. Am I in wrong legal grounds for keeping it since I agreed to let them break the lease?
    Thanks!

  6. Bill Wallace

    Early Lease Termination should be handled in your lease.

    Mine basically says you pay $300 termination fee and you pay rent until I get it filled. I had a job transfer this past fall. He gave me plenty of notice and I got it re-rented (at a higher rate) with no vacancy period. He happily paid the $300 and everyone was happy.

  7. Nick Bukowski

    Thanks for the information, Bill.
    Scott, it only states the are required to give me 30 days notice (which they did) and that by ending the lease, they are responsible to fulfill the payments until the expiration of the lease. The house sat vacant for only 5 days.

  8. Robert Steele on

    This article seems to me to be full of bad advice.

    There are only three ways you are getting out of my lease:
    * As required by law (e.g. military duty)
    * If you are in breach of lease and I terminate it.
    * If you want to break the lease and you follow the terms set forth in lease ($500 fee plus you continue to pay rent until it is re-leased).

    • Kevin Perk

      Robert,

      Thanks for offering your opinion with your comment. I do appreciate differing ideas and ways of doing things. That is one of the great things about real estate, there are so many ways to do things.

      I think you and I would agree on many things. We also charge most folks to get out of their lease. But in my experience, there are times when it is just best to end the relationship and let them go.

      Thanks again for the comment,

      Kevin

  9. Hi,
    Thanks for the great article, it inspired me to ask for advise. We have a tenant who wants to terminate early and without legitimate cause. He’s currently behind by 1 month and hoping the loss of his security and last month rent will keep him in good standing. However, part of his security went to pay the listing broker, and his last month rent won’t make us even. We’d like to hold him to the early term fee agreement in the lease, but don’t see how. In our experience, if a tenant isn’t collectible, we’re basically at their mercy. Any suggestions?

    • Kevin Perk

      Gerson,

      You can always try to get a judgement based on the terms of your lease, but the tricky part is collecting it. If someone is just not paying you then evict and stop the bleeding. You may not ever collect what is owed, but at least you stopped the bleeding.

      Good luck and thanks for commenting,

      Kevin

    • Deanna Opgenort

      If he’s willing to go peacefully be grateful you aren’t dealing with an eviction and get him out of there! Figure out how many days rent his security deposit would cover and give him written notice to leave by that date.

      I’m in CA and I know we do things differently than other parts of the country, but I’m curious about how part of the security deposit goes to the listing broker (??). Shouldn’t a security deposit be refunded 100% to the tenant when they move out, minus damage?

    • Drew Sygit

      Always keep the bigger picture as your ultimate goal. Lose the battle to win the war! There’s a reason occupants are offered “Cash for Keys”. Get them out of the property ASAP with minimal damage and cleaning needed so you can re-rent to a better tenant and get back to cashflowing.

  10. Kathlyn Lewis

    Glad to see this post now as I have a question about lease breaking for a friend – great timing!

    My husband and I are landlords in Boise, ID and generally have sympathies with the owners when it comes to leases and landlord tenant relationships. I have a coworker (in my day job) who had to break his lease because he and his wife bought a house. While I totally understand that there are consequences to breaking a contract, the property management company is taking their deposit and forcing them to pay for the rental until the contract is up (in March) while making no effort to re-rent.

    My question to you seasoned folks out there – is there anything my coworker can do to fight this? It would be one thing if the property management company was making an effort to get the place filled, but they won’t even put a “For Rent” sign up.

    I wasn’t sure if there was some way to push back based on the bad faith of the management company, or if these guys are just hosed and will have to deal with two monthly payments.

    Thanks in advance for any advice you might have!

    Cheers,

    Kathlyn

      • Katie Rogers

        Of course, buying a house is a good reason to break a lease. Wait on buying a house? Then someone else will likely get the house they wanted. There is no good reason to use a lease to trap tenants. Simply put everyone on a month to month and avoid the hassle.

    • Drew Sygit

      Obviously a bad choice on their part and they should have negotiated this upfront with the PM before buying! This may be why the PM won’t try to lease the property out as they’re upset with your friends for how they’ve handled this.

      In our opinion, most judges would not look favorably on the PM for NOT trying to lease the property out again. Your friends may be able to minimize their liability by either getting something in writing from the PM to get them to do so or by trying to find an acceptable replacement tenant themselves and presenting them to the PM as a replacement. Be sure to use their rental application and criteria!

      Not sure if this will work, but you trying will help make your case to a judge if it goes that far.

  11. Steven Huang

    I’ve had two tenants break their lease.

    One was an exceptional reason- her roommate was murdered on a blind date and the suspect had met my tenant when she opened the door for him so she left the property while fearing for her safety.

    The other one was due to a loss of her job, so I just let her leave quickly and kept the security deposit and quickly put a new tenant in.

  12. Drew Sygit

    Kevin, great topic, as all the comment action shows!

    Not sure if you have one, but we’ve developed an Early Termination Agreement that lists all the requirements to let someone out of their lease early for any reason not covered by law. It covers our Early Termination Fee, cooperation needed from them to advertise & show while they still occupy (they MUST agree to a set schedule for showings to make it easier on our staff), condition they must leave the property in, etc.

    You’re right about judges and their decisions. Most landlords don’t realize a judge can pretty much make any ruling they think is fair. Of course a landlord can appeal this, but once you find out how much the costs of an appeal are, it rarely makes sense to do so — and the judges KNOW this.

  13. Jeff Arndt

    Great article! I had a situation where I had a hunch that the tenant was lying to me and wanted to leave because he didn’t like the place. He gave me an excuse that just didn’t seem genuine to me. I gave him the benefit of the doubt and let him leave only because the place was in great shape, and in a great rental market. I tasked him with marketing and showing the property to prospective tenants and I at the end of the day had the last stamp of approval for the new tenant. It was a win for everybody, I didn’t need to market or show prospective tenants to the property and I got an additional $600 in cash flow for the month. He got to break his lease and not pay the 3 month penalty that I had written in the lease. I like to be flexible with my tenants whenever possible.

  14. Virginia has no cooling off period when a new tenant signs a lease.
    What should you do when a tenant signs a lease and everyone else has also signed and then tenant emails you they don’t want to proceed with the lease. Do you keep the 1st month rent and deposit and hold them to the lease or do you allow them to walk away.
    We have had 2 people do this recently on two different properties telling us they believe they have a 3 day time period to cancel the lease.

    • Fred:
      We’ve had this happen several times as well. We put it right in our lease, that once the lease is signed, if they cancel/do not take possession, they lose the security deposit and 1st month’s rent as liquidated damages. If it is not stated in the lease, the tenant/applicant can argue that the lease has not yet taken effect, so there should be no penalty. Prior to adding this clause, we had a judge rule against us, as he deemed that since we were given 45 days notice prior to the tenant moving in, we should’ve been able to re-rent the apartment with no lost rent.

      There are some states that do give tenants a “right of first refusal”, usually 2 or 3 days, to cancel with limited penalty. If, as you state, Virginia does not have this, I recommend adding a cancellation clause to your lease to protect you from these situations.

  15. Very informative discussion on this topic. Military aside, there can be many facets of a Tenant initiating the process of breaking a lease. In my experience, good relationships have been kept by having the solution the problem already agreed upon in my leasing documents, before the problem occurs. It’s ready and waiting in every lease: Give 30 notice in writing; forfeit only half the Security Deposit and choose one of two methods. #1: , pay rent until either of us finds an approvable Tenant who in fact takes possession. #2: pay 3 months rent, fulfill all departure related responsibilities, move and the lease is voided. Actually I developed a form aside from the lease. It defines the two options and conveys that the Landlord wants to assist if this situation occurs, but the pain and risk must be shared. No Applicant has ever balked at the form. As seen in above comments, it’s rare to have the solution pre-agreed. As to a Tenant losing a job, I make two things clear: 1) my empathy and offer to help some with food, etc. best I can, but clarifying the rent must be paid; 2) that I cannot function as a bank. Over 50 years I’ve made additional concessions a few times, but I try and remember . . . we humans will always take the path of least resistance. I’m known for being fair, transparent and enforcing the lease. If they want to stay, as a general rule, they will get help from friends and family. Remember . . . if your lease is legal, easy-to-understand and reasonable it is you the Landlord who controls the resolution. I believe that letting a Tenant go simply because they are giving trouble is the same as giving a child candy in return for stopping the fit he’s pitching. Develop a reputation community-wide for being fair and kind, but also iron-fisted when necessary. No candy for the child. Stripe those buttocks. And the rock [Tenant] that’s dry will go to work or draw some check. Remember garnishment? I tell you your reputation is the best asset you have in dealing with difficult leasing decisions.
    My forms, some free, are available at http://www.paperlandlord.com. It’s active but excuse errors, it’s undergoing a revamp. Managment according to the leasing documents you use. Consistency is critical.

  16. These are good points that I agree with, but like Adrian, I also have a question; this might seem obvious to landlords, but housing laws can get complicated. If you don\’t feel safe in your home, can you break your lease? Or would a lawyer be a good precaution? A friend of mine has a roommate upstairs that\’s given off strong vibes of being unstable, and I worry for her being a tenant there. Either way, we\’ll figure something out, but it\’s good to be informed.

  17. Tamara R.

    Here is a new one for me. I just had tenants break a lease because they said there was a smell in the house that was making them ill. They had tried everything to rid the home of the smell, but they say it caused them constant sick feelings. An air quality test revealed nothing, but our lawyer advised us to just let them go….so we did.

  18. Christopher Leon

    @KevinPerk Thanks for the good post.

    Just had a resident break a lease due to a job loss. They continued to pay rent up up until they couldn’t find a job and gave us a 15 day notice (which I wasn’t thrilled about). Luckily, we were able to fill the vacancy on Sep 1st (for a zero vacancy with a rental increase) and we just let the past resident out of the lease. They took good care of the unit, and we will return some of their deposit back to them. I can’t see why I would regret this, but it just seems like the right thing to do. I was tempted to send them an invoice and have them liable for the costs to lease the unit, but, why kick someone when they’re already down. They ended up having to move 5 hours south for a new job, and there cash position probably isn’t what it used to be.

  19. Monica George

    Great comments – does anyone have suggestions for this?
    Tenants I’ve had since 2008 in 4-bed SFR want to break 2-year lease 1 year early due to job change. Great tenants so far but I don’t have early termination clause written in lease. Not sure if CA laws allow me to keep any of their sec. dep. as payment, but I am OK to let them move in next 45 days as they asked. What is better – demand buyout of 3 mths rent to leave early or require them to pay for advertising and rent until a new tenant is found? Trying to be fair, but not easy to find tenants while home still occupied. (it may need cleaning and paint, new carpeting, ect – and it is Nov after all). Suggestions?

  20. Deanna Opgenort

    Curious about what you decided (other than re-vamping your rental agreement to include terms for breaking a lease early) and how it worked out. Honestly, 7 years from tenants is pretty darned long, and paint, carpet etc, would be normal wear & tear.

    • Monica George

      I did let former tenants move out early but they left behind a lot of damage that was unknown. Took almost a month to fix all the issues including water damage, new kitchen floor, clean up the house and yard, and paint & re-carpet. Kept all of their deposit to cover the damages, with a balance that was never paid. But I did find great new tenants and was able to raise the rent another $100. All said and done, worked out OK.
      I did add a section on my new lease allowing early termination with a $500 penalty, cost of advertising, and requires tenants to work with me and help find replacement. This will hopefully mitigate any possible damages if they want to move before their lease is up.

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