Author Topic: Just bought a rental property, tenant wants to break lease 4 months in  (Read 4601 times)

FurtherJourneys

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Hi there!
My husband and I just bought a multi-unit apartment building. We took over ownership at the end of May and are having to deal with the former landlord's quirks. One of these was that he collected rent in person and never charged late fees. We've been working with people for the month of June, but made it clear that we will expect rent to be paid in a timely manner in the future or we will be assessing late fees.

My husband got a call today from a tenant claiming that her lease expires in August and asking that she be let out of it a month early because she can't afford rent anymore because her boyfriend moved out. When he looked at her lease, there was no boyfriend on the lease (but that could be the former landlord's sloppy documentation) and it was signed in April. Not sure why she thought we wouldn't have a copy of the lease.

We don't want to keep a tenant who doesn't want to be there and can't afford the rent, but we don't want to send the message that tenants can just move out whenever they want. We're also planning on making some improvements to the units and can afford not to have it leased while these are being done.

We are leaning towards making her give a full 30 days notice and prorating the rent into the middle of July but letting her out of the lease. Since we are new at this, I thought I would see how other people have handled it. I'd appreciate any feedback you could offer!

Fishindude

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I'd let her out of it, so long as she doesn't leave a mess, and I would keep her deposit for breaking the deal.
Would be best to get her out of there ASAP, as from the sound of it she wouldn't be able to pay going forward anyway.

 

tonysemail

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at least in California, the only recourse is to take the tenant to small claims court.
that's simply not worth your time.
In practice, tenants absolutely can break the lease whenever they want and landlords aren't going to sue them for breach of contract.
it's best to just move on and find a better tenant asap.

TheGrimSqueaker

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I write all my leases with an early-exit clause. The tenant can end the lease early by paying $X (usually about two months of rent) or 50% of the remaining term, whichever is lower, and by giving the usual 30 days notice at or before the start of the month.

If the lease doesn't have an early-exit clause, let her out of the lease, with the following conditions.

1. 30-day (or full month) notice starts at the beginning of the month.
2. She pays rent for the full notice period.
3. You're holding on to the damage deposit after she moves out in case there's no other tenant, but she's still on the hook to pay for any damages or excess cleaning beyond the usual apartment-turning stuff.
4. If you, or she, finds an acceptable replacement to take over the lease and move in when she moves out, she can have the damage deposit back less any actual damages or cleaning expenses. (It's against the law to collect double rent.)
5. In the meantime, consider offering a "finder's fee" rent credit for any other tenant you have who refers a replacement. Whoever finds you a qualified, acceptable replacement tenant to take over for their neighbor gets that amount off their next month's rent. This does three things: it makes people value their neighbors a bit more, it increases the odds you won't have a vacancy, and it guarantees that at least that pair of tenants knows their neighbors.

Believe me, it's worth more than $100 to get that vacancy filled, and the absolute last thing you want in an apartment is a person who doesn't want to be there.

When I buy a building where some tenants have a verbal lease or a badly written one, the first thing I do is to go around to the whole building and offer everyone an incentive to tear up the old lease and sign a new, better-written one with me in exchange for either a small reduction of rent or a $100 credit toward their next month's rent. That way I can adjust the terms, improve the house rules, get everyone on the same annual cycle, and make any bad tenants uncomfortable enough to leave.

The thing about just letting the tenant walk is that, unless a judge breaks the lease or you dissolve the contract by mutual agreement, you're still bound by the terms of the lease even if the tenant isn't there.

Beaker

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Our usual deal is that the old tenant keeps paying the lease until we find a new tenant and they start paying. We hold on to their deposit until the new tenant starts, then refund it as appropriate.

We also charge 50% of one month's rent early-exit fee in addition. Didn't used to, but we were getting a lot of turnover for a while and the re-rents were becoming a real PITA.

FurtherJourneys

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Thanks everyone, really appreciate the feedback! After digging deeper it looks like after the split she signed a new lease and assumed that it was under the term of the old one, but in fact it was a new one year lease. We decided to give her the choice of either breaking her lease and forfeiting her deposit or giving us a 30 day notice and proceeding as usual. She chose to give 30 days notice. The finders fee and early-exit fee are both ideas we are going to consider going forward.

Blindsquirrel

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 Meh, tell her that you want the whole term of the lease paid, unless/until you find another tenant. Normally you can find an evil lawyer to collect for 1/3 of amount collected. A good lawyer will hunt a dead beat tenant to the ends of the earth, as they should.

zephyr911

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Meh, tell her that you want the whole term of the lease paid, unless/until you find another tenant. Normally you can find an evil lawyer to collect for 1/3 of amount collected. A good lawyer will hunt a dead beat tenant to the ends of the earth, as they should.
Most multifamily tenants don't have liquid assets to justify such a pursuit. This is a minor annoyance, not willful damage.

Kroaler

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The 30 day paid notice was probably the best idea. Dont want to force a tenant to stay and them wreck the place...

Now you can slowly work on higher quality tenants.  Best of luck!  Im a little jealous, I want to buy a multi family soon. . . .

clarkfan1979

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Two times the rent is the standard penalty.

MakeSmarterDecisions

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We had the same exact thing happen to us when we bought a multi-family complex (8 units) four years ago (today actually!)  It took a couple years for all but two units to turn over to new tenants that we chose. We still have folks that want to end early and we try to work with them. We work to make it a win-win but always spell out the terms of what will happen if we can't find a high quality tenant to fill their unit. Good luck!

alme

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Our rental agreements say that tenants have to give 60 days' notice to break their lease, or we keep their deposit (one months' rent). When they ask to break the lease, we tell them we'll return their deposit if (a) they cooperate in showing the apartment by keeping it clean and going out for a few minutes when we need to show it, and (b) we can get a new tenant in before they leave. We don't want to force a tenant to stay in a lease he/she can't afford, and people are very motivated to get their deposit back. So far, we've rented 2 units for 4 years and have never had a vacancy.

rachael talcott

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I have a clause in my lease for early termination.  Basically I advertise for new renters and the current renters are off the hook once I find someone new.  It provides motivation for the current renter to make the place look decent during showings. 

You should think through what you want your policy to be and put it in future leases, so that your tenants know upfront what the expectations are.  For this particular tenant, they had a lease with the former landlord, and you are stuck with that lease.  If someone else wants out and points to this case, you can always say that legally you were held to the lease from the previous landlord.

Fishingmn

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Here's my clause - but keep in mind that I'm not a lawyer and this is not legal advice -

6.   LEASE BREAK.  In the case that a lease break is requested, the Tenant shall first submit such request in writing to the management office and request the Landlord to use reasonable efforts to re-rent the premises.  Tenant shall pay a lease break penalty of $500.00 upon Tenantís early termination of this Lease.  In addition, Tenantís lease break and lease break penalty will in no way release the Tenant of Tenantís obligation to pay rent under the terms of the Lease until the premises is re-rented or the Lease expires, whichever may come first.  Tenant shall bear all reasonable costs of re-renting the premises over and above the lease break penalty, including, but not limited to, publication costs and labor, if Tenant requests that Landlord attempt to re-rent the premises prior to the expiration of the Lease.

gillstone

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1. What does the current lease allow for either party to do in event of breaking the lease?

2. Let her go on reasonable terms and within the bounds of the signed lease.  No good comes from keeping her locked into a unit she can't pay for. Also, keeping an angry tenant around when you don't need to can have an impact on others in the complex.

+1 on door knocking to get new (and better) leases and on rent credits for referrals.

NoNonsenseLandlord

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All my leases have a two month's rent cost to break the lease.  Keeping the deposit is a no-brainer.  If they leave you a mess, it's a no-win for you.  You are finding out that a lease is more for the tenants, and the deposit is what protects you, not the lease.

Hopefully you can start showing the place immediately.

FIPurpose

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I'm honestly very surprised at some of the extremely strict lease breaking terms being suggested in this thread. I am not a landlord, but in every place that I liked where I rented, I have always been given a free lease break given a 30 day notice. Since then, I have always given my referral to coworkers about those apartments. I wouldn't ever trust a landlord that makes me cover rent while they look for a new tenant.

iamlindoro

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I wouldn't ever trust a landlord that makes me cover rent while they look for a new tenant.

Counterpoint: How is the landlord in this case any less trustworthy than a tenant who is willing to disregard the duration of the lease they have signed? Landlords aren't under any obligation to provide you an "out" for a contract you signed. Allowing tenants to pay their way out, or only to cover the rent until a new tenant can be placed, is being reasonable and willing to work with the former tenant.

rachael talcott

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I'm honestly very surprised at some of the extremely strict lease breaking terms being suggested in this thread. I am not a landlord, but in every place that I liked where I rented, I have always been given a free lease break given a 30 day notice. Since then, I have always given my referral to coworkers about those apartments. I wouldn't ever trust a landlord that makes me cover rent while they look for a new tenant.

Vacancies are one of the biggest costs for a landlord that is figured into the rent.  It depends on the area, but in a location where it takes more than 30 days to find a new tenant, I'd have to charge more per month to cover the the cost of allowing people to break the lease.