Texas rental law question - Renter terminated lease early

[cliner]

Hey all,

My fiance owns a home she has been renting to a family since March 1, 2017. The term of the lease was March 1, 2017 until February 28, 2018. Her tenant emailed her on August 24, informing her that they needed to terminate the lease early due to job relocation, and said his company would pay 2 months' rent. We plan on moving into the house in March, after our apartment lease ends.

They vacated the property yesterday, September 20.

I've attached the section of the lease agreement regarding default & early termination. I hope it's legible. If it helps, I can wipe any identifying info and post the whole lease agreement, but I didn't see anything else that would be relevant.

My fiance's broker/agent told her she could "negotiate more than 2 months' rent, like 2-and-a-half months' rent", and that's it. Or, attempt to find another renter for 4-5 months and take agent fees out of the deposit. Another possibility I thought of was: Terminate our apartment lease early to move into my fiance's house, and have her tenant pay our apartment's early termination fees and any moving fees/etc.

My fear is that my fiance's email replies (e.g., "Understood... that shouldn't be a problem" and "I'm sorry to hear you guys are moving out but I understand you have to terminate our lease early due to relocation") constitutes written agreement of early termination as defined under section 28(iii) of the lease.

Any help would be appreciated. We're not trying to take advantage of anyone, we just don't want to get stuck with a vacant house for 5 months while we're paying to rent an apartment. We've thought about Airbnb, but we're not sure we could cover the cost of the mortgage that way. Neither of us has done it before.

Here is the email chain:

> On Thu, Aug 24, 2017 at 8:03 PM,
> tenant wrote:
>
> > Hello landlord
> >
> > company has transferred me to a new job in city. Unfortunately, we have
> > to leave Texas and terminate our lease. We need to move out at the end of
> > September.
> >
> > company will pay for two months' rent (in this case, October and November)
> > to cover early termination. This should give you time to find a new tenant.
> >
> > Let me know if you have any questions.
> >
> > Thank you,
> > tenant

On 8/26/17 at 2:46 PM, landlord (my fiance) wrote:
> Hello tenant,
>
> I appreciate your letting me know in advance. I’m sorry to hear you guys
> are moving out but I understand you have to terminate our lease early due
> to relocation.
>
>
> Actually I’m renting out the house for one year only because me and my
> fiancé are going to move back next March when our current lease ends. It
> would be difficult for me to find a new tenant who wants to rent for less
> than 6 months. If you know someone interested in short term rentals please
> let me know.
>
>
> Thanks,
>
> landlord

Hello landlord,

Thank you for understanding. Depending on when we can buy a new house, we may be here until October. Would that be a problem?

Additionally, company will pay you two months' rent as compensation for early termination, so that should take you through December.

We will look around company to see if anyone is looking for a short-term lease.

Thanks,
2nd tenant on the lease


On Aug 26, 2017, at 3:17 PM, landlord wrote:

> Hello tenant,
>
> Understood... that shouldn't be a problem. Also thanks for looking around. I appreciate it.
>
> landlord

On Mon, Sep 18, 2017 at 10:47 AM, tenant wrote:

    Hello landlord,
    We are moving out this week.  Our last day in the house is Wednesday.   Our plan is to having a cleaning service come in Wednesday morning to clean the entire house.   
    Are you around to look at the house today, tomorrow or Wednesday?   Also, should we have the utilities transferred back to your name?

    Thank you and we will talk soon
    tenant

**And then a few more emails just talking about cleaning up the house before they leave**

[Goldielocks]

Well,

The lease is clear that the tenant is on the hook until it is re-rented, and that you as landlord will do as much as feasible to re-rent the unit.  If you can only get a lower rent, then they owe the difference to cover your losses.

I would let the tenants know this, and then advertise the unit for Oct - March, at a reduced short term lease rate to attract tenants.  Perhaps 15% less than the original rental rate would attract someone quickly, and they pay the 2 month penalty...

Then, let them know when it is leased, and send the bill for any losses you incur.  The challenge is that you need to take them to small claims, then get an action to collect if they default, if they just ignore you...  If they show up, the judge might think that 2 month penalty was reasonable and ask you why you did not try to rent it out for a reduced rate, etc.

[Dicey]

Any chance you could Airbnb it until you move back in?

[joonifloofeefloo]

1. Does the lease agreement comply with the tenancy laws for your area?

2. If you don't know, consider posting your area so that people can help you find out if it does, and all applicable laws and processes.

[cliner]

1. Does the lease agreement comply with the tenancy laws for your area?

2. If you don't know, consider posting your area so that people can help you find out if it does, and all applicable laws and processes.

The house is in Frisco, Collin County, TX.

Any chance you could Airbnb it until you move back in?

We're definitely considering that.

Well,

The lease is clear that the tenant is on the hook until it is re-rented, and that you as landlord will do as much as feasible to re-rent the unit.  If you can only get a lower rent, then they owe the difference to cover your losses.

I would let the tenants know this, and then advertise the unit for Oct - March, at a reduced short term lease rate to attract tenants.  Perhaps 15% less than the original rental rate would attract someone quickly, and they pay the 2 month penalty...

Then, let them know when it is leased, and send the bill for any losses you incur.  The challenge is that you need to take them to small claims, then get an action to collect if they default, if they just ignore you...  If they show up, the judge might think that 2 month penalty was reasonable and ask you why you did not try to rent it out for a reduced rate, etc.

Thanks for the info, that's an interesting idea. Will run it by my fiance.

[joonifloofeefloo]

The house is in Frisco, Collin County, TX.

Are your tenancy laws state-wide? If so, maybe edit this thread's subject line to "Texas rental laws?" (or the equivalent edit if your tenancy laws are determined municipally, etc). That might draw the attention of people familiar with the laws in that location.

The laws are likely available online too. Some regions present them in clear language, and spell out quite nicely the rights and responsibilities of each party in a situation like this.

Do be sure to check those laws. There can be various consequences for steps taken outside of those, even if entirely reasonable.

[cliner]

The house is in Frisco, Collin County, TX.

Are your tenancy laws state-wide? If so, maybe edit this thread's subject line to "Texas rental laws?" (or the equivalent edit if your tenancy laws are determined municipally, etc). That might draw the attention of people familiar with the laws in that location.

The laws are likely available online too. Some regions present them in clear language, and spell out quite nicely the rights and responsibilities of each party in a situation like this.

Do be sure to check those laws. There can be various consequences for steps taken outside of those, even if entirely reasonable.

I see, thanks for the heads-up & the suggestion. I'll start reading up to see if the laws are state-wide or more local.

Edit: Laws seem to be state-wide, from what I can tell.

Also, fiance and I have been going back and forth this evening on our options. She doubts she'll be able to find a new renter for 4-5 months. I think I forgot to mention, we don't want to extend our apartment lease after March 2018, otherwise we'd just find another 12mo renter and extend our apartment 8mos.
I think our best bet is to break our lease with our apartment and move into the house.
I think the following is reasonable:
Give our 30-day notice to our apartment complex within the next week, letting them know we'll be moving out in late October or early November
Pay our early termination fee, per the apartment lease agreement
Move into fiance's house in late October/early November
Bill the renter for:
1) Lost rent from October plus
2) Our apartment's early termination fee

Would it be reasonable to also bill for mover's fees incurred during our move back into the house?

[cchrissyy]

that plan sounds OK until the part where you want to bill the tenant for your own apartment's broken lease fee and your own moving costs. there is no way they are legally liable for those expenses.

[joonifloofeefloo]

In googling your laws, what did you find you *can* hold the tenant liable for?

You can charge for those, which may come to less, same, or more as the costs you pay to break yours. i.e., You don't need to be able to charge your tenant directly for your costs; you can bill for what you're allowed to and that will happen to cover some of your own.

This noted, I didn't charge for breaks in leases. I think people need to be able to move on when their circumstances change. I think leases are great for showing intent, for encouraging thinking about one's commitments, as a back-up for both parties...but I wouldn't charge for a break when someone is only breaking it due to relocation or severe medical circumstances, etc. In this case, I might be inclined to charge legally-permitted fees equivalent to the cost to you for your early move. That seems win-win.

I think your plan -once the details align with law- is great!

[cliner]

that plan sounds OK until the part where you want to bill the tenant for your own apartment's broken lease fee and your own moving costs. there is no way they are legally liable for those expenses.

The moving costs I agree don't fit into the plan, which is why I decided not to include it in the letter I drafted for my fiance to send to the tenant last night. She hasn't sent it yet, as we're still talking about it (and also taking input from this great community here. Y'all have been a huge help already in this stressful process).

Requesting compensation for the broken lease fee, however, seemed reasonable to me just because of the options available:
option 1) Standard operating procedure: Relist the house & try to rent it out for 4-5 months to new tenants (scenario A). Then, bill previous tenant for lost rent + re-letting fees. However in the event the house isn't successfully rented (scenario B), I'm afraid "lost rent" would equal 4-5months rent... something like $10,500
option 2) Break our apartment lease and occupy the house 30 days later in early November, relieving the tenants of any responsibility to cover lost rent from November on. The cost of our apartment early termination fee would be much less than the cost of 4-5 months "lost rent" from scenario B of option 1.
option 3) Airbnb. Neither of us has done this before, and we have no idea how close to the rental rate we could get through Airbnb. This option seems like the most difficult, and most risky. My fear would be making so little money through Airbnb that we end up having to bill the previous tenants for a ton of lost rent anyway.

Again, am I way off base? I don't "want" to bill the tenant for my own apartment's broken lease fee, as if it's some plan to make a buck. I'm just trying to figure out how to not lose money in this scenario. Only billing for one month's lost rent would leave us over $3,000 in the hole because of that early termination fee. We don't *want* to leave this apartment right now. We wanted to stay until March, but we're willing to do the move to keep it simple and get the house occupied to avoid the possibility of Option 1 Scenario B

In googling your laws, what did you find you *can* hold the tenant liable for?

You can charge for those, which may come to less, same, or more as the costs you pay to break yours. i.e., You don't need to be able to charge your tenant directly for your costs; you can bill for what you're allowed to and that will happen to cover some of your own.

This noted, I didn't charge for breaks in leases. I think people need to be able to move on when their circumstances change. I think leases are great for showing intent, for encouraging thinking about one's commitments, as a back-up for both parties...but I wouldn't charge for a break when someone is only breaking it due to relocation or severe medical circumstances, etc.

I agree. And I'm not looking to "punish" this tenant for moving on. It's a job change which couldn't be helped, and we totally understand that. However, I also don't see why my fiance should eat the cost of that move, when there was a clear lease agreement. If we were not planning on moving back into the house in March, we would do as you've done & simply find another tenant to rent the place out for 12 months. But as it stands, we have to find a renter for only 4-5 months.

In this case, I might be inclined to charge legally-permitted fees equivalent to the cost to you for your early move. That seems win-win.

I think your plan -once the details align with law- is great!

From what I read, legally-permitted fees are:
- costs of re-letting
- other misc. expenses such as re-keying the doors
- lost rent. As a poster mentioned above, in TX the landlord does indeed have a duty to make a reasonable effort to re-let the property: "Sec. 91.006.  LANDLORD'S DUTY TO MITIGATE DAMAGES.  (a)  A landlord has a duty to mitigate damages if a tenant abandons the leased premises in violation of the lease."

The property code doesn't mention early termination fee (of course not, why would it). But I mention the alternatives above: 1) Try to re-let the house (possibly unsuccessfully) and use the law to seek compensation for lost rent (possibly 4-5months if house is not rented), or 2) Try to make it easy/simple and request a statement in writing that they'll pay our termination fee + lost rent, shake hands, and move on right away.

Again, thank you everyone for your insight and advice. We're trying to have this decision made within a week, and this thread is helping a lot.

[joonifloofeefloo]

Yeah, those of us who've been landlords really understand how stressful and confusing it can be! It's great you're asking here and checking your region's laws before making any moves. You're right on track.

In my area, there's also an option for a "mutual agreement to end a tenancy." I relied on that regularly. When a tenancy wasn't working for either party, we made an agreement, filled in that form, and all was well. (Sometimes they bit a small cost, sometimes I paid them out, etc. We negotiated a true agreement, based on the circumstances.)

One dilemma in your situation is that you had wanted to take over the place at end-of-lease. So, it's not your tenant that's restricting a new tenancy to 5 months. It's your life plan that is. If you weren't moving in soon, you're tenant would be off the hook because you'd shortly be finding someone else. How does that play in, legally and otherwise? I'm not sure.

Otherwise, I think your idea for their paying out your early-end costs is reasonable and fair.

Some more questions:

1. Would your landlord let you off the hook? Maybe that resolves everything.

2. Does your region offer the option of a negotiated end? In that case, your tenant offsets some of your early-end costs, like you said, and everyone is happy.

[cliner]

Yeah, those of us who've been landlords really understand how stressful and confusing it can be! It's great you're asking here and checking your region's laws before making any moves. You're right on track.

In my area, there's also an option for a "mutual agreement to end a tenancy." I relied on that regularly. When a tenancy wasn't working for either party, we made an agreement, filled in that form, and all was well. (Sometimes they bit a small cost, sometimes I paid them out, etc. We negotiated a true agreement, based on the circumstances.)

One dilemma in your situation is that you had wanted to take over the place at end-of-lease. So, it's not your tenant that's restricting a new tenancy to 5 months. It's your life plan that is. If you weren't moving in soon, you're tenant would be off the hook because you'd shortly be finding someone else. How does that play in, legally and otherwise? I'm not sure.

Otherwise, I think your idea for their paying out your early-end costs is reasonable and fair.

Some more questions:

1. Would your landlord let you off the hook? Maybe that resolves everything.

2. Does your region offer the option of a negotiated end? In that case, your tenant offsets some of your early-end costs, like you said, and everyone is happy.

This is really helpful. I think a mutual agreement to end tenancy would be the best outcome here. I'll do some more searching to see if there are any Texas-specific laws re: mutual termination agreements. Once I've got it figured out, I just might type one up and have my fiance send it to the tenant as an option. For now, here is the letter I've drafted:

Tenant,

I hope the move went well!

Regarding the property:

Were you able to find someone within company who can rent starting in October? If not, I will try to re-let the house for 5 months. I'm hoping I can successfully find a new renter for that time period. In this case, I would accept the standard two months' rent mentioned in your previous email. However in the event that the house is not successfully rented, I would have to seek further compensation for lost rent due to the house being vacant during the remaining months of our lease agreement.

As an alternative, I am willing to terminate my lease with my apartment complex early, and occupy the house beginning in November. Per my apartment's lease agreement, I would be obligated to pay 2 months rent ($1480 * 2) + my security deposit ($150), totaling $3,110. In addition to the early termination fee, I would seek compensation for lost rent due to the house being vacant through October, bringing the total to $5,210. Attached is a mutual agreement to end a tenancy. If you would rather go with this option, please sign and return the agreement, and I will contact you again when the move is finished.

Thank you,
landlord

I'm afraid it sounds harsh and demanding.

One dilemma in your situation is that you had wanted to take over the place at end-of-lease. So, it's not your tenant that's restricting a new tenancy to 5 months. It's your life plan that is. If you weren't moving in soon, you're tenant would be off the hook because you'd shortly be finding someone else. How does that play in, legally and otherwise? I'm not sure.

I agree. Putting it like that makes me much more open to negotiating an outcome where we both walk away happy. It makes the option of accepting his offer of 2 months' rent and leaving it all behind look a little more attractive, even though we technically lose out on ~$1,000. I feel like I have to mention again, we're not trying to punish anyone. I just want to help my fiance not eat much cost.

1. Would your landlord let you off the hook? Maybe that resolves everything.

I will walk downstairs in a bit and ask. That's a great idea I hadn't even thought of. I've always thought of leases and such as very black-and-white, so this sort of negotiation has never occurred to me. Thanks.

[joonifloofeefloo]

You're very welcome :)

As long as all laws are honoured on each party's ends, lots of room for negotiation, yes.

It makes the option of accepting his offer of 2 months' rent and leaving it all behind look a little more attractive, even though we technically lose out on ~$1,000.

I wouldn't worry about a $1k loss in this situation (i.e., you wanting the place after the five months). A landlord has to have room for months of no-rent; it will be built into your landlording budget.

I don't have much focus at the moment, so I haven't gone through this with a fine-tooth comb and from all angles, just a more general sense. But again, you're on the right track: Ensuring you're functioning within the laws; looking at an outcome that's as optimal as possible for all parties.

[dandarc]

WRT to the house - I'd take the 2 months offer and leave it at that.

WRT to the apartment - talk to your landlord.  Even if the early-termination fee proves non-negotiable, maybe if you found someone to take over the lease they'd agree to transferring the obligations to this new person.  That being said, if you have to just pay the fee and your net cost is $1,000 on this whole deal, that's actually not bad at all.

[joonifloofeefloo]

...maybe if you found someone to take over the lease they'd agree to transferring the obligations to this new person.

+1. I was just thinking the same thing. i.e., Maybe you can't find someone to take over your tenant's for 5 months...but you likely CAN find someone to take over your current apartment. Again, everyone happy :)

[cliner]

I wouldn't worry about a $1k loss in this situation (i.e., you wanting the place after the five months). A landlord has to have room for months of no-rent; it will be built into your landlording budget.

That makes a lot of sense. This is the first time my fiance has rented her house, and I have no experience with it at all. Lots of new information, good stuff.

WRT to the house - I'd take the 2 months offer and leave it at that.

WRT to the apartment - talk to your landlord.  Even if the early-termination fee proves non-negotiable, maybe if you found someone to take over the lease they'd agree to transferring the obligations to this new person.  That being said, if you have to just pay the fee and your net cost is $1,000 on this whole deal, that's actually not bad at all.

This actually sounds like the best, least-hassle solution. I'll see what the subletting process is for our apartment. Thanks for this suggestion. It looks like there are more than 3 options after all :)
Edit: Just called, property manager said no subletting, no exceptions. I'll try talking to a different manager another day to see if I get a different response.

[joonifloofeefloo]

Edit: Just called, property manager said no subletting, no exceptions.

We're not suggesting subletting, but rather giving notice on your lease, and letting you or your landlord find someone new for the apartment. Subletting can leave you responsible for a stranger in someone else's building, not to mention put the subletter in that precarious situation of having a short lease on a place he perhaps wants the assurance of being able to stay in. I wouldn't sublet in any case.

But, it sounds like you're place doesn't charge you for the remaining months on your own lease anyway? Just the early termination fee? If so, I would just pay that and move on, yeah.

[cliner]

Edit: Just called, property manager said no subletting, no exceptions.

We're not suggesting subletting, but rather giving notice on your lease, and letting you or your landlord find someone new for the apartment. Subletting can leave you responsible for a stranger in someone else's building, not to mention put the subletter in that precarious situation of having a short lease on a place he perhaps wants the assurance of being able to stay in. I wouldn't sublet in any case.

But, it sounds like you're place doesn't charge you for the remaining months on your own lease anyway? Just the early termination fee? If so, I would just pay that and move on, yeah.

I understand now. Subletting does seem risky, I had no idea.  But in either case, no, the property will not make an exception. We could just pay the early termination fee, take the tenant's 2 months' rent offer, eat the $1,000 cost, and move on (most expensive, but also most truly hassle-free option). We might still try to avoid eating that $1,000 though, by at least suggesting a mutual agreement to end a tenancy.

Thanks again!

[sol]

I don't live in Texas, but tenants don't get to terminate leases early around here.  If they signed a one year lease, they owe one year of rent.  Similarly, you can't throw them out before their lease is up.  That's what the contract is for.

As a landlord, you can be nice.  You can offer to let them out of the lease on the condition that you can find new tenants.  You are not obligated to do so.  Their signature on the lease agreement commits them to one year's worth of rent payments.  They can offer you two months, or three months, or zero, but you shouldn't be obligated to take anything less than you are legally owed by the contract they signed.  They owe you full rent for the duration of their lease unless you decide otherwise. 

Around here rents are rising so quickly that I actually welcome tenants who want to break leases, because it means I can re-rent at a higher amount per month sooner.  I hate being stuck with a one year lease contract for a fixed price while watching neighborhood rents rise by the equivalent of $3k in extra profit per property year.

[joonifloofeefloo]

We could just pay the early termination fee, take the tenant's 2 months' rent offer, eat the $1,000 cost, and move on (most expensive, but also most truly hassle-free option).

This really sounds great, yeah. Their employer has made a really reasonable offer, you've calculated that you lose only $1k over all, and no hassle. The no-hassle is worth something, in my opinion, and all three parties are all already offering reasonable stuff.

[cliner]

I don't live in Texas, but tenants don't get to terminate leases early around here.  If they signed a one year lease, they owe one year of rent.  Similarly, you can't throw them out before their lease is up.  That's what the contract is for.

As a landlord, you can be nice.  You can offer to let them out of the lease on the condition that you can find new tenants.  You are not obligated to do so.  Their signature on the lease agreement commits them to one year's worth of rent payments.  They can offer you two months, or three months, or zero, but you shouldn't be obligated to take anything less than you are legally owed by the contract they signed.  They owe you full rent for the duration of their lease unless you decide otherwise. 

Around here rents are rising so quickly that I actually welcome tenants who want to break leases, because it means I can re-rent at a higher amount per month sooner.  I hate being stuck with a one year lease contract for a fixed price while watching neighborhood rents rise by the equivalent of $3k in extra profit per property year.

In texas, we actually are obligated to seek new tenants. Also, I understand your point, but my fiance and I are both "nice", as you say :) We're softies/slight pushovers, and we don't want to hold them liable for an entire year's rent unless we have to (that is, if we aren't able to move into the house ourselves AND we aren't able to find new renters.)

We could just pay the early termination fee, take the tenant's 2 months' rent offer, eat the $1,000 cost, and move on (most expensive, but also most truly hassle-free option).

This really sounds great, yeah. Their employer has made a really reasonable offer, you've calculated that you lose only $1k over all, and no hassle. The no-hassle is worth something, in my opinion, and all three parties are all already offering reasonable stuff.

I'd say "least-hassle" as opposed to hassle-free. The fact that we have to move into the house 5 months earlier than planned is a change we weren't anticipating. It changes my work commute significantly, plus we actually kinda like the place we're renting and we were anticipating staying here for the full year. Mildly inconvenient, definitely not ideal, but also nothing for us to get really upset over :P meh

So. I think we've decided to try as hard as we can to not eat the $1,000. I think it's reasonable: We're going to re-list the house and hope we find a renter in the next couple weeks. But we will also offer the option of a mutual agreement to terminate the lease to the tenant. If we find a new renter, then great, we can collect lost October rent + advertising cost. If we don't find a renter in 2 weeks, we can:
- stay in the apartment, keep the house on the rental market until it rents, and seek lost rent for each month the house is vacant (boooo, what a pain, I don't like this, but it is an option)
- move out of the apartment into the house, & seek the amount listed in the mutual agreement (a little bit more of a hassle/inconvenience, but reasonable cost-wise for both parties. We don't eat the $1,000 of vacant house + our fee, but they're no longer on the hook for the entire 5 months of lost rent)

I now know, as mentioned above, that vacant property is an expected cost of landlording, but I still want to try to avoid it if possible.

Thanks again all of y'all for the help. Will keep this thread updated if there are any happenings.

Update: Fiance just got off the phone with broker/agent. She's confident that she can find a short-term renter in the next 2 weeks (hungry for that commission :)). Crossing our fingers, hoping we can find a good family to rent the home to avoid any hassle.

[joonifloofeefloo]

Great job sorting through it, cliner and clinerfiancee :)

[Dicey]

Hmmm, did anyone suggest that the problem is partly of your own making? It's not the tenant's fault that you are planning to move back into the house in five months. Under normal circumstances, when a tenant breaks a lease, the LL simply finds a new tenant. Unless your stated intent to move back into the house on a specific date was spelled out in the lease agreement, a judge might not agree with your claim against your tenant. Of course, I live in a state where the laws strongly favor the renter, not the LL.

As to your "losses", some of that could be mitigated on your tax return. Be sure to vet all of this through your tax advisor.

[joonifloofeefloo]

Hmmm, did anyone suggest that the problem is partly of your own making? It's not the tenant's fault that you are planning to move back into the house in five months. Under normal circumstances, when a tenant breaks a lease, the LL simply finds a new tenant. Unless your stated intent to move back into the house on a specific date was spelled out in the lease agreement, a judge might not agree with your claim against your tenant.

Yep, we covered that :)

[Dicey]

Hmmm, did anyone suggest that the problem is partly of your own making? It's not the tenant's fault that you are planning to move back into the house in five months. Under normal circumstances, when a tenant breaks a lease, the LL simply finds a new tenant. Unless your stated intent to move back into the house on a specific date was spelled out in the lease agreement, a judge might not agree with your claim against your tenant.

Yep, we covered that :)

LOL, as you mentioned (I think it was you), I'm reading without my fine-tooth comb this morning. Kind of like riding a bike with no hands.