Author Topic: what kind of incentive would you want to prematurely end a lease?  (Read 705 times)

kenmoremmm

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i have a condo that i've rented out for the past decade. current tenants were on a 3 year lease which ends in 11 months.

i would like to sell the condo, asap, fearing the worst in the housing market.

i would like to offer an incentive to get them to move out. do you think 1 month of free rent would be enticing enough, or is this a bigger number? i would basically want them out at the end of the month (so kind of behind the 8-ball here).

i know the tenants were short on cash due to covid-related job loss, so we already gave them 1.5 months free earlier this year with no expectation of getting paid back.

Wrenchturner

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Re: what kind of incentive would you want to prematurely end a lease?
« Reply #1 on: August 03, 2020, 04:53:14 PM »
I think this depends on the rental atmosphere of your area.  I would probably accept 1 month's rent but this is a renter's market.  If I knew my options were worse elsewhere I would want a higher rate.

You could probably have a frank conversation about it with the tenants, I see no reason why any party would be misleading in their intentions here.  In person, ideally.  You have some good faith banked with your rent gift you gave them.

JLee

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Re: what kind of incentive would you want to prematurely end a lease?
« Reply #2 on: August 03, 2020, 04:55:04 PM »
Can you sell it with the lease in place / 11 months of guaranteed rental to the buyer, or are your prospective buyers likely owner/occupant?

ixtap

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Re: what kind of incentive would you want to prematurely end a lease?
« Reply #3 on: August 03, 2020, 04:59:56 PM »
You really need to check with the local laws on this one.

kenmoremmm

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Re: what kind of incentive would you want to prematurely end a lease?
« Reply #4 on: August 04, 2020, 12:06:22 AM »
re: local laws - i would assume that if the agreement is mutual, there's no harm, right?

my understanding about selling with the lease in place is that it would net a lower sale price because the cap rate is low and the prospective buyer would not be able to do a value-add to the property for a year when the lease agreement ends.

cchrissyy

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Re: what kind of incentive would you want to prematurely end a lease?
« Reply #5 on: August 04, 2020, 12:49:31 AM »
If they want to move for some reason, simply telling them you would let them out of the lease without penalty may be enough incentive. But if they don't want to move, frankly, they have every right to stay and you probably should accept that the idea of selling this year is not realistic.

ixtap

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Re: what kind of incentive would you want to prematurely end a lease?
« Reply #6 on: August 04, 2020, 08:49:10 AM »
re: local laws - i would assume that if the agreement is mutual, there's no harm, right?


Not necessarily. One person's incentive is another's coersion.

feelingroovy

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Re: what kind of incentive would you want to prematurely end a lease?
« Reply #7 on: August 04, 2020, 10:38:57 AM »
You could just ask what amount would make it work for them. A little flexibility on the timeline would probably help also.

If they already missed rent payments this year, they probably don't have enough for a deposit and first month's rent somewhere else.

You are hoping they can find a new place and move in 3-4 weeks. If it were me, I would want to be well compensated for the hassle.

Evie

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Re: what kind of incentive would you want to prematurely end a lease?
« Reply #8 on: August 04, 2020, 11:12:15 AM »
Your first task is to check local laws.  In California I believe selling a property is automatically a 60 day notice even with a lease in place.  Depending on where you live you might find something similar. For a condo I assume your are likely selling to someone who will want to move in themselves, so absolutely you need it empty IMO for ease of showing and to not scare off buyers. Personally, I always want a property delivered vacant because I don't trust someone else's screening criteria and I don't want to inherit a mess. 

It's common to offer key money as an added incentive to smooth feelings and incentive the tenant to leave the place in good condition. 


kenmoremmm

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Re: what kind of incentive would you want to prematurely end a lease?
« Reply #9 on: August 04, 2020, 12:38:32 PM »
snips from local ordinances, below. none of them appear to be specific to the idea i'm proposing.

Termination of Tenancy:
A written notice given by a landlord to a tenant requiring the tenant to move listing at least one reason specified in the Just Cause Eviction Ordinance.
Note: If a tenant refuses to move, only a court can force the tenant to leave.

The following is a summary of the reasons for which owners may end tenancies under the ordinance:
1. The tenant fails to pay rent within 14 days of a notice to pay rent or vacate.

2. The tenant habitually fails to pay rent on time, causing the owner to notify the tenant in writing of overdue rent 4 or more times in a 12-month period.

3. The tenant does not comply with material terms of a lease or rental agreement within 10 days of a notice to comply or vacate.

4. The tenant does not comply with a material obligation under the State Landlord-Tenant Act within 10 days of a notice to comply or vacate.

5. The tenant habitually fails to comply with material terms of the lease or rental agreement, which causes the owner to serve a 10-day notice to comply or vacate 3 or more times in a 12-month period.

6. The tenant severely damages the rental unit (causes “waste”), causes a nuisance (including drug-related activity), or maintains an unlawful business, and does not vacate the premises within three days of a notice to do so. The type of damage, nuisance or unlawful business must be specified in writing on the notice.

7. The tenant engages in criminal activity in the building or on the premises or in an area immediately adjacent to the building or premises. The alleged criminal activity must substantially affect the health or safety of other tenants or the owner; illegal drug-related activity is one crime specified by the ordinance. A property owner who uses this reason must clearly state the facts supporting the allegation, and must send a copy of the termination of tenancy notice to SDCI.

8. The owner wishes to occupy the premises personally, or the owner’s immediate family will occupy the unit, and no substantially equivalent unit is vacant and available in the same building and gives the tenant written notice at least 90 days prior to the end of a rental period. Immediate family includes the owner’s spouse or the owner’s
domestic partner, and the parents, grandparents, children, brothers and sisters of the owner, the owner’s spouse or the owner’s domestic partner. If the owner gives this reason to terminate a tenancy and then fails to carry it out, he or she may be subject to a civil penalty of up to $2,500. A tenant whose tenancy is terminated for this reason has a private right of action if he or she feels an owner has failed to comply with these requirements.

9. The owner wishes to terminate the tenancy of a tenant who lives in the same housing unit with the owner; or the owner desires to stop sharing his or her house with a tenant living in an approved accessory dwelling unit (ADU) in an owner-occupied house.

10. The tenant’s occupancy is conditioned upon employment on the property and the employment relationship is terminated.

11. The owner plans major rehabilitation that requires a permit and demonstrates that the work cannot be done with a tenant in occupancy. In addition, the owner must comply with the requirements of the Tenant Relocation Assistance Ordinance. (See below for more information.) If the owner gives major rehabilitation as the reason to terminate a tenancy and then fails to carry it out, he or she may be subject to a civil penalty of up to $2,500. A tenant whose tenancy is terminated for this reason has a
private right of action if he or she feels an owner has failed to comply with these requirements.

12. The owner decides to convert the building to a cooperative or condominium. (See page 6 for information on the Condominium and Cooperative Conversion Ordinances.)

13. The owner decides to demolish a building or to convert it to non-residential use. The owner must first comply with the requirements of the Tenant Relocation Assistance Ordinance (see page 5) and obtain a necessary permit.

14. The owner desires to sell a single family residence and gives the tenant written notice at least 90 days prior to the end of a rental period. The owner must list the
property for sale at a reasonable price in a newspaper or with a realty agency within 30 days after the date the tenant vacates. Property owners may be required to sign a certification of the intent to sell the house if SDCI receives a complaint. There is a rebuttable presumption of an ordinance violation if the unit is not listed or advertised, or is taken off the market or re-rented within 90 days after the tenant leaves. A tenant whose tenancy is terminated for this reason has a private right of action if he or she feels an owner has failed to comply with these requirements.

15. The owner plans to discontinue the use of a housing unit which is not authorized by the Land Use Code, after receiving a Notice of Violation. The owner must pay relocation assistance to the tenants of each such unit at least two weeks prior to the date the tenant is to vacate. Low-income tenants must be paid $2,000 relocation assistance; other tenants must be paid relocation assistance equal to two months’ rent.

16. The owner needs to reduce the number of tenants sharing a dwelling unit in order to comply with Land Use Code restrictions (i.e., no more than 8 people per dwelling unit if any are unrelated).

17. The owner decides to terminate the tenancy of a tenant from a house containing an approved ADU in order to comply with the development standards for ADUs, after receiving a Notice of Violation of the Land Use Code. The owner must pay relocation assistance to displaced tenants in the amount of $2,000 for low-income tenants, or two months’ rent in other cases. SDCI may require a property owner to sign a certification of his or her intent to discontinue the use of the ADU.

18. An Emergency Order to vacate the property has been issued by SDCI and the tenants have failed to vacate by the deadline given in the Order.

Private right of action for tenants:
If an owner terminates a tenancy because (1) sale of a single family residence is planned, (2) the owner or a family member is to move in, or (3) substantial rehabilitation is planned, and if the owner fails to carry out the stated reason for eviction, the tenant can sue the owner for up to $3,000, costs, and reasonable attorney’s fees. Unless otherwise noted above, a termination of tenancy notice must be given at least 20 days prior to the start of the next rental period and must state the reason for termination in writing. Only those reasons listed above are lawful causes for terminating month-to-month tenancies in Seattle. For the complete text of the Just Cause Eviction Ordinance, go to the City of Seattle's, City Clerks website and click on Seattle Municipal. Call up section 22.206.160. For more information, call SDCI Property
Owner and Tenant Assistance at (206) 615-0808. Please note, under state law tenants wishing to terminate month-to-month tenancies must also follow proper notice
procedures, notifying the owner or manager in writing at least 20 days before the start of the next rental period.
 
https://www.seattle.gov/DPD/Publications/CAM/cam604.pdf

ixtap

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Re: what kind of incentive would you want to prematurely end a lease?
« Reply #10 on: August 04, 2020, 01:00:57 PM »
I was just looking at a tenants' rights page for Seattle that specifies: "If you live in a condo, apartment, duplex, triplex, or townhome, your landlord cannot use this [selling] as a just cause reason to end your rental agreement."

Further reading suggests that these apply specifically to month to month rentals. There are separate rules for making changes to leases that are agreed upon by both parties, which could include the terms you are proposing (ie, refund their deposit on signing the new agreement, so that they can afford a new place).


Dicey

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Re: what kind of incentive would you want to prematurely end a lease?
« Reply #11 on: August 04, 2020, 01:21:06 PM »
I'm a landlord. The rules are constantly changing. After giving it some thought, here's what I'd try. Help them find something else. And when you do, consider a little deposit assistance. Of course, talking to the tenant first ensures you of finding something acceptable, but I'd probably do some online sleuthing before I spoke with them to learn if it was even possible. If it is, you might get them out even faster and look like a hero.

therethere

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Re: what kind of incentive would you want to prematurely end a lease?
« Reply #12 on: August 04, 2020, 02:10:43 PM »
When this happened to me I asked for two months rent, with 30 days notice which had to be given by the end of a month. That's what I would have to pay if I broke the lease, so I thought it was only fair to apply it to the landlord. Along with a positive reference. Think of it like the"cash for keys" program when everyone was getting foreclosed on. At least in my state, the lease needs to be upheld by the new owner.

My landlord wouldn't offer anything, they just wanted to have the ability to cancel the lease whenever they wanted. So I returned the favor by staying in the house for all showings and providing "helpful" input to prospective buyers.

PDXTabs

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Re: what kind of incentive would you want to prematurely end a lease?
« Reply #13 on: August 04, 2020, 05:39:18 PM »
re: local laws - i would assume that if the agreement is mutual, there's no harm, right?

Sure, but in Portland the minimum is $2,900~4,500 even without breaking a lease. https://www.multifamilynw.org/portlands-relocation-ordinance

MissPeach

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Re: what kind of incentive would you want to prematurely end a lease?
« Reply #14 on: August 05, 2020, 03:49:42 PM »
Your first task is to check local laws.  In California I believe selling a property is automatically a 60 day notice even with a lease in place.  Depending on where you live you might find something similar. For a condo I assume your are likely selling to someone who will want to move in themselves, so absolutely you need it empty IMO for ease of showing and to not scare off buyers. Personally, I always want a property delivered vacant because I don't trust someone else's screening criteria and I don't want to inherit a mess. 

It's common to offer key money as an added incentive to smooth feelings and incentive the tenant to leave the place in good condition.

I know someone who owns rentals in CA and with the new rent control/eviction laws I heard this changed. They are requiring payments to the tenants for selling or for the owner to move back in. If in CA, I would look into that to see if it applies to you.

affordablehousing

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Re: what kind of incentive would you want to prematurely end a lease?
« Reply #15 on: August 06, 2020, 11:38:53 AM »
I think it's wise to follow both streams of advice here simultaneously. Check the local laws and learn them well. Know the backstops of what you can and cannot do. That said, this is a great situation to help find some possibility of non-financial goals of both parties here. Money can certainly solve eeverything here, but for instance if they have particular agitation over finding another place, and a landlord friend has an opening youcan help them get into, that might get them out sooner/easier. Know the laws but try to work directly with them as well.

kenmoremmm

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Re: what kind of incentive would you want to prematurely end a lease?
« Reply #16 on: August 06, 2020, 01:06:26 PM »
well, sent an email to them. one day later, got this:

Thanks for the email. The end of August works for us. We’ll start looking for spaces now.

Thanks!


perhaps they wanted out of their lease??? i will not pry...