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When Tenants Break Their Lease: Strategies for Landlords and Property Managers

162 views March 4, 2024 Karina Jugo 3

The relationship between landlords, property managers, and tenants is crucial to maintaining a healthy and thriving rental property market. However, situations arise where tenants may need to break their lease agreements due to unforeseen circumstances. In such cases, landlords and property managers play a pivotal role in handling the situation fairly and professionally.

This article delves into the strategies that landlords and property managers can employ when a tenant breaks their lease. But first, let’s take a look at various ways tenants can break a lease.

When is the lease or rental agreement considered broken?

A lease in the residential rental market is considered broken when a tenant prematurely ends the lease agreement before its specified term has expired. This could occur for various reasons, such as job relocation, family emergencies, changes in financial circumstances, or other personal reasons. The act of breaking a lease is also commonly referred to as “early termination” or “lease termination.”

A lease is considered broken when the tenant:

  • Vacates the property: The tenant physically moves out of the rental property and no longer occupies it. This is typically the most straightforward indication that a lease has been broken.
  • Notifies the landlord: The tenant communicates their intention to terminate the lease early to the landlord or property manager. This notice might be given in writing, verbally, or through formal channels, depending on the terms specified in the lease agreement and local laws.
  • Stops paying rent: If a tenant stops paying rent without proper cause and without following the procedures outlined in the lease agreement, it can be an indication that they intend to break the lease.
  • Violates lease terms: Some lease agreements have clauses specifying actions that would constitute a breach of the lease, such as unauthorized subletting or engaging in illegal activities. If a tenant engages in such activities, it could lead to lease termination.

It’s important to note that, even when a tenant vacates the property and indicates an intention to break the lease, the legal process of lease termination may not be straightforward. Lease breakage can have financial and legal implications for both the tenant and the landlord. Many jurisdictions have laws and regulations that outline the rights and responsibilities of both parties when a lease is broken.

In many cases, tenants breaking a lease might have to pay penalties and fees or continue to pay rent until the property is re-rented or the lease term expires, depending on the terms of the lease agreement and local laws. Landlords, on the other hand, might be required to make reasonable efforts to mitigate damages by finding a new tenant. Understanding the lease agreement, consulting local laws, and open communication between both parties are key to navigating lease break situations effectively and within the bounds of the law.

eviction process

Breaking the Lease vs. Eviction

Breaking a lease and eviction are distinct legal concepts within the realm of landlord-tenant relationships. They involve different circumstances, actions, and legal processes.

Breaking a lease refers to the situation where a tenant voluntarily chooses to terminate their lease agreement before its designated end date. This might occur due to personal reasons such as job relocation, family changes, or financial constraints.

Breaking a lease involves the tenant notifying the landlord of their intention to vacate the property prematurely. While the tenant might incur penalties or financial obligations, breaking a lease is a consensual action and requires mutual agreement between both parties. The tenant retains some degree of control over the timing and terms of their departure.

On the other hand, eviction is a legal process initiated by a landlord to forcibly remove a tenant from the property due to a breach of the lease agreement or violation of local housing laws. Evictions typically occur when tenants fail to pay rent, engage in illegal activities, cause property damage, or violate the terms outlined in the lease agreement.

Landlords must follow specific legal procedures, which often involve serving proper notices, providing the tenant with an opportunity to remedy the issue, and obtaining a court order if necessary. Evictions are initiated by the landlord and result in the tenant’s involuntary departure from the property.

In summary, breaking a lease is a tenant-initiated decision to end the lease agreement early, while eviction is a landlord-initiated legal process to remove a tenant for lease violations. The key difference lies in the voluntary nature of breaking a lease and the legal enforcement involved in an eviction.

What if the lease agreement includes a military clause?

A military clause in a residential lease agreement is a provision that addresses the unique circumstances faced by military service members and their families when it comes to renting a property. This clause is designed to accommodate the needs of military personnel who may be required to relocate due to military orders, deployments, or changes in station.

A military clause is usually included as an addendum to standard lease agreements in areas where there are military bases nearby. It is designed to provide flexibility and protection for service members so that they can fulfill their military obligations without facing undue financial or legal burdens related to their lease agreement.

The key points typically covered by a military clause include:

  1. Lease Termination: The military clause allows the service member to terminate the lease agreement early without incurring significant penalties if they receive orders for deployment, change of duty station, or other official military orders that require them to move away from the current location.
  2. Notice Requirements: The clause often specifies the required notice period that the service member needs to give to the landlord when invoking the military clause. This notice period varies depending on local laws and the terms of the lease.
  3. Documentation: Landlords may request official military orders or other documentation as proof of the service member’s need to invoke the military clause.
  4. Responsibility for Rent: The military clause might stipulate the service member’s obligations for paying rent after the lease termination notice is given. In many cases, the service member is responsible for paying rent only until the date of lease termination, and not for the entire lease term.
  5. Security Deposit: The clause may outline the procedures for returning the security deposit to the service member after the lease is terminated in accordance with the military clause.

It’s important to note that the specifics of a military clause can vary based on the jurisdiction and the language used in the lease agreement. Its main purpose, however, is to allow military personnel to break a lease agreement and have security deposits returned if they are called to duty or must relocate due to connected service activity. It is only available to active-duty military, National Guard, and reservist members with the aim to support them and their families during times of transition.

What Landlords & Property Managers Can Do

When a tenant breaks the lease, landlords and property managers have several options to consider. The appropriate course of action will depend on the specific circumstances, the terms of the lease agreement, and local laws. But before delving into the specific actions that landlords and property managers can take, it’s essential to understand the lease agreement.

The lease is a legally binding contract that outlines the terms and conditions of the rental arrangement. It stipulates the responsibilities of both parties—the tenant and the landlord—including the options available in case either party falls short of the terms of the lease . It is crucial for both parties to be familiar with the lease agreement, including any clauses pertaining to early termination or lease break penalties.

Based on the stipulations of the lease agreement, here are some common options available for landlords and property managers:

1. Communicate Openly

When a tenant expresses their intention to break the lease, open and empathetic communication is key. Landlords and property managers should listen to the tenant’s reasons for wanting to leave early. Understanding their circumstances can guide the decision-making process. Whether it’s due to a job relocation, family emergency, or financial difficulties, compassionate communication can lead to a more amicable resolution.

2. Enter into a Lease Termination Agreement

Landlords and tenants can negotiate a mutually beneficial lease termination agreement. This can involve discussions about the move-out date, any outstanding rent or fees, and the return of security deposits. Both parties should carefully document the terms of the agreement in writing to avoid any misunderstandings later.

3. Re-rent the Property

Instead of immediately enforcing the lease break penalties, landlords and property managers can explore alternative solutions. For instance, landlords can actively market the property to find a new tenant as quickly as possible. In many jurisdictions, landlords have a legal obligation to mitigate damages by making reasonable efforts to re-rent the property. Once a new tenant is found, the financial burden on the original tenant for breaking the lease may be reduced.

4. Sublet or Assign the Lease

Depending on the lease agreement and local laws, landlords may allow the departing tenant to find a replacement tenant to take over the lease. Subletting involves the original tenant finding a temporary replacement while assigning the lease involves transferring the lease entirely to a new tenant. Landlords should review the potential replacement tenant’s application and conduct necessary background checks before approving such an arrangement.

5. Impose Lease Termination Fees and Penalties

Lease agreements often include clauses that outline the penalties or fees associated with breaking the lease early. If such clauses exist, landlords and property managers can enforce these terms, provided they are in compliance with local laws. These penalties can help cover the costs of finding a new tenant, potential vacancy periods, and other related expenses. However, landlords should ensure that these fees are reasonable and proportionate.

6. Use the Security Deposit

Landlords may use a portion or all of the tenant’s security deposit to cover unpaid rent or other damages resulting from the lease break. However, deductions from the security deposit should be made in accordance with applicable laws, and an itemized list of deductions should be provided to the tenant.

7. Adhere to Legal Requirements

Every jurisdiction has specific laws and regulations governing landlord-tenant relationships, including lease terminations. Landlords and property managers must be well-versed in these legal requirements to ensure they handle the situation appropriately. Some jurisdictions may require a reasonable effort to mitigate damages by attempting to re-rent the property. Failure to comply with legal requirements can lead to legal consequences for the landlord.

8. Mediate

In some cases, landlords and tenants might opt for mediation to reach a resolution without resorting to legal action. Mediation involves a neutral third party facilitating discussions between the landlord and tenant to find a mutually agreeable solution.

9. Take Legal Action

In cases where the tenant’s lease break results in substantial financial loss for the landlord, legal action may be considered. This could involve pursuing the tenant for unpaid rent, damages, or breach of the lease agreement in court. However, legal action can be time-consuming and expensive, so landlords should weigh the potential benefits against the costs.

10. Document the Process

Throughout the lease break process, maintaining thorough documentation is crucial. This documentation can include communication records, lease agreements, efforts to re-rent the property, and any financial transactions related to the lease break. Proper documentation serves as evidence in case of disputes and helps landlords demonstrate their adherence to legal requirements.

The Bottom Line

Dealing with a tenant’s lease breakage requires a balanced approach that considers both the tenant’s circumstances and the landlord’s responsibilities. Landlords and property managers should prioritize open communication, explore alternatives, and adhere to legal requirements. While enforcing lease break fees and penalties is an option, it should be done in accordance with the lease agreement and applicable laws. Ultimately, fair and professional handling of lease break situations contributes to a positive rental property market and fosters trust between landlords, property managers, and tenants.

Authors

  • Karina Jugo

    Karina Jugo is a content administrator at RentPost who works directly with real estate and property management experts to create resources and guides for property managers. She has more than 15 years of experience in content research and writing for various industries.

  • Jacob Thomason

    Jacob Thomason is the CEO and co-founder of RentPost, software platform providing property managers, landlord or owners with the tools necessary for property management. Jacob is a software entrepreneur with with a vast array of expertise ranging from business concept design to software architecture and development. He is running RentPost for more than 14 years and helping property managers and property owners.

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