When to allow a tenant to break their lease
When you decide to invest in real estate and choose a property to rent out, there are many things to consider as a landlord. One important factor is your lease. Deciding what to include, the length of the lease, and making sure that you abide by federal and state laws are all things to keep in mind. You must also consider what reasons you will consider valid, as well as your policy, if a tenant decides they want to break their lease. There are some times that you must legally allow a renter to break their lease, times you should try to be flexible, and times that you should enforce the lease.
Know the law
Landlords always need to be aware of any and all state and federal laws. In dealing with a lease, there are certain laws and regulations that allow a tenant to break their lease. One example is, if your tenant is military, active or reserve, and they get deployed or have a permanent change of station, you must allow them to break their lease. This is covered under the Servicemembers Civil Relief Act (SCRA). Always make sure that you check with the renter’s military base to confirm, but once confirmed, allow them to break their lease.
Another legal reason to allow a person to break their lease is if the occupant’s safety is a concern. Many states have laws that allow tenants to break their lease if their physical safety has been threatened by a neighbor, compromised by a stalker, or if they find their self in a domestic violence situation. Even if your state doesn’t have these laws, sensitivity and compassion should be used in these situations. The final reason a tenant should be allowed to terminate their lease would be death. If your tenant passes, you do have the option to attempt collection on their estate, however as stated before, these situations should be handled with compassion and sensitivity.
Reason to bend
If you are not required by law to allow a tenant break a lease, then you always have the option to enforce it. However, there are some situations where it may be beneficial to work with renters as opposed to going through a drawn-out eviction process, spending lots of time in court and legal fees. These situations include major life changes and unforeseen circumstances.
If a tenant is diagnosed with a life changing medical condition, this is a good reason to let them break their lease if they wish. If tenants are going through a divorce and one will be moving and the other possibly can’t afford rent alone, this is another reason to allow them to break the lease. Job loss or sudden mandatory job transfers are also reasons to let a tenant out of their lease. Also, if you have a renter who is unnecessarily difficult, you may consider letting them out of their lease so you no longer have to deal with them.
In all of these situations, you have the right to ask for an early termination fee or to charge rent until the unit is filled again. You can also offer the current tenant the option to sublease, or some other option in order to recoup some of your losses. Many people suggest that you do not offer a sublease agreement to a tenant that is released because of difficulty. The reason behind this is because there is a good chance they may attempt to cause more issues in the long run.
Reasons to enforce the lease
There are some reasons and situations that you, as a landlord, should stand your ground in regards to the lease. These include situations or changes that are predictable or made by choice. If a renter chooses to quit their job or chooses to relocate (not mandatory as mentioned above) you should enforce the lease. If the occupants decide they just don’t want to live there anymore, or they don’t like some aspect of the rental that can’t be easily changed, enforce your lease. If your tenant graduates and plans to leave for college, the lease is still valid.
All of these examples are situations that were no surprise and should have been planned for accordingly when signing a year or two-year lease. Also, as stated above, you can always offer early termination fees or enter into other agreements with renters who wish to break their lease in order to keep the process as quick and easy as possible, if you choose to do so.
Over time as a landlord, you will come across many situations as far as your lease is concerned. Make sure when you decide to use a property as a rental, that you are prepared. Make sure that you outline the options you want available for lease termination in the lease. Also make sure that your prospective tenant is aware of your policies and expectations when they decide to sign the lease. With all of the information upfront, your renters will know what to expect if anything happens. Additionally, keep in mind that some occupants may not be worth keeping. You are in charge of your properties as well as the leases. You should always do what is right for you, your property, and your cash flow.