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It's not uncommon for tenants to break a lease agreement, and the reason could be one of several, like a new job or military deployment. As the property owner, you must know how to handle the circumstances professionally, considering the reason behind the early termination and the consequences it might entail.
Consequences for Breaking the Lease Early
Some reasons behind tenants breaking their lease agreement are not valid for exemption from penalties and charges. Since the lease agreement is a legally binding contract, landlords must still do things by the book.
- Collecting Rent
Tenants who leave before their tenancy period ends will still have to pay rent even if they no longer occupy the premises. The amount should be specified in the lease agreement.
Landlords can continue collecting rent until the rental period ends or until a new tenant occupies the rental unit. Landlords can pursue legal action if the previous tenant refuses to pay rent.
- Paying an Early Termination Fee
The lease agreement should include the amount a tenant will pay if they leave before the lease term ends. In California, most landlords typically charge two months' rent to terminate the lease agreement. The landlord can use this to find a replacement tenant after the early lease termination.
- Withholding the Security Deposit
When a tenant breaks a lease agreement by leaving early, the landlord can deduct from the tenant's security deposit for unpaid rent, along with other costs incurred when re-renting the property to a new tenant.
An itemized list of the deductions must be provided within 21 days after move-out in California, as per state landlord-tenant laws.
What If the Tenant Disputes the Consequences?
Review the necessary landlord-tenant laws and the tenant's lease agreement to determine the obligations of both parties. Be prepared with significant information such as the rent payment the tenant owes, the reason why they left, and the lease rules they violated.
It's best to consult or hire a property manager or lawyer to handle the issue in this circumstance. They’ll know the laws and the legal obligations of both you and the former tenant. If their reason for breaking a lease is valid, imposing fees for early lease terminations can lead to legal issues.
What Are Valid Reasons for Breaking a Lease?
Active Military Duty
Under the Servicemembers Civil Relief Act (SCRA), tenants who are on active duty are exempt from paying a penalty fee and other consequences as long as they provide the necessary documents.
The tenant should have signed the lease before entering military service and will remain in military service for a minimum of 90 days. However, they are still required to provide written notice at least 30 days before the planned termination of the lease.
Domestic Violence
If the tenant is a victim of domestic violence, harassment, sexual assault, or stalking, they are within their rights to break a lease early and give a written notice of termination to the landlord. They can then leave 30 days after the notice has been provided. The following must be provided for valid early termination:
- A copy of a protection order against domestic violence, harassment, stalking, or sexual assault that was issued to the tenant who is the victim of domestic violence, harassment, stalking, or sexual assault.
- A copy of a written report from a law enforcement agency indicating that the tenant notified the law enforcement agency.
- A copy of a written affidavit signed by a qualified third party acting in his or her official capacity, stating that the tenant is a victim of domestic violence and identifying the adverse party.
- A copy of a temporary or extended protection order.
Uninhabitable Residence
Local and state laws govern the habitability of rental properties. Landlords are required to meet certain safety and health standards, such as working heating, plumbing, and electrical systems. Failure to meet these standards can result in early termination of the lease.
Landlord Harassment
Tenants can break their lease agreement if their landlord harasses them by violating the tenant's privacy, entering the premises without proper notice, threatening the tenant and their guests, or withholding essential services in the rental agreement. In this case, early termination of the lease is valid.
What Can You Do to Mitigate Damages?
Be Proactive
Be comprehensive when drafting rental agreements for tenants. Clearly outline the penalties when a tenant decides to break the lease. You can even specify what valid reasons are for breaking a lease, such as job transfers, loss of employment, and more.
Another preventative measure during the rental process is thorough tenant screening. Through this process, you can identify tenants who may break lease rules by doing credit checks, criminal history checks, employment verification, calls to previous landlords for owed rent, and more.
Customize Your Leases
When you find that the original lease did not fit the former tenant, you can customize new leases based on their needs. The new tenant might prefer a month-to-month lease or a particular date for their lease to end.
They can always choose to renew the agreement once their lease expires. You are more likely to retain residents when tenants find that you are flexible with your terms. Plus, you will see fewer to no early terminations of leases.
Fill the Vacancy Immediately
You must make a reasonable effort to fill a vacancy after a tenant breaks the lease to make up for the month's rent lost. Depending on your contract, the original tenant can be obligated to pay for turnover costs like cleaning and marketing fees, but the main goal is to have a paying tenant in your unit.
Learn Your Legal Rights
Once the tenant signs their lease, they are legally responsible for paying rent during their tenancy until the lease ends, as well as following the terms in the contract, such as property upkeep.
Not knowing the rights of both parties will not only cause you to lose rental income, but you might also spend more money on legal disputes.
This can be helpful when you're finding a new tenant for your rental property, as you can take proactive measures while keeping legal compliance in mind.
Hiring a Property Manager to Avoid Early Lease Terminations
Aside from outside factors like job transfers, property management plays a huge role in retaining tenants. From implementing preventative measures to being an efficient landlord, all these factors can affect whether a tenant moves out or renews their lease.
Harland Property Management will not only help you mitigate these instances, but we can also find a new renter quickly to fill vacancies and maximize the value of your property.
Let's talk about your investment goals and learn about what we can do to help you achieve them!
