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Author Topic: What do you do when a tenant wants to break the lease?  (Read 13101 times)

Offline Jerry301

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What do you do when a tenant wants to break the lease?
« on: November 12, 2014, 05:09:27 pm »
I am a 1st time land lord renting a condo to a tenant in Virginia.  A few days ago, the tenant sent me an e-mail saying they had gotten a new job out of state and would need to break the lease.  The tenant said they would be moving out in the next 30-60 days, and the lease runs until August 2015.  I plan to get a new tenant into the condo, and deduct the cost of vacancy, cleaning, advertising, etc. from the security deposit.  My question is, in this situation, would you refund the remainder of the deposit to the tenant?  Up to this point, there havenít been any problems with the tenant.

Offline javipa

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Re: What do you do when a tenant wants to break the lease?
« Reply #1 on: November 12, 2014, 05:40:50 pm »
Unless you've included some 'early termination' fee in your lease agreement, you would be required by law to return any unused deposit to the lessee. 

You can't just keep the balance of the deposit, because the tenant broke his lease.

At the same time, you have a breach of agreement in front of you.  How your agreement treats breaches, determines what you can do, with the least resistance.

Despite what the lease stipulates, no judge will award the balance of the unpaid residential lease to a landlord.  It just won't happen.

In future residential lease agreements, you want to establish a fee schedule for premature lease terminations. You could charge anything, up to the total unpaid rent, except that you won't get more than the balance of the deposit, despite being owed thousands more (if the tenant forced you into court).

Check out this thread for future reference.

http://www.reiclub.com/forums/index.php/topic,56309.msg273013.html#msg273013
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>>> Click: http://sub2marketdomination.com/how-to-find-motivated-sellers-2/

Offline Jerry301

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Re: What do you do when a tenant wants to break the lease?
« Reply #2 on: November 12, 2014, 07:23:41 pm »
Thanks for the quick reply.  I'll refund the remainder of the balance to the tenant, and amend my future leases to include an early termination fee.

Offline javipa

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Re: What do you do when a tenant wants to break the lease?
« Reply #3 on: November 12, 2014, 07:49:03 pm »
Sounds like a good plan.
"149 Ways (Plus One) To Find Motivated Sellers..!"  -Free Report-
>>> Click: http://sub2marketdomination.com/how-to-find-motivated-sellers-2/

Offline Bluemoon06

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Re: What do you do when a tenant wants to break the lease?
« Reply #4 on: November 13, 2014, 08:49:57 pm »
You need to check the laws of your state.  Remember javipa is in California (aka landlord hell) The rules there are insane.  In the landlord heaven (aka Texas)  you offset the expenses that the tenant causes you with the deposit.  As long as you make a reasonable effort to lease the place all the additional costs you encure because of the tenant's actions can come out of the deposit. Virginia is probably in the middle but I would bet it is closer to heaven than hell.
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Offline Brian K

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Re: What do you do when a tenant wants to break the lease?
« Reply #5 on: December 06, 2014, 02:09:04 pm »
I have condos in Northern VA and faced the same situation, but my lease says that the security deposit is non-refundable if the tenants leave before the term of the lease ends.  In one case, the tenant gave us 60 days advanced notice and we decided to find a win-win situation - they would keep the place clean, would allow us to show the place when we needed to, and do nothing to negatively affect our finding a new tenant, and if they did this, we would return their security deposit.  The risk was ours since we would return the deposit new tenant or not, but we felt that we could find a new tenant in time and we did.

This is a situation you should address in your future leases.

Offline Estrogen Hostage

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Re: What do you do when a tenant wants to break the lease?
« Reply #6 on: December 06, 2014, 02:47:24 pm »
More often than not, it's easy to find a new tenant. If they are reasonable I can be too.

Offline campbellsimon

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Re: What do you do when a tenant wants to break the lease?
« Reply #7 on: December 12, 2014, 08:26:42 am »
It really depends on how your lease was worded... and the state laws. If you have a "professionally written lease" then there will be a clause about early termination. Remember, that is a legal agreement binding the tenant to the property for the term of the lease.

In the past, I told my tenants that they would be responsible for the rent until I could find a replacement tenant. At that time, I would prepare a release form and return the security deposit less any damages. I would then provide proof that I was actively marketing the property which included showing while the tenant is still there. That way, I could keep the income consistent - I mean why should you take a financial hit because they got a job transfer?
Simon Campbell - Business Analyst

Offline yrush2000

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Re: What do you do when a tenant wants to break the lease?
« Reply #8 on: January 05, 2015, 09:42:50 pm »
In Florida many property owners have added early termination lease buy outs which equals 2 months rent.  However it does not require any notice.  Simply pay 2 months rent and hand in your keys

Offline skymikesell

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Re: What do you do when a tenant wants to break the lease?
« Reply #9 on: February 27, 2015, 10:13:26 pm »
if you do not have an early termination clause in your lease would your state allow you to sue for breach of contract?   does not seem like a stretch since the contractual agreement was for 12-18 months however long you wrote the lease for.

if so you can go back to tenant and tell them you will release them if they allow you to show property for rent as they are still living there... pay a one month termination fee before move out ... and leave your place in broom clean condition.

Offline Kelly luvs Bandit Signs

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Re: What do you do when a tenant wants to break the lease?
« Reply #10 on: March 29, 2015, 12:52:21 pm »
Hi,

Regarding the security deposit, your flexibility depends on the state. The New England area is tenant friendly and it may be more hassle that help to hold onto it.

If you're rolling in cashflow, then refund the security deposit, assuming there is no damage above normal wear and tear. If things are tight as they are when you're first starting, call the tenant and tell them you're going to retain the security deposit since they are breaking the lease.

If you say this with a sweet tone, the tenant will say, "that's fine".

Good luck!!
-Kelly Lynch
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Offline Jerry301

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Re: What do you do when a tenant wants to break the lease?
« Reply #11 on: April 24, 2015, 04:53:12 pm »
Follow up to the original post:

After looking up Virginia law, I let the tenant know that they would be responsible for rent until I got a new tenant in the condo, but I would get a new tenant in as soon as possible.  The tenant didn't like the uncertainty that presented, so they proposed amending the lease to a 6-month term and forfeiting the security deposit, which I agreed to.  I ended up finding a new tenant to move in a few days after the original tenant moved out, so everything worked out well.  As suggested, I changed the lease I'm using to state that early termination will result in forefiting the security deposit. 

Offline madssingers

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Re: What do you do when a tenant wants to break the lease?
« Reply #12 on: May 14, 2015, 02:51:50 am »
Great case study and happy it ended up well for you ;)
Kind Regards
Mads Singers
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Web: http://realestateva2hire.com

Offline tatertot

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Re: What do you do when a tenant wants to break the lease?
« Reply #13 on: June 10, 2015, 01:53:06 am »
"moving out in the next 30-60 days" is not a proper notice.  Tenants who give notice that they are moving must give a firm move-out date.  Just in case anyone else is reading this.  I'm sure OP has already figured something out.

 




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