Turnovers are expensive, no doubt about it. But even worse are delinquent tenants that cause legal and financial headaches. While long-term leases help prevent tenant turnover, what do you do when a tenant wants to break their lease agreement early?
Many landlords allow early termination only if they absolutely must by law. But this can sometimes lead to drawn-out evictions of delinquent tenants, and time and money wasted in court. Sometimes, it’s the tree that bends rather than breaks that survives best.
In many states and provinces where tenant breaks the lease and leaves early, they are required to pay for the remainder of the lease term or until the rental unit is filled. Some lease agreements also allow for subleases as a relief for early termination.
Advocating for flexibility doesn’t necessarily mean that the tenant gets off scot-free. In most cases of flexible early termination, the landlord charges some combination of early termination fees, kept deposit or current month’s rent. Here’s a look at cases where early terminations might be allowed… and when to enforce the full lease contract.
When to Be Flexible
Tenants who have just undergone a major life change may not be reliable to make consistent rent payments. One example is divorce: divorcing tenants may cause more trouble than they're worth to pursue, if both want to move out and neither can afford the rent solo. Collect an early termination fee if at all possible (see the Mutual Termination of Tenancy Agreement).
Serious illness should warrant a clean break from a lease. These people may need to prioritize health costs over rent, and allowing a termination can protect against future evictions, lost revenue and uncomfortable attempts to collect from an ill tenant.
Also consider an early lease termination due to unexpected job loss. If they want out of the lease, consider let them out before they default and force the long eviction process on you. It may still be worth requiring them to find a replacement tenant however.
Some job transfers are involuntary, and surprise transfers can create a bad situation for everyone involved. Consider letting these tenants out of their lease contract if they pay an early termination fee, or perhaps if they sublease the rental unit for the remaining term. (Notable exception: active-duty military tenants – see below.)
Then there are simply some people who are bad tenants. Maybe they continuously threaten lawsuits and habitability claims or call demanding repairs and upgrades every month? Uncooperative tenants cost landlords in the long run, every time.
If they stay through the lease term, send them a non-renewal notice well in advance of their term ending. If they want to leave early, take them up on it, and collect an early termination fee if possible. Don’t raise the idea of subletting for these tenants – they will still have too much opportunity to cause trouble for you.
When You Legally Must Allow Early Termination
There are generally three reasons when you must allow tenants to break a lease agreement early:
1. Military Orders
Under the Servicemembers Civil Relief Act (SCRA), active duty and reserve military are allowed to break their lease if they are deployed or have a Permanent Change of Station (PCS). That said, be sure to confirm orders with the tenant’s military base or commanding officer before just agreeing blindly.
With the exception of commercial property in some states, a tenant’s death is a de facto termination of lease. While you may try to collect from the tenant’s estate, it may be more trouble than it’s worth. Find their next of kin as quickly as possible, and come to the fastest arrangement you can for removing the renter’s belongings.
3. Safety Concerns
In many states, the law requires landlords to allow renters to break their lease if they are a victim of domestic violence, sexual assault or stalking. Similar legal exceptions, like Washington’s RCW 59.18.352 allow tenants to break a lease if threatened by a neighbor with a deadly weapon.
Even if your state or province doesn’t have similar laws, reason and compassion should prevail if a tenant’s safety is on the line.
When to Stand Firm
The above notwithstanding, some people just think the rules don’t apply to them. Here are some sample scenarios where landlords should strictly enforce their lease agreements.
Graduations are predictable and job transfers are voluntary. A general rule is to enforce leases for any tenant whose move is the result of a voluntary action or foreseeable events. A tenant who changes jobs or graduates should not shift the burden to the landlord. Holding a tenant to her lease in these cases can incentivize the tenant to find a qualified subtenant as a replacement.
Tenants who quit their jobs are another classic case of a voluntary action that should not receive special treatment. Granting exceptions for even one voluntary change can be a costly slippery slope. Offer an early termination fee if you want, or to allow them to find a subtenant, but the subtenant must stand up to the same rigorous tenant screening you do on all normal renters.
The majority of tenants looking to break a lease should be held responsible for what they agreed to: the entire lease term. But always use discretion in what you demand from renters looking to leave early – you're better off without some tenants. By pruning the unreliable, disinterested or troublesome tenants, you can make room for stable long-term residents.