Welcome to our landlord guide on lease breaking. Today, we’ll cover the essential components of your lease, specific rules, and regulations that could potentially cause legal complications, and dispel some common myths to help you navigate the process more smoothly.
Here are the key points we’re going to discuss:
So, let’s dive in with our first topic: the important distinction between lease breaking and evictions, and why it’s crucial for landlords to understand.
It may seem a bit meticulous to focus on terminology, and while that might be the case, it’s important for a reason. Lease breaking refers to the act of terminating a residential rental agreement before the set expiration date. This can happen for a variety of reasons and typically involves a tenant moving out before the lease term has concluded.
With this topic, there are many different factors to consider. Every state has its own regulations regarding lease termination, what is legally allowed, and what is not. We will discuss the general information applicable on a national level but also point out when you may need to do additional research to ensure you’re compliant with your specific state laws.
Typically, breaking a lease can result in a fee, which may be the responsibility of either the landlord or the tenant. Any party initiating the termination must provide proper notice. These details should be specified in your lease agreement under an early termination clause. This clause should clarify what circumstances allow for a lease to be broken, the required notice period, the method of delivering this notice, and any other relevant details to ensure that all parties have a clear understanding of what is expected.
Our goal is to clearly define this terminology so you are well-informed.
When discussing evictions, it’s important to understand they are generally more severe than simply breaking a lease. Evictions almost always involve legal action and require court involvement. The process typically begins with notices, such as a notice to vacate or a notice to comply. However, if the situation escalates, it will necessitate court intervention, which is not usually the case with lease breaks.
Another important distinction is that evictions can only be initiated by the landlord; a tenant cannot evict another tenant. In contrast, either the landlord or the tenant can initiate a lease break. This exemplifies the flexibility in lease break situations.
A critical point to remember is that evictions often remain on a tenant’s record, which can have long-term effects, whereas a lease break generally does not carry this consequence. If you’re interested in this topic and want to learn about the potential implications of evictions, we have a wealth of content available for you.
This topic is one we discuss frequently. I’ve included links to a blog and a webinar in the presentation deck, and we’ll be sending this deck to you after we conclude today. So you’ll have the opportunity to access all of the detailed information at your own pace. However, our primary focus today will be on the specifics of lease-breaking.
I want to call your attention to a final note on this slide. The reason there’s an asterisk next to ‘tenant record’ is to indicate that some states don’t allow reporting of eviction history. New York and Illinois, for instance, have restrictions in this area, but Jeanne can confirm this for us. There could be additional complexities regarding their regulations, so for landlords operating in those states, navigating the laws can indeed be complex.
It’s crucial to be aware of the various laws and how they can impact the situation. And now, let’s move on to another interactive portion of our session: we have another poll coming up for you to participate in.
In our second poll of the day, we are looking to gather some insights based on your experiences as landlords. We’re curious about the number of evictions you’ve had to initiate, how often you’ve terminated a lease as a landlord, and how frequently your tenants have broken their leases. There are no incorrect responses—I’m just trying to understand your experiences.
It’s my personal belief that evictions should be a last resort due to their potential disproportionate impact, and I encourage you to access the webinar for more in-depth information on this topic. But there are many reasons why leases are broken, and we will cover some of these reasons today.
It appears that the majority of you, around 84%, haven’t initiated a lease termination. On the other hand, it seems quite a few have had tenants who have broken their leases, which can be challenging when you rely on rental income.
Don’t worry, though, we’ll go through all you need to know to manage these situations. The results are showing that most of you haven’t had to go through evictions, which suggests that your lease agreements are effective, your tenant screening is working, and you’re establishing strong landlord-tenant relationships. This isn’t to imply fault for those who have gone through an eviction; sometimes, it’s simply unavoidable.
It’s interesting to note that while the majority haven’t had to break a lease themselves, about half of us have experienced a tenant breaking the lease at least once. It’s insightful to see these perspectives.
Let’s dive deeper into scenarios when a tenant can legally terminate their lease without facing a penalty on a national level. We’ll explore some specific situations and their implications. Before that, let’s make it engaging with a game I like to call “Is It Legal?”
In this game, I’ll present various scenarios, and you’ll use the chat to answer whether you think the tenant can break the lease without incurring any penalty. When we say “Is It Legal,” we’re asking whether the tenant can leave without consequences based on legal allowances.
Ready for round one? Let’s begin.
Let’s delve into scenarios where a tenant can legally break a lease without facing any penalties. There are certain situations, acknowledged on a national level, where breaking a lease is permissible without consequence. We have already engaged in a game where we discussed different hypothetical situations and whether it was legally permissible for a tenant to break the lease in those scenarios.
The results revealed that many of you understand that a tenant like Taj, who is an active-duty military member, is protected under the Servicemembers Civil Relief Act to break a lease if he receives permanent change of station orders. However, a tenant moving for a new job, like Mary, does not have federal protection to break the lease without penalty.
We also discussed the case of Howard, who had habitability issues with his rental property such as a rodent infestation and lack of basic utilities like hot water and a working oven. It’s crucial for landlords to respond to such maintenance requests promptly because tenants do have the right to a habitable living environment, and failure to provide this can legally permit them to break the lease without penalty.
Now, let’s review some common situations where tenants would typically face penalties if they break their lease:
Landlords have a duty to mitigate damages when a lease is broken, which means actively trying to find a new tenant to reduce the financial loss rather than suing for the remainder of the lease without any effort.
It’s important to note the following regarding the landlord’s responsibilities:
Remember, as a landlord, maintaining good communication and empathy with tenants, being proactive about maintenance requests, and understanding the legal framework can lead to better outcomes for all parties involved. It also helps to ensure that your lease agreements are clear and comprehensive, covering various scenarios and the expectations around each.
Understanding the responsibilities involved in being a landlord is important, especially when it comes to handling situations where a tenant wishes to break the lease. Part of your role is to attempt to re-rent the unit if a tenant decides to leave before their lease ends. Securing a new tenant not only benefits your financial situation by ensuring continued rental income, but it also allows the departing tenant to move on.
While it might feel like a setback when a tenant breaks a lease, it’s crucial to remember that if they no longer wish to live in your property, it’s typically better for both parties to part ways amicably. The obligation to find a new tenant, even in such circumstances, is an integral part of a landlord’s duties.
Having covered some challenging scenarios, let’s now focus on scenarios where your tenant can legally terminate their lease without incurring a penalty:
These constitute some of the reasons a tenant may legally break a lease, highlighting the importance of knowing the law and maintaining your property to avoid legal issues and cultivate good landlord-tenant relationships. It’s also vital for lease agreements to be clear on the conditions under which an agreement may be terminated, as this helps set proper expectations from the start.
We’ve already discussed several scenarios where tenants may have the right to legally break their lease without penalties. While we’re addressing this from a national perspective, remember that state-specific laws also play a critical role. It’s essential that you familiarize yourself with the local laws that pertain to your rental property to remain compliant and avoid potential legal issues.
Federally, tenants typically have the right to terminate their lease without penalty under the following circumstances:
It’s important to note that tenants are generally required to provide notice before breaking their lease, which allows for communication and attempts at resolution. The specific amount of notice and the manner in which it must be given may vary by state law, and these details can be specified within your lease agreement.
That’s quite a bit of information to take in. If there are any questions, I am here to provide answers and clarify any points of confusion. Please don’t hesitate to reach out if you need further explanation on any of these topics.
We want to clarify some myths about lease-breaking to ensure you don’t encounter legal issues. Remember, laws vary by state and even by county, dictating the terms under which a lease can be terminated.
Generally, you cannot end a lease prematurely without a valid reason if it’s not stipulated in your lease agreement. You cannot terminate it simply because you wish to move in, because a friend or family member needs a place to stay, or because you’ve decided to sell the property.
However, it’s important to note that your lease is a legally binding document. If your lease includes clauses that address these scenarios, and all parties have agreed to it, then you have a clear set of conditions that must be satisfied to break the lease according to those terms.
We will delve into specific legal language shortly, but first, let’s discuss why a landlord might want to include an early termination clause in a lease. This clause is just one of several contingencies you should consider including in your lease agreement. The more contingencies you anticipate and stipulate in your contract, with mutual agreement from both you and your tenant, the more seamless your relationship will be. It will also minimize potential headaches should any unforeseen circumstances arise.
It is crucial to be thorough and include as much detail as you can in your lease. Ensure that you have an early termination clause that clearly outlines the specific conditions under which either you or your tenant may legally break the lease.
You should also clearly specify the notice period required from both parties regarding lease termination. This includes how much notice you need to give your tenant if you’re the one breaking the lease and the notice you require from them if they decide to terminate the lease. In addition, you can dictate the method of communication for this notice—whether it be by email or through a letter sent via first-class mail.
It’s important to apply the same standards to both parties. For example, if you expect your tenant to give you 60 days’ notice and send a letter by first-class mail, then you should also adhere to these requirements when giving notice to your tenant. It would be unfair and poor practice to hold your tenant to a 60-day notice period and postal communication while allowing yourself only a 30-day notice period and the option to verbally notify. Such unequal terms would result in an unbalanced and unjust contract.
To maintain fairness and simplicity, make the notice terms the same for both parties whenever possible. Additionally, you should outline the amount of time each party will have to put their affairs in order after notice has been given.
Linking back to the issue of notice requirements, let’s use a hypothetical scenario. Imagine I’m Landlord Krista, and I approach my tenant with this message: “According to our contract, I’m giving you a 30-day notice that I plan to put the house on the market. I will inform you once it’s sold. However, within these first 30 days, your tenancy is secure, as this period is intended for you to organize your departure if needed.”
Continuing this scenario, if the house doesn’t sell by the 31st day, the tenant will then be given a week’s notice before they must vacate. This approach allows the tenant to create a plan and manage their affairs, promoting a harmonious relationship so that, ideally, all parties can part on amicable terms.
Finally, it’s critical that your early termination clause includes any applicable penalties for breaking the lease prematurely, providing a clear course of action for enforcement. This serves as protection for landlords seeking compensation for potential losses due to an early termination. Conversely, you should also consider what compensation or concessions, if any, you would offer to your tenant in the event that you must break the lease early. Establishing these terms upfront can help avoid conflict and ensure fairness in the landlord-tenant relationship.
Let’s examine the typical structure of early termination clauses. I can’t stress enough the importance of reviewing your local landlord-tenant laws before drafting such a clause. Generally, across the nation, the standard notice period required is a minimum of 30 days, with some ranging from 30 to 60 days, but most commonly it’s at least 30 days.
For a lease termination due to non-protected reasons such as obtaining a new job, marriage, or divorce, the typical penalty fee is equivalent to one to two months’ rent. Additionally, in some states, landlords may also stipulate that tenants forfeit their security deposit if they terminate the lease early. When considering this, bear in mind the combined financial impact. For example, if the security deposit equates to one month’s rent and you impose an additional fee equivalent to another month’s rent, the total cost to the tenant would be two months’ worth of rent. It’s essential to keep track of these fees to ensure what you’re asking is reasonable and equitable.
However, if a tenant is moving out for a reason that is protected either nationally or locally, such as age, you are not allowed to penalize them or withhold their security deposit based solely on the early termination. But, if the tenant incurs damage to the property, such as holes in the wall from a dart game gone awry, then you can use the security deposit to cover those damages as you normally would.
It’s important to neatly itemize the costs for any damages, communicate clearly with the tenant about their security deposit, and refund any remaining balance after deductions for repairs. This approach facilitates transparency and maintains fairness in the process.
If your tenant is moving out for a federally protected reason, you cannot penalize them. That’s an important rule to remember. Now, let’s take a moment for me to check the chat and see if there are any questions.
Linda, it’s excellent that you’ve been diligent in putting everything in writing. That’s a very sound practice.
Vivian, you mentioned an issue from August where your tenants left without paying rent. That’s truly an unfortunate situation, and I’m sorry to hear that.
It seems there aren’t any questions that need immediate attention at the moment. You’ve all been wonderful. I’ll just adjust my screen, and then we can proceed with the rest of the presentation.
For those of you concerned about not having an early termination clause in your lease and wondering what to do, the first thing is don’t panic. There are steps you can take to address this situation.
There is always an option to modify an existing lease with new stipulations through the use of a lease addendum. To clarify, a lease addendum is an additional clause that can be added to a currently active lease agreement at any point during its term.
It’s important to note that both the landlord and the tenant must sign the lease addendum for it to be valid. I’ll quickly explain how you can create a lease addendum using TurboTenant, which allows you to do so in less than five minutes, and the process for getting it electronically signed.
[John Martin provides a tutorial on how to find the form for updating an existing lease agreement on TurboTenant and demonstrates how to create and send a lease addendum. This would typically be found in the forms tab and can be easily filled out with details from the original lease.]
When crafting an addendum, in this case, to include an early termination clause, ensure that it complies with local law. If necessary, seek professional advice to avoid including unlawful terms. Creating a lease addendum through TurboTenant is straightforward: you simply input the new information, such as details about the early termination clause, and then get the document e-signed.
One thing to consider, especially with a lease addendum regarding early termination, is whether to implement it immediately or wait until the lease renewal. Adding it immediately offers extra protection should any issues arise, but it could also cause concern for tenants if they interpret it as a sign that their lease might be ending soon. If you choose to add such a clause, open communication is key. You can reassure your tenant by explaining the reason for the new clause, perhaps sharing that you learned it was an important inclusion during an educational webinar and affirming that you’re not currently planning to terminate the lease. Transparency will help alleviate tenant concerns and establish a clear plan for the future.
In summary, here are the crucial takeaways from our discussion today, and then we’ll open up the floor for some questions.
Both tenants and landlords have the ability to terminate a lease, but tenants do possess federally protected rights under certain conditions. Examples include active duty service members who receive orders to move, victims of domestic violence, or situations where the landlord fails to provide a habitable living environment. These are valid grounds for a tenant to notify you of their intent to vacate the property and break the lease early without incurring penalties.
It’s imperative to be well-versed in your local landlord-tenant laws to avoid potential legal issues, especially concerning the early termination of a lease. Conduct thorough research and ensure that your lease includes an early termination clause that precisely details what is expected from both parties. This will provide a clear guide for both you and your tenant to handle what might otherwise be a complex and difficult situation.
With that framework in mind, let’s move into my favorite part of the presentation: the Q&A session. I’ve noticed several questions coming in, so let’s take a closer look and address them.
Question: What happens if a lease doesn’t have an early termination clause and a tenant decides to terminate their lease early, such as four months into a six-month lease? What actions can the landlord take?
Answer: The landlord can take legal action to collect any unpaid rent, but it becomes a bit more challenging. They would typically need to go through small claims court, which has a cap on the monetary amount that varies by state—for example, a cap of $7,500. If the amount the landlord needs to collect is higher, the case would move to county court. Small claims courts are designed to be user-friendly, allowing individuals to represent themselves without an attorney, which helps to simplify the process and reduce costs. So while there is a solution available, it does require stepping through the legal system.
Question: If a tenant leaves the property and breaks the lease but doesn’t pay the owed rent, what should the landlord do?
Answer: The landlord should consider taking the matter to small claims court or county court, depending on the amount due. Besides that, keeping meticulous documentation of all interactions, agreements, and financial transactions related to the tenancy is crucial. Good record-keeping will greatly benefit the landlord if they decide to file a claim. A well-documented case can expedite the court’s review and lead to a quicker resolution. Thus, Jeanne’s advice to Maple is to ensure all documentation is in order before filing a case.
Question: Can a landlord modify a pet lease addendum to include an additional pet, such as a chinchilla, even if it’s during the middle of the lease term, especially if the tenant has added an extra pet without giving prior notice?
Answer: Yes, a lease addendum can be drawn up and integrated into an existing lease during its term as long as both the landlord and the tenant agree to the changes and sign off on the amended terms. This way, the lease accurately reflects the current situation with the pets.
Question: Is a landlord required to provide a receipt if a tenant pays rent on time via Zelle?
Answer: The requirement for landlords to provide receipts for rent payments, including those made through electronic methods like Zelle, can vary based on state laws. While not all states may mandate the issuance of receipts for electronic rent payments, it is generally considered good practice for documentation purposes. Landlords are advised to issue receipts to maintain clear records of all transactions. It’s also recommended to review your specific state’s regulations to determine if there is a legal requirement to provide rent payment receipts in your jurisdiction.
Question: What happens if a tenant refuses to sign a lease addendum? Are they still bound by the new terms of the addendum?
Answer: No, if a tenant does not agree to the new terms and refuses to sign the addendum, they cannot be legally held to it. The only option in that scenario is to wait until the lease is up for renewal and then introduce the new provision. If the tenant wishes to continue the tenancy, they will then need to agree to the new terms and sign the lease. So while it’s a bit of a gray area when the tenant doesn’t agree, it highlights the importance of including as many relevant terms as possible when initiating a new lease agreement.
Additional Comment: Indeed, this is why changing terms mid-lease can be challenging. The best approach is to ensure that the initial lease agreement is as comprehensive as possible. While you can introduce updates to a lease with an addendum later, you need mutual agreement, and trying to make changes without that can create friction between the landlord and tenant.
Question: Robert is asking about situations where the landlord is selling the property. Can the landlord not sell their unit with a tenant still living in it, for example, to another investor?
Answer: It is indeed possible for a landlord to sell their property, even with a tenant in it. However, the landlord and the new buyer must honor all current leases until they expire. Tenants are legally safeguarded in this respect. Furthermore, it’s common for buyers to be fully aware that they’re purchasing a property that comes with existing tenants and their leases.
Question: Fernando is inquiring about the certainty of collecting debt when going to court. Is it guaranteed that a tenant will pay if there’s a court order, or are there cases where they might not comply?
Answer: Unfortunately, it’s not guaranteed that the tenant will have the means to pay the debt, even after a court order. They may lack the necessary funds, assets, or employment from which wages could be garnished to settle the debt, which can result in the debt being uncollectible.
Follow-up Question: Another person is asking about the best ways to get payment after winning a small claims court case for back rent and damages. What options exist after obtaining a court ruling in your favor?
Answer: After winning a court claim, there are usually negotiations or agreements made, possibly leading to a payment plan if the debtor doesn’t have the full amount—say $5,000—readily available. In the case of employed individuals, wage garnishment could be pursued. A valid court order also allows the landlord to employ a collection agency to follow up on the debt.
Closing Comments: Jeanne provided helpful advice, indicating that landlords have several methods to attempt debt recovery after winning a court claim. The process can be complex, so it’s useful to seek guidance from other landlords, local landlord associations, or those acquainted with the legal system in your area, as their insights can be crucial in navigating these situations effectively. We’ve now reached the end of our time for this session.
Question: What should a landlord do if there is a co-applicant who wishes to break the lease, but the other tenants do not want to vacate?
Answer: Assuming we’re discussing a co-applicant—someone whose name is on the lease as a tenant—and not a co-signer, it would generally be their responsibility to find a suitable replacement before they exit the lease. This tenant replacement process should be specified in the lease, ideally in an addendum covering scenarios with multiple leaseholders. When all parties have signed the lease, each of them is responsible for fulfilling the lease terms. If a tenant needs to depart, finding another tenant to assume their responsibilities helps to maintain the lease’s integrity and financial obligations.
Thank you, everyone, for joining us today. It’s always a pleasure to discuss the nuances of being a landlord. A special thanks to Jeanne Sanford for her time and expertise. Your insights have been invaluable, and we really appreciate your contributions. I hope everyone has a wonderful rest of their Thursday.
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