You’ve undergone a thorough screening process, selected a tenant, signed a lease, and prepped the unit for the new renter to move in. The last thing you want to hear is that your new tenant doesn’t want the unit after all. But occasionally, a renter breaks the lease before taking possession of the unit. How should a landlord handle this tricky situation?
A signed lease is legally binding, even before a tenant moves into a rental unit. So, you could argue that the tenant is obligated to pay rent until you find a new renter –unless you failed to provide a habitable unit. On the other hand, there are a few potential pitfalls to this approach:
State or local law. Some states require landlords to make a “good faith” effort to fill an empty unit when a renter ends the lease early. Once you’ve found a new tenant, the lease with the original tenant becomes null and void, and they no longer owe rent. Some state and local laws also impact whether you can keep a security deposit to cover unpaid rent. Ensure you know which laws and regulations apply to your rental property and stay compliant.
Tenant circumstances. Sometimes, the tenant intends to fulfill the terms of a rental agreement but can’t see it through due to changes outside their control. For example, if your renter lost their job, was transferred to a new location, or is going through a divorce, they may be incapable of paying rent in spite of the signed contract. In such a situation, it will be more compassionate and likely less stressful to cut your losses and find a new tenant. Other circumstances may require you to allow early termination, such as a member of the military getting called into active duty.
When a tenant lets you know they plan to break the lease, request that they put their intention in writing. This notice should include their reasons for breaking the lease and up-to-date contact information. Once you’ve found a new tenant, draft an early termination letter for both parties to sign to clarify the terms and end date.
If you’re concerned about the uncertainty of a tenant breaking your lease early, the best approach might be to lay out the consequences proactively in your rental agreement. Consider including provisions that cover whether your tenant is allowed to sublease or sublet, how the security deposit will be handled, and a reasonable cancellation fee.
As frustrating as it might be to lose a tenant before they’ve even moved in, remember that understanding, willingness to listen, and clear communication can help resolve the issue as respectfully and peacefully as possible.
About Rentals America
Rentals America provides full-service property management for residential rental properties. Our team is completely dedicated to property management, and we’re here to help landlords navigate the rental market.
