What To Do When A Tenant Leaves Early

Learn How This Property Manager Cuts His Losses When a Tenant Cuts Out

Thanks to Robert Machado, CPM, MPM, HomePointe Property Management for this submission:

Hobo sackThere are a lot of reasons why a tenant might try to break a lease.  Some may be valid and require the landlord to allow this to happen.  One example is a military transfer.   But, most situations are simply a choice, like a civilian job transfer or promotion, don’t like the neighborhood, school change, and the like.

A landlord must protect themselves in these situations and enforce the lease.  One way to do this is with a clause in the lease so the resident is aware of what will happen ahead of time.  Here is HomePointe’s clause:

34. Resident agrees that if they must vacate the property prior to the expiration of this agreement, Resident will be responsible for all costs associated with locating a replacement Resident.  These costs include but are not limited to all advertising, leasing fees at property managers regular current rate, and costs of signage.  Resident is also responsible for all rent and other charges until replacement Resident has signed a new lease or the lease expires.

In addition, the resident would be responsible for returning the property in the same condition as when they started the lease.  It is the landlord’s responsibility to try and mitigate the loss that the tenant might incur by breaking the lease.  For instance, the landlord should ask for the same or less rent from the next tenant.  They should also work to find a new resident, even if they bill the current resident for the costs of advertisement.

Robert Machado, CPM, MPM has twenty-seven years experience in managing residential and commercial properties and is with HomePointe Property Management, which serves the greater Sacramento area.

Wallace C. Gibson, CPM with Gibson Management Group in Virginia also shares his company’s policies for what to do when a tenant leaves early:

“My residents get a 19 page Resident Handbook and residents’ options for breaking their lease are contained it it….My lease is 6 pages and in VA, we can have additional rules/regulations if they are referred to and referenced in the lease….

G. Breaking Your LeaseBy terms of your lease, you may not sublet or assign your rights under your lease. In order to replace you as the Tenant/ Lessee for the property, you may…..advertise, show and secure qualified applicant(s) and provide us with executed application forms with appropriate credit check fee(s). We will then qualify the applicants and prepare the appropriate documents/new lease should they be approved. There is a $400 fee for this lease documentation and you are responsible for the rent up to the time the new tenant lease takes effect and your security deposit will be refunded – less appropriate charges – when the new tenants have executed and returned their property condition check list…..OR, you may….. vacate the property and we will then advertise and show the property to qualified applicants. The fee for this service is one-half of one month’s rent (a minimum of $600). We will qualify and prepare the appropriate documents/new lease. In addition, there is a $400 fee for this lease documentation and you are responsible for the rent up to the time the new tenants’ lease takes effect and your security deposit will be refunded, less charges for advertising and the fees enumerated above, when the new tenants have executed and returned the property condition check list. All property utilities must remain on in your name and the grounds maintained up to and until you are notified that a replacement has been secured.

Gibson Management Group, Ltd., is a full-service property management company offering 40 years of professional property management services and offers listings in the city of Charlottesville, Virginia and Albemarle County as well as Greene and Louisa Counties and the Lake Monticello area of Fluvanna County.

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Need help drafting a Lease Agreement?  See our four-part series How to Draft a Solid Lease Agreement.

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