Early rental lease termination - what is reasonable?

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sidartvader
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Early rental lease termination - what is reasonable?

Post by sidartvader »

The tenants in my rental home recently bought a house they liked, so now want to move out of the rental. The original lease agreement was from Aug '14 till May '15 (10 months), and they want to vacate end of this month (Feb). They have agreed to forgo the deposit (one months rent) and promised to have the house cleaned. This way I would be losing two months rent, which is a bit much to lose on a 10 month lease in my opinion. We are planning to go back to live in the house starting June (we are living overseas at present), so renting it out again is not an option.

I have asked them to pay another month's rent so I am only out one month's rent, but they seem to be balking. The complicating factor is that the property management guy working for me is also their realtor for the new house they bought, so he's working both sides and not really reliable to represent my best interests. They have regularly paid the rent over the last 7 months, so no problems from that side.

In this situation, what would be a reasonable option of parting ways?
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ResearchMed
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Re: Early rental lease termination - what is reasonable?

Post by ResearchMed »

What does the lease say about early termination?

That would be the place to start.

Why would you feel pressured to change that?

RM
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ralph124cf
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Re: Early rental lease termination - what is reasonable?

Post by ralph124cf »

In many states, if a tenant moves out early, then the landlord is entitled to the normal rent for the term of the lease, PROVIDED he makes a good faith effort to find new tenants. You say that you are not willing to do this. I would take the deal the tenants are offering.

Ralph
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ResearchMed
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Re: Early rental lease termination - what is reasonable?

Post by ResearchMed »

ralph124cf wrote:In many states, if a tenant moves out early, then the landlord is entitled to the normal rent for the term of the lease, PROVIDED he makes a good faith effort to find new tenants. You say that you are not willing to do this. I would take the deal the tenants are offering.

Ralph
If this is the case in OP's state, wouldn't trying to get a renter for just the remaining term of the lease suffice?
If so, then OP would have the original schedule for the return home.

RM
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bottlecap
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Re: Early rental lease termination - what is reasonable?

Post by bottlecap »

By keeping the security deposit and asking for one month's rent, you are effectively getting the last two months rent. You're not offering them any deal (not that you need to, but assuming they don't trash the place and you keep the deposit as a result, you are effectively not permitting them to vacate early without paying rent).

Not knowing the laws in your state, if they were good tenants, I would ask for one extra month rent now, forgo the second month of rent and, if appropriate, return their security deposit when they vacate. You don't owe them anything, but I think that's a square deal when there's only two months left and in all likelihood, they would be liable for it otherwise.

Good luck,

JT
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Watty
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Re: Early rental lease termination - what is reasonable?

Post by Watty »

By keeping the security deposit and asking for one month's rent, you are effectively getting the last two months rent. You're not offering them any deal (not that you need to, but assuming they don't trash the place and you keep the deposit as a result, you are effectively not permitting them to vacate early without paying rent).
There are three months(March, April, May) left on the lease so they would be saving a months rent.

ResearchMed wrote:What does the lease say about early termination?

That would be the place to start.

Why would you feel pressured to change that?

RM
+1,

and they want to only do it with about 12 days notice.

They are not asking anything close to reasonable since I would assume that the lease specifies what their early termination options are.

If you have problems with the property managers conflict of interest then consider reporting him to the state real estate board if he does not represent you well. If he works for a large real estate agency you could also get the agencies management involved. Just talking with him about your concerns on his conflict of interest and these options will likely get results.
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saltycaper
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Re: Early rental lease termination - what is reasonable?

Post by saltycaper »

Renter's perspective... My lease calls for full two months notice. Giving notice in mid February would mean you're on the hook for rent for all of March and April. Early termination in the first year of the lease used to be 1/2 month's rent, with no early term fee after the first year.

Recently, they changed that to 1 month's rent for early term in addition to your two full months notice, no matter how long you've rented. In your tenant's case, that would mean they are on the hook for the remaining three months. That was too onerous for me to re-up the most recent lease extension for another full year, so we shortened the term.

State laws aside... If they had given you more notice (at least a month) that they wanted to leave, I think 1 month beyond their stay would be reasonable. Since they are giving you practically no notice, 2 months rent seems reasonable. Of course, all this should have been spelled out in the lease.
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JGoneRiding
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Re: Early rental lease termination - what is reasonable?

Post by JGoneRiding »

I for sure would demand payment for march simply due to lack of notice. N then it would depend on state law n how clean the house was if it was truly spotless I would settle for the security deposit and let the last mos rent slide.

I would immediately send notice that rent is due for march as they haven't even given u 30 days and then go from there. I usually let people out of leases with only slight penalties but also generally able to re rent
wholeinone04
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Re: Early rental lease termination - what is reasonable?

Post by wholeinone04 »

ResearchMed wrote:
ralph124cf wrote:In many states, if a tenant moves out early, then the landlord is entitled to the normal rent for the term of the lease, PROVIDED he makes a good faith effort to find new tenants. You say that you are not willing to do this. I would take the deal the tenants are offering.

Ralph
If this is the case in OP's state, wouldn't trying to get a renter for just the remaining term of the lease suffice?
If so, then OP would have the original schedule for the return home.

RM
Most tenants/landlords don't know this but at least in California this is true. If a tenant moves out, the landlord has to make a good faith effort to find new tenants otherwise the old tenants are on the hook for the entire amount (or at least until they can get it rented out).

Most landlords tell tenants in this situation (and tenants also assume) that they are on the hook for the full amount but don't know about that little caveat which is huge IMO. I would assume a good faith effort means you have to list at the same price and if rents have gone up (which they have) you probably will find a tenant ASAP and thus your old tenant would be off the hook. Landlord's only recourse would be a bad recommendation haha.

If the laws are similar in your state, I would tell the tenant that you will be making a good faith effort to rent out the unit for the same price for the remainder of the lease (which likely won't happen - who's gonna move in for 2-3 months) and they'll owe you the full amount. Probably won't be worth your time to try and collect but you could def threaten them with putting it on their credit report, etc if the law is on your side. I'm a landlord and a tenant currently but still I side with the person who does their research and knows the law :)
harrychan
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Re: Early rental lease termination - what is reasonable?

Post by harrychan »

wholeinone04 wrote:
Most tenants/landlords don't know this but at least in California this is true. If a tenant moves out, the landlord has to make a good faith effort to find new tenants otherwise the old tenants are on the hook for the entire amount (or at least until they can get it rented out).

Most landlords tell tenants in this situation (and tenants also assume) that they are on the hook for the full amount but don't know about that little caveat which is huge IMO. I would assume a good faith effort means you have to list at the same price and if rents have gone up (which they have) you probably will find a tenant ASAP and thus your old tenant would be off the hook. Landlord's only recourse would be a bad recommendation haha.

If the laws are similar in your state, I would tell the tenant that you will be making a good faith effort to rent out the unit for the same price for the remainder of the lease (which likely won't happen - who's gonna move in for 2-3 months) and they'll owe you the full amount. Probably won't be worth your time to try and collect but you could def threaten them with putting it on their credit report, etc if the law is on your side. I'm a landlord and a tenant currently but still I side with the person who does their research and knows the law :)
+1

I would absolutely cite the law and remain civil. They know they are on the hook. In CA, you cannot use the deposit as last month's rent either as you will have no recourse to claim damages. I think it is worth it to claim and collect. It probably can go in their escrow being that the property manager is their agent :)
This is not legal or certified financial advice but you know that already.
Paul78
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Re: Early rental lease termination - what is reasonable?

Post by Paul78 »

RM[/quote]

Most tenants/landlords don't know this but at least in California this is true. If a tenant moves out, the landlord has to make a good faith effort to find new tenants otherwise the old tenants are on the hook for the entire amount (or at least until they can get it rented out).
[/quote]


But in this case could the landlord just make a good faith effort to find a new tenant through May? Since the landlord wants the house back in June.

I am guessing this "good faith" attempt to find a tenant for a 3 mth (March April May) lease will ultimately fail but it would still allow the landlord to collect the three months rent from the current tenant, right?
dolphinsaremammals
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Re: Early rental lease termination - what is reasonable?

Post by dolphinsaremammals »

sidartvader wrote:The tenants in my rental home recently bought a house they liked, so now want to move out of the rental. The original lease agreement was from Aug '14 till May '15 (10 months), and they want to vacate end of this month (Feb). They have agreed to forgo the deposit (one months rent) and promised to have the house cleaned. This way I would be losing two months rent, which is a bit much to lose on a 10 month lease in my opinion. We are planning to go back to live in the house starting June (we are living overseas at present), so renting it out again is not an option.

I have asked them to pay another month's rent so I am only out one month's rent, but they seem to be balking. The complicating factor is that the property management guy working for me is also their realtor for the new house they bought, so he's working both sides and not really reliable to represent my best interests. They have regularly paid the rent over the last 7 months, so no problems from that side.

In this situation, what would be a reasonable option of parting ways?
Get in writing that you get to keep the security deposit even if they leave the house in clean condition. (Who is going to check on that condition while you are overseas, the dubious property management person - do you have someone else who can do it?)
Twins Fan
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Re: Early rental lease termination - what is reasonable?

Post by Twins Fan »

Does the property management guy work for a property management company? Go above him and say you want a different guy while this is going on.

Agree with others, that breaking the lease early should be covered in the lease agreement. What does that say about it? There should be no bargaining or deal making going on.

Man, we've had a couple threads lately about property management companies (tenants not allowing showing, other one) that make me real thankful for the property management company I use!..... knock on wood. :happy
ddurrett896
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Re: Early rental lease termination - what is reasonable?

Post by ddurrett896 »

I don't want anyone in my rental that doesn't want to be there - Id let them walk.
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hand
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Re: Early rental lease termination - what is reasonable?

Post by hand »

Ugh, don't agree to take the security deposit in lieu of rent - what happens if there are damages to the property?
Take the extra time, collect whatever rent is agreed as outcome of your negotiations and return security deposit only if property is turned over in appropriate condition.

I'd also consider firing the property manager who clearly no longer has your best interests at heart. Given current circumstances, it seems likely your property manager won't do an adequate job at the move out inspection or in negotiations with your tenant.

Likely not worth pursuing, but I would review my contract with the realtor / property manager and determine if he was in breach by working against your interests by prompting your tenants to move out. Perhaps a private conversation with the property manager indicating your intent to 1) to recover any unpaid rent through May from the property manager and 2) to meet with local landlords / landlord associations and publicize his duplicity would be enough to "improve" his guidance to the tenants and result in them (or likely him through them) paying full rent.
Carefreeap
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Re: Early rental lease termination - what is reasonable?

Post by Carefreeap »

harrychan wrote:
wholeinone04 wrote:
Most tenants/landlords don't know this but at least in California this is true. If a tenant moves out, the landlord has to make a good faith effort to find new tenants otherwise the old tenants are on the hook for the entire amount (or at least until they can get it rented out).

Most landlords tell tenants in this situation (and tenants also assume) that they are on the hook for the full amount but don't know about that little caveat which is huge IMO. I would assume a good faith effort means you have to list at the same price and if rents have gone up (which they have) you probably will find a tenant ASAP and thus your old tenant would be off the hook. Landlord's only recourse would be a bad recommendation haha.

If the laws are similar in your state, I would tell the tenant that you will be making a good faith effort to rent out the unit for the same price for the remainder of the lease (which likely won't happen - who's gonna move in for 2-3 months) and they'll owe you the full amount. Probably won't be worth your time to try and collect but you could def threaten them with putting it on their credit report, etc if the law is on your side. I'm a landlord and a tenant currently but still I side with the person who does their research and knows the law :)
+1

I would absolutely cite the law and remain civil. They know they are on the hook. In CA, you cannot use the deposit as last month's rent either as you will have no recourse to claim damages. I think it is worth it to claim and collect. It probably can go in their escrow being that the property manager is their agent :)
Just want to clarify that a LL CAN use the deposit for unpaid rent.

That said I agree with the poster who says don't use the security as last month's rent. Otherwise what's the incentive to leave the place clean and free of damage?

I was in this situation myself but under slightly different circumstances. When we were living overseas and getting ready to move back I had to start eviction procedures with my tenant of NINE YEARS. :( Turns out they had file BK the summer before and despite me visiting TWICE that summer (and spending money on some capital improvements Grrr) they and their attorney failed to inform me pursuant to BK law. They were two years into a three year lease and therefore had to inform me by law. They wound up leaving about a month early because once you serve the 3-day to quit the lease termination process starts. Ultimately I did get all the rent due since they were trying to rebuild their credit after BK.

Had another tenant leave about 3 months into a year lease on another property we own. He was a real estate agent and therefore knew he was on the hook. He did find a substitute tenant.

FWIW, I bet the agent DID inform your tenants of their obligation and they are just testing you. If the property is in CA I'd inform them of their obligations and go through the mitigation process (make the agent advertise). It's possible someone would want a shorter stay (I've had someone sell their house but want to stay in the area so their kid could stay in school) and if the tenants don't pay take them to small claims court.
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wholeinone04
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Re: Early rental lease termination - what is reasonable?

Post by wholeinone04 »

Paul78 wrote:RM
Most tenants/landlords don't know this but at least in California this is true. If a tenant moves out, the landlord has to make a good faith effort to find new tenants otherwise the old tenants are on the hook for the entire amount (or at least until they can get it rented out).
[/quote]


But in this case could the landlord just make a good faith effort to find a new tenant through May? Since the landlord wants the house back in June.

I am guessing this "good faith" attempt to find a tenant for a 3 mth (March April May) lease will ultimately fail but it would still allow the landlord to collect the three months rent from the current tenant, right?[/quote]

Yea exactly, no one's gonna sign a 3 month lease haha. I would definitely let the tenant know you will be following the law and making an effort to rent out but if it can't be rented out, the tenant is on the hook. If they are a responsible tenant/have a decent score the threat of an eviction or mark on their report should be enough to convince them to pay up.
JGoneRiding
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Re: Early rental lease termination - what is reasonable?

Post by JGoneRiding »

While I agree unlikely I wouldn't say NO one will sign a 3 mos lease. I did once as I only had a 3 mos contract to work. Just out of college. It was in case the job didn't fit. Now been here 9 yrs. But no way was I signing a yr long lease! N I had a dog n a cat. But nice ll
Wellfleet
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Re: Early rental lease termination - what is reasonable?

Post by Wellfleet »

WHAT DOES THE LEASE SAY???

If the lease says they pay for everything then send a certified demand for rent and see them in court.

If it doesn't specify anything then decide if you want to go to court and deal with someone doing stuff to your apartment who isn't happy.

My friend moved for work and the landlord cooked up some demand for cash beyond what the lease said (30 day notice/security deposit/last months rent perhaps).

My friend told them that they would see them in court and that concluded the demands.
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sidartvader
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Re: Early rental lease termination - what is reasonable?

Post by sidartvader »

Thank you for all your comments, many excellent points as always.

I read the lease (for the first time now :( ), but could not really see any clause for early termination. There is something about indemnity payments, which could be the same thing perhaps, but I am unsure.

This is our home, so I don't want them disgruntled and messing up the place. But at the same time, I didn't want to be down ~$6000 (two months rent). I have offered them one month, but they don't seem to be biting (atleast according to my prop mgr).

I am planning to ask them now to pay through April, and I will return the deposit (which the prop mgr's company has kept - is this common?) when I have one of my neighbors check the place to be ok. I think one month's rent forgiven is good enough (I will chalk that up as my good deed of the year!)

I will post once I have this sorted.
Carefreeap
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Re: Early rental lease termination - what is reasonable?

Post by Carefreeap »

sidartvader wrote:Thank you for all your comments, many excellent points as always.

I read the lease (for the first time now :( ), but could not really see any clause for early termination. There is something about indemnity payments, which could be the same thing perhaps, but I am unsure.

This is our home, so I don't want them disgruntled and messing up the place. But at the same time, I didn't want to be down ~$6000 (two months rent). I have offered them one month, but they don't seem to be biting (atleast according to my prop mgr).

I am planning to ask them now to pay through April, and I will return the deposit (which the prop mgr's company has kept - is this common?) when I have one of my neighbors check the place to be ok. I think one month's rent forgiven is good enough (I will chalk that up as my good deed of the year!)

I will post once I have this sorted.
Yes it's common for a PM to keep the deposit in their Trust Account. Another reason I don't use a PM. Another party to hassle with over a deposit.
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