I have a bit of a problem on my hands. I haven’t talked about it in some time, but I’m a landlord. I kind of fell into the position when my fiancee and I headed west to pursue great career opportunities. I was a little leery of becoming a landlord. The job doesn’t have a lot to love for a Lazy Man like me – more responsibility and losing money each month were at the top my most hated list. Still, the move out west would be far, far more beneficial economically. Becoming a landlord was the lesser of two evils. The other evil, would have been selling the home for far less than I paid for 2 years ago – perhaps $40,000 less using my neighbor’s place as an estimate.
Despite all the potential for disaster, up until earlier this month, it’s the easiest gig I’ve ever had. This is largely because I may have the best tenant in the world. She actually asked me if she could pay me earlier in the month. She forwards on my mail – on her own dime (side note: the US Postal Service needs to revamp it’s system greatly). As a florist she’s touching up the garden – again on her own dime. I’ve offered to pick up the mail costs (not that I want it as it’s been all junk mail), but she wouldn’t have of it.
However things have gotten to be difficult. Due to a life-threatening reason beyond her control, she is forced to relocate before her lease is due. I’m not really going to go into the reason, but let’s just say that I believe the reason. There’s a chance that she could be making the reason up to get out of the lease, but it wouldn’t make sense that she would. She only has two months on the lease after the day she plans to move out.
I’ve already decided that I will let her break the lease. However, should I apply some kind of penalty for not staying the full year? If so, what would be an appropriate number? How would your answer change if I was able to rent it out without a day of missed rent?
Your lease agreement should have a clause for breaking the agreement. If it doesn’t, then you can either ask for all of the lease agreement, meaning she would have to pay the remaining two months or you get nothing. I don’t think it would be fair to start creating rules in the middle.
That said, if you’ve already agreed to let her out and you believe she has a valid medical reason for needing to do so, then I believe the right thing to do is just let her go. She’s only two months out, has been an ideal tenant and she could obviously use the break. This would seem to me to just be the right thing to do.
If you can rent the place out without any time lost, then the only reason I would think you would want to penalize someone is to recoup any costs in attracting that new renter. If you had advertising costs, legal costs, security costs for background checks and other associated expenses, then it might make sense to charge for that, but you’re so close to the end of your lease, you were going to have to do that anyway.
It sounds to me that you believe the right/moral thing to do is just let her go and look for a new tenant, but the business/capitalist side of you is struggling with it. It’s up to you how you handle it, but I’m usually of the opinion that I should treat people the way I want to be treated. If you were in her shoes, how would you want to be treated? What would you think is fair? You’re not unreasonable in expecting some compensation for the break of contract. Just treat her the way you would want in the same situation and I think you’ll do just fine!
If she really has been a great tennent, then I wouldn’t hesitate to let her break the lease. If I had someone else already lined up, even better!
I’m a big believer in “what goes around, comes around”. She has gone out of her way to make it easy on you as a landlord, now it is your turn to do the same for her.
Lazy Man says
Tom, yes there is a breaking the lease clause and I could legally enforce her to pay up. My ethics say that’s not the right thing to do.
I didn’t agree to letting her break the lease outright, but hinted that there’s probably room to work. We wouldn’t be making rules in the middle, but negotiating a special case that doesn’t typically come up in landlord-tenant agreement.
“If you had advertising costs, legal costs, security costs for background checks and other associated expenses, then it might make sense to charge for that, but you’re so close to the end of your lease, you were going to have to do that anyway.” This is what I am leaning towards, but just a prorated amount of those expenses. It probably wouldn’t amount to much, maybe $100-$200.
I’m a softie, and would let her break the lease since she’s been such a great tenant. However, I’d also put some incentive to have her help you out of this jam. Give her incentive to find someone take over the lease, i.e. if she finds someone to take the lease over, she owes nothing extra. Otherwise she needs to be responsible for some portion of remaining balance and split that loss with you. I think that’s more than fair.
You really should brush up on the landlord-tenant law in the jurisdiction where the property is located. It may not be legal for you to enforce a “penalty” beyond your actual marketing costs in finding a new tenant and your lost rent.
Lazy Man says
Anne, I have a lawyer to help me with the legal details, so I’m not worried about that. While you may be technically right, I can legally enforce her to pay the remaining months of the lease. So do you think she would fight a $100-200 charge from me, when I can turn around and force her to pay $2700? She would save some $2500-$2600 in the deal.
Having been a landlord in a previous life, my gut feel tells me you should probably just let this one go. Generally speaking, the hassle and frustration you will encounter isn’t worth the amount of money you would recoup. I would simply work towards getting the house in order for the next tenant to move it. Great tenants are a godsend; maybe you’ll get lucky again. Just make sure they don’t have pets!
Common Sense says
If it is something out of her control, then you should basically let it go. If she is just trying to get out of the lease, then you try to get as much as you can out of her. If she doesn’t want to pay, it is very hard to get the money. The best thing to do is to try to minimize the amount of time that you have the place vacant. Work out a deal with her where you can show the place to new potential tenants while she is still in the house. Make sure she leaves the place in a rentable condition. If you try to get her to pay, then she be more inclined to mess up your place and you would lose a lot more than the rent that you would have lost.
My ethics say that’s not the right thing to do
2 BROS BLOGGING says
You should start marketing it right now. Tell her to have it cleaned and have her show it for you. An incentive for here is that if she gets it rented out so you lose no rent days, you’ll let her out. Else, have her pay for up to the first 30 days of it being vacant, up until it gets rented. It’s like splitting the cost down the middle.
I’ve run into this situation a couple of times before. I think that you are better off just letting her leave. Just make sure that the apartment is nice and clean before you give back her security deposit.
She’s been a great tenant, you trust her. Create some good karma for yourself and just let her go. She wouldn’t be breaking the lease if it wasn’t for a good reason, and you have an opportunity to help her out. I’m sure she would be very appreciative.
I’m not a landlord, but I did get stuck dealing with a nasty, nasty landlord who not only refused to let me out of a lease, but caused all kinds of problems for me when I tried to sublet the apartment (which I was allowed to do, according to the lease). It ended up being a nightmare for me, and if they had just been a bit more helpful, my life would have been 10000% easier.
I would say let her out. She seems to have done some good things while she was there, and you believe her story, so getting a penalty out of her would nag you. I don’t think you would ever feel “right” about it afterward. You both move on, and everyone lives happier, knowing they were both good.
@lazy man – Then you should definitely defer to your lawyer since s/he knows the situation. But in most jurisdictions, while you may have a right to the remaining lease payments, you do have a duty to mitigate damages by trying to find another tenant. In the hypothetical in your blog post, if you found someone to take over the lease right after your existing tenant moved out, you would have to deduct the rent the new tenant paid you from the “penalty.”
Adventures In Money Making says
let is go.
besides, if she’s in CA you’ll lose in court.
also, according to the law, you have to make reasonable attempts to re-lease the property.
if you lease it up in a week,she’s only due for 1 week’s worth of rent. there’s no
well, it is purely up to you; however, giving away and letting things slide is not a good way of doing business nor a profitable one. she entered into the lease knowing the ramifications for breaking the lease early. come on, it’s a business, it’s not personal. but, as you’ve written, you’ve already made the decision.
what was her story?
How about asking her to find a new tenant while she is there? If she does, than you are all set as you won’t lose money and she won’t have penalty to pay. Depending on your area, another tenant might be easy to find. That was the solution my landlord found for my personal case few years ago and it end it up well. In any case, I think it would not be fair to charge the full penalty.
Having a non contentious lease ending is always important… I would let her out… Thanks her for forwarding the mail and adding flowers… wish her the best…. and start looking for a new tenet yesterday.
I hope she deducts the amount of forwarding your mail and improving your landscaping from your ‘penalty.’ Give me a break, it’s 2 months, she gave you notice.
I have been an apartment building owner for 14 years, and I have yet to charge a tenant for breaking a lease. They are generally relocating due to changing jobs. While it always ends up costing me money, I view it as a cost of doing business. I try to treat my tenants as I would like to be treated, and I think it pays off in the end. I have had more than one tenant return after moving back into the area, and a lot of my new tenants are referrals from past/existing tenants.
No, no penalty. There are good tenants and bad tenants. The harsh terms of a lease are for the bad tenants. When you have a good tenant, bend over backward for them because THEY are doing YOU a favor by paying a good chunk of your mortgage. Let her break the lease and move on. I rent a home and it’s common to rent for less than the mortgage payment. If property owner cannot afford to keep the house when it is not rented then owner should not be in the renting business and house should be sold.
Lazy Man says
Anon, I asked her to deduct the forwarding of the mail. As for the landscaping, I didn’t ask, so no, she can’t just do it and charge me. Remember Anon, I’m not the one breaking the contract here. She always has the choice to stick with what was drawn up.
Gaming the Credit System says
I’m with others who say just to let her go. Karma and all that jazz. If she’s really been a model tenant and she really has a life-or-death thing then IMO it’d be unethical to make her pay for an early lease termination. Yes, I know there’s probably a clause in the contract and a well-defined penalty for breaking it early, but still…. let her off without a fine.
It seems I am with the majority. If she has been such a great tenant, let her go and forget about it. If you truly believe that she has a good reason to break the lease you should simply allow her to leave. I am sure that she will do her best to help you find a new tenant.
Blaine Moore (First Time Home Owner) says
I would say that you should let her go for all the reasons mentioned above. Chances are pretty good that your next tenant is not going to be nearly as good as she was and you will realize how great it was to have her as your first tenant. Ask that she leave everything clean and maintained, and if she knows anybody that could take her place. Start advertising for a new tenant. I wouldn’t charge her penalties, though. I also agree with the advice of not releasing the security deposit until after you verify that the place is clean.
Lazy Man, listen to the majority and let her go. You have been blessed in having this person care for your property. Put yourself in her shoes. What if you had not moved because of a wonderful job opportunity, but instead had lost your job and wound up on the verge of foreclosure? Wouldn’t you appreciate any kindness anyone afforded you? Whatever you’re losing by doing the right thing is far less that the $40,000 you say you could have lost. Shame on you. Grow up and stop whining.
Everything Finance says
I say “Let it go” or just as a principle charge her $1.
When someone has been good to you, its time to return the favor.
I wouldn’t charge her penalties, though. I also agree with the advice of not releasing the security deposit until after you verify that the place is clean.