If you’re a landlord, you probably have a lease agreement or rental agreement for your tenants, outlining the rules and restrictions for the property, setting rent prices, and outlining a period of time during which the agreement is active. If a tenant breaks the lease agreement early by moving prematurely, they may face a penalty for doing so. But can a landlord break the lease agreement early without penalty?
Why Break a Lease Agreement Early?
Landlords are generally interested in making as much money as possible with as few disruptive challenges as possible. Accordingly, they tend to keep lease agreements active for as long as possible. There are some conditions that might motivate a landlord to break a lease, however, such as:
- Problematic tenant behavior. If the tenant is not complying with the terms of the lease, or if they’re being disruptive or destructive in ways that undermine your ability to make money, you may wish to terminate the lease agreement early. In an easy situation, your notice of lease termination will result in the tenant’s immediate departure. In other cases, this can lead you to file for eviction.
- Renovations and repairs. In some cases, you may wish to have full access to the property to issue renovations or repairs. For example, you may need to abate some damage and get the property to a higher level of safety or integrity. You may also want to make some purely cosmetic improvements. Either way, you may need the property vacant for a period of time.
- Selling the property. Ordinarily, it’s a good idea to keep your tenants when selling the property; this can be seen as an added value by your prospective homebuyers. However, if you’re trying to sell the property to an owner/occupant rather than another landlord, you may want the tenant gone.
- Moving in. In rarer cases, you may be interested in moving into the property yourself, essentially becoming your own occupant. If this is the case, you can’t move in until the current tenant leaves.
Is It Possible to Break the Lease Early?
So is it legally possible to provide an early termination of the lease?
Most of the possibility here is dependent upon the actual terms and conditions of the lease. If the tenant is violating the terms of the lease, or if the terms of the lease specifically allow you to terminate the lease before the terms are ordinarily completed, you should be able to terminate the lease legally. It’s perhaps best to understand this with a series of examples.
Let’s say your lease specifically forbids a tenant from keeping pets at your property, but you have evidence that the tenant is keeping three dogs. Here, the tenant is breaking the terms of the lease, so you have clear grounds for terminating the lease early. The same is true if you outline terms for the monthly payment of rent (as is the standard), yet the tenant is not paying rent regularly.
Things get a little more complicated when it comes to breaking a lease for reasons proactively outlined in the lease. For example, you may explicitly state in your lease that it’s possible for you to terminate your lease if and when you need to make renovations to the property, or if you’re planning to sell the property. If this language isn’t currently in your lease, you may not be able to terminate the lease early without repercussions.
If you’re still in the process of drafting a lease agreement, it’s in your best interest as a landlord to include as many contingencies as possible. The more opportunities you have to terminate a lease, the more flexibility you’ll have in the future. Some landlords specifically draft a month-to-month lease for this purpose; in most areas, a month-to-month lease allows you to terminate a lease for almost any reason on a monthly basis, giving you plenty of outs.
How to Break a Lease Early
If you find yourself in a position to terminate a tenant’s lease, the standard practice is to send a notice to your tenant that their lease is being prematurely terminated. State and local laws may vary, requiring specific wording in this notice, or requiring that it must be sent in a specific manner, or a specific number of days before the termination takes effect.
If the termination notice is sent because of problematic tenant behavior, your best practice is to give your tenant a chance to take corrective action. For example, if they’re a month or two behind on the rent, consider giving them an opportunity to pay you back. If they’re currently keeping a pet in violation of the terms of your lease, give them an opportunity to remove the pet from the premises.
If the tenant fails to comply with this last chance for compliance, you may need to file for eviction. The eviction process can be long and fairly complicated, especially if the tenant is fighting back against you, but having the terms of the lease and a formal termination notice on your side will help the process go much smoother.
A Note on Local Laws
You should also understand that the rules and regulations for creating, managing, and terminating lease agreements is going to vary significantly from city to city. Some cities may have laws protecting tenants with longer termination terms, or more flexible laws that give landlords more power. Make sure you research the real estate and rental agreement laws in your area before you make any firm decisions, and talk to a lawyer if you’re not sure about the variables.
If you’re interested in creating a new lease agreement, or delegating your responsibilities as a landlord, contact Green Residential today! Green Residential is a property management firm that can help you draft new lease agreements, find new tenants, manage your existing tenants, and keep your property in good shape—all without hurting your bottom line.