“Different Cases Of How Lease Break Happens” written by Mike Marko
If you’re a property manager, you should know how to prevent a lease break. A lease break is what happens when a tenant decides to end a tenancy agreement early.
Whether you like it or not, a lease break is always a possibility. It can become a reality because of various reasons.
But regardless of the cause, a lease break can lead to problems to your rental property business.
As much as possible, I’m trying my best to avoid a lease break because it can affect the cash flow of my rental property business, for example.
That’s since a lease break can cause imbalance in your revenue because it creates a vacancy. When there’s a vacancy, the collected rent will be lower than the capacity of your rental property.
You’re going to have problems paying utilities, maintenance, or other fees if you’re not getting your projected revenue.
For that reason, it’s important for you to know how lease break can happen and how you can handle it.
In this blog post, I’ll talk about different cases of how a lease break happens. Also, I’ll discuss what’ll happen if ever a tenant decides to break the lease.
Lease Break Cases and How to Avoid It
Even if tenants are bound to a fixed-term lease or contract, there are still instances when they can end their tenancy early.
As the property manager, you need to avoid this from happening. A lease break can often cost more than a normal turnover, after all.
With that said, it’s important for you as a property manager to know some of the most common causes of a lease break. That way, you’ll know how to deal with them as well as how to avoid them.
Failing to Maintain the Property
One of the main responsibilities every property manager has is the obligation to maintain the property.
Regardless of your agreement with the tenant, you’re still responsible for keeping the property habitable.
Failing to do it may lead to tenants breaking the lease because they no longer find the property fit to live in.
To prevent a lease break from happening, make sure to do the following to maintain the rental property.
- Make sure the property has running water at all times.
- Provide proper trash bins.
- Keep the common area clean.
- Do regular maintenance and repairs.
- Follow health and safety codes.
The tenant can file a complaint with the local health or other safety organization if you fail to maintain the property.
If that happens, authorities or inspectors will check the rental property to see if the tenant’s claims are real.
If it turns out that the tenant’s claims are valid, a violation notice will be sent to you. Usually, the notice will state that you need to fix the problem within a certain number of days.
Failing to do what’s written on the notice could possibly result in a lawsuit. This is a particularly unpleasant possibility for cases of lease break related to uninhabitable properties.
Entering the Premises without Notice
Entering the rented property without the tenant’s permission can result in a lease break. In this case, the lease break is due to your violation of the tenant’s rights.
Once a tenant starts to occupy the rental property, it’s already in the tenant’s possession. You’re no longer allowed to enter it without a notice.
Rental laws require property managers to give notice before they enter the tenant’s rental unit. The notice should state the reason why you need to enter the premises.
Also, you should give the notice 24 hours before your desired time for entering the tenant’s rented property.
Besides initiating a lease break, the tenant can sue you for invading their privacy if you enter the premises without their permission.
A property manager can only legally enter the rented premises if they’re doing the following:
- To inspect the unit,
- Make repairs, and
- Show the unit to prospective tenants.
Keep those reasons in mind or your own carelessness may lead to a lease break. You don’t want complacency in your position as landlord to harm your business.
Tenant Is an Active Military Person
According to the Federal Servicemembers’ Civil Relief Act, a tenant that receives duties from the military can terminate a lease.
The tenant can do a lease break if they receive military orders for a permanent change of station or if they’re going out in the field.
If this happens, the tenant must give notice at least 30 days before the desired date of termination.
Don’t ever try and prevent the tenant from breaking the lease in this case. It’s illegal to force the tenant to pay for the rent once they receive formal orders from the military that necessitate a lease break.
Also, you can’t use the tenant’s security deposit to cover the loss of revenue from the lease break.
Tenant Is a Victim of Domestic Violence
Tenants who have been victims of domestic violence have the right to terminate their lease agreement without penalty.
According to the rental laws, the tenant can do a lease break if the act of violence has happened recently (3 to 6 months).
But in order to end the tenancy early without penalty, the tenant must provide a written notice.
The notice should clearly explain that their desire for a lease break was due to domestic violence. Also, it should be given at least 30 days before their desired date of termination.
It’s better to check rental laws in your area regarding this matter because some states require more than 30 days’ notice.
Once the tenant has given the notice, you have the right to request proof of this act of domestic violence.
If the tenant’s claims are true, they’re only responsible for paying rent up until the date of lease termination.
Illegal Rental Property Business
The tenant can do a lease break without penalty if the rental business is not legal.
So make sure that your rental property business complies with the law. It should have licenses and certifications such as a Housing business license and Certificate of Occupancy.
State laws regarding the requirements for a rental property business aren’t the same. That’s why you need to check from time to time to make sure your business is operating legally.
If it turns out your rental business isn’t legal, you’re required to return at least a portion of the rent a tenant may have already paid.
What If Lease Break Happens?
You need to find a new tenant to re-rent your property to if a lease break happens.
The new tenant will then rent your property to lessen the amount of money your previous tenant owes or to lessen your damages.
In legal terms, this is known as “mitigating damages”. Property managers can’t just leave the apartment empty and sue the tenant for the back rent.
If you can’t find a new renter, you may require the tenant to pay for the remaining days of the lease or by using the security deposit.
But again, this is only applicable to some cases of lease break. Check the laws for the situation before doing anything like this.
Final Thoughts on Different Ways a Lease Break Happens
A lease break without penalty can happen and this can affect the cash flow of your business. That’s why it’s important to do all you can to prevent a lease break from happening.
With that said, make sure you regularly maintain the property because it’s your responsibility to keep it habitable. If you don’t, tenants may have a case for initiating a lease break.
Aside from that, don’t forget to give notice before you enter a tenant’s rented unit. It’s illegal for a property manager to enter the premises without notice, and may lead to a lease break.
Also, a tenant can break the lease if they’re in active military duty or a victim of a domestic abuse.
Lastly, make sure that your rental property business is following the rental laws in your area. Operating legally allows the tenant to end their tenancy without penalty.
If you have more questions about a lease break, just leave them in the comments below.
If you need help marketing your business online then check out IM Consultant Services.
Disclaimer: This commentary is a matter of opinion provided for general information purposes only and is not intended to be taken as investment or trading advice under any circumstances. Information and analysis above are derived from sources and utilizing methods believed to be reliable, but we cannot accept responsibility for any losses any person may incur as a result of this analysis. Individuals should consult with their personal financial advisers. By using this web site or any information contained in it, the user specifically and expressly agrees that no advisor-client relationship is created between said user and any author, owner, executive, or principal of this web site by either use of this web site, or by any information, product, or service offered by or on this web site. No express or implied guarantees or warranties as to investment or trading results are made, and any perceived insinuations of such are hereby expressly disclaimed.