Tenant Breaking Lease

Tenant Breaking Lease

Tenant Breaking Lease

What to do When a Tenant Wants to Break Their Lease

It happens to the best of us, we receive a tenant breaking lease early letter. This is a moment when most of us in this industry find ourselves at a crossroad. That’s because, after a tenant signs a lease agreement, we expect them to stay for the entire term. But, the reality is, a tenant might decide to leave early and break their lease. While most tenants have every intention of renting from you for the entire lease period, things can happen. From job loss to job transfer and buying a house to active duty or a change of station, there are many reasons why a tenant may need to break their lease. While some are legally justifiable, others are not. For this reason, it’s important to understand what to do when a tenant wants to break their lease.

Please Note: this information is not a substitute for qualified legal advice.

Breaking A Lease

Breaking a lease in California is not like other states. In fact, in California there times when breaking a lease is legally justified. Even when it is not legally justifiable, landlords in California still have a duty to find a new tenant. For example, if there is no legal justification for tenants to break their lease, you still have a legal duty to minimize your losses [“mitigate damages”] (Civ. Code § 1951.2). Nevertheless, tenants are still legally bound to pay rent for the full lease term, typically one year. However, the law recognizes that sometimes tenants have justifiable reasons for moving out before their lease ends. These include:

When Breaking A Lease Is Justified (California):

  • Active Military Service: tenants who enter active military service have a right to get out of their rental obligations (Servicemembers Civil Relief Act)
  • Domestic Violence: Civ. Code § 1946.7 provides early termination rights for tenants who are victims of domestic violence
  • Untenantable Condition: tenants may vacate the premises, in which case the tenant shall be discharged from further payment of rent (Civ. Code §1942)
  • Abusing Right of Access or Use & Harassment: tenants have the right to privacy, and if you violate that, the tenant may break the lease
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What to do When a Tenant Wants to Break Their Lease

So, your tenants want to break the lease, now what? Tenants do this for a variety of different reasons. Whether it’s personal, professional, or because the landlord violated the lease, depending on the reason, in some situations it is legal to break the lease. But, in other situations, it makes sense to be compassionate. In cases where there are no legal grounds for breaking the lease, it’s always best to try and work with the tenant to find a solution.

Handling A Broken Lease

How you handle a broken lease depends on the relationship you have with your tenants. As a landlord, your reputation is just as important as your bottom line. While we are not saying you should let a tenant break their lease early, just be compassionate when faced with certain situations. Situations where it makes sense to be compassionate and work with your tenants to find a solution that works for both of you include:

  • Job Loss
  • Job Transfer
  • Divorce

Early Termination of Lease Clause

To save both you and the tenant from the process of finding a new tenant, consider adding an early termination of lease clause into your leases. If you formalize the allowance of an early termination with associated fees, you can protect yourself as well as give the tenant an easy way out. An early termination fee is an amount that allows your tenants to break the lease and walk away without any recourse. Unlike security deposits, these fees are not refundable.

Tenant Breaking Lease

Conclusion

If a tenant wants to break their lease, how you handle it is entirely up to you. However, there are certain situations that are legally justifiable and ones that are not. For this reason, knowing how to handle a broken lease is important. Because you’re allowed to continue charging your tenant for rent until you find a new one, tenants might find it more attractive to pay a non-refundable fee to end the lease early. By including an early termination of lease clause into your lease agreements you save time, while ensuring your tenants know there is a charge if they decide to end the lease early.

Managing your tenants, finances, as well as documentation, is a lot of work! Especially when faced with complicated situations like a tenant breaking their lease early. For this reason, you may want to consider hiring a professional property management company. A good property manager can handle all of the ins and outs of tenant turnover, leasing, communication, and more. Contact us today at (858) 576-2176 to learn more about our property management services.