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September 17th, 2019

When You Should Let Tenants Break A Lease

One of your primary goals as a real estate investor and landlord is to create stability with your tenants. Frequent turnover takes money out of your pocket. While the ideal tenant will sign a minimum lease of one year and want to stay beyond that initial period, there are moments when tenants want to break a lease, or move out before the agreement expires.

Traditionally, breaking a lease is frowned upon by landlords, and for good reason. But we’re sharing some instances below where allowing a tenant to leave early is actually in your favor.

Military Duties

Federal and state laws protect active and reserve military personnel from being held to their lease if they are transferred or activated. While there’s really nothing you can do to prevent a military family from leaving if they receive new orders, taking the extra step to make the transition a smooth one will be greatly appreciated. Avoid fighting the tenant on the move and simply request a copy of the orders as proof that they need to break the lease.

Job Transfer

When a job transfer is mandated and the tenant isn’t military, it’s still a good idea to allow the tenant to break the lease. In many jobs, a transfer may be out of the tenant’s control. Certain companies send their employees where they’re needed, even on relatively short notice. To give you some negotiating power in this scenario, consider added a “Job transfer” clause in your lease that states the tenant has the option to exit the agreement early so long as the transfer is greater than 50 miles away.

Job Layoff

If a tenant loses their job without a new employment perspective, a strained relationship is imminent. You’ll be in search for rent and the tenant will be unable to provide it. If the tenant has no income, it’s best to allow them to move on so you can find a more fitting renter.

Major Change In Life Circumstances

When a tenant is diagnosed with a serious medical issue, the best treatment option may be in a different town or state. Unfortunately, these situations are as much out of a tenant’s control as they are yours. Offer empathy to your tenant and allow them to find the best situation for their care.

Other major life changes, like the passing of a partner or divorce, can be reasons to terminate the lease. These types of issues can cause a major change in the tenant’s income and lifestyle. While being a landlord is a business, it’s necessary to look beyond the numbers when a tenant is in need or distress.

Constant Complainers

While everything looked great during the interview and application process, there are some tenants who are simply never pleased by anything you do. From maintenance and repairs to the landscaping and neighbors, they’re constantly complaining about something.

The headache they cause isn’t worth the rent check. If they haven’t already asked, give them the option to leave by simply saying, “It seems the property isn’t what you initially expected and, despite my best efforts, I can’t make it work for you. I’d like to give you the opportunity to find a home that is better suited for your needs.” The tenant will either take the hint and calm down or happily accept the offer and move out.

No matter the situation, it’s best to keep the lines of communication open on both ends. While you don’t want to allow your tenant to break the lease for frivolous reasons, there are certain circumstances that make it a best case scenario for all involved.