Lease Basics: When a Tenant Wants to Break The Lease

By E-Renter Tenant Screening
Posted on September 17, 2011 under Lease and Rental Agreements | Read the First Comment

Dealing with tenants who want to break a lease early doesn’t have to be unpleasant. Experienced landlords often offer tenants a buy-out agreement as a way to compensate them for the trouble of a breaking the lease.

You can set the conditions of the buyout according to your needs. For example, you can release your tenant from the lease and any remaining rent obligations, in exchange for a fee. While the fee does not affect the tenant’s obligations for any property damage (any security deposit paid by the tenant is a separate matter), it can compensate you for your time and trouble in finding a replacement tenant, plus your advertising expenses and possible loss of rental income while undergoing the process.

Be sure that the terms and conditions of the buy-out agreement are clearly spelled out in a document that will be signed by you and all tenants listed on the original lease agreement. Include the dollar amount of the fee, which might equal one, two or three months’ rent, along with the date the property will be vacated, and other details concerning property inspection, key return, security deposit, and forwarding address information. It’s a good idea to have all of your lease and agreement documents reviewed by a landlord/tenant attorney.

The amount of the fee should cover the loss of rent for the time you expect it will take to re-lease the property, advertising expenses and any other costs related to the tenant terminating the lease.

Legal disclaimer:

The contents of this article are intended for general information purposes only, and should not be relied upon as a substitute for obtaining legal advice applicable to your situation.