How to Terminate a Lease Agreement: A Landlord’s Guide
Handling lease agreements is one of the most important aspects of any rental business. Without a solid lease agreement, property owners can get damages beyond their budget. In addition, lease agreements are helpful to determine the rights and responsibilities of both the tenant and landlord. That said, sometimes circumstances pop up, and a lease may have to end early. If you’re a landlord and need help with your rental, keep reading as we discuss how to terminate a lease agreement.
How Does a Lease Agreement Work?
A lease agreement is a contract between a tenant and landlord that states responsibilities for both parties. Usually, a rental lease covers renting the property for long periods, typically lasting 12 months or more.
Once the tenant signs your lease, you’ve both entered a legally binding agreement. With that, once landlords set the lease length and the monthly rate, they cannot change them. This protects landlords so that tenants can’t leave early. Similarly, it protects tenants so landlords can’t change the monthly rate whenever they want.
Once a lease agreement is up, the tenant usually moves out of the rental home or signs on another lease at the same place. That said, landlords are not obligated to renew the old lease terms and may implement changes, including rental increases.
Rental homeowners should always state what will happen if a tenant decides to break the lease early. That said, landlords may include in the lease that it’s legally binding and may entail legal ramifications if a tenant breaks the lease early. Now, let’s go over more reasons why it’s important to have a strong lease agreement.
Why is it Important to Have a Strong Lease Agreement?
A well-written lease is a rental business essential. No property owner wants to handle disputes, legal issues, evictions, or lease breaks personally. So, clearly stating tenant responsibilities and legal information in your lease agreement is crucial. If you hire a property management company, they can help with managing the details.
If you are a landlord to one rental property and plan to manage it yourself, make sure to have your lease reviewed by a lawyer. This will ensure all bases are covered, and the lease terms are clearly stated. Then, within your lease, include all tenant and landlord responsibilities to minimize disputes, should they come up in the future.
Valid Reasons For Tenants to Break a Lease
Although it can be a significant inconvenience for landlords, it’s essential to know why tenants may break their lease. So, let’s go over some of the most common reasons tenants decide to leave their lease early.
- Tenant is Victim of Harassment
- Tenant is a Victim of Violence or Assault
Early Termination Clause
These days, some lease agreements may have specific terms that allow tenants to terminate the lease early in exchange for a fee. Tenants and landlords should read over the lease terms and determine an early termination clause.
If landlords decide to implement an early termination clause, tenants should know how much notice is required before termination. Similarly, tenants must know how much the fee will cost and when to pay it.
Active Military Duty
According to federal law, if a tenant is called to military duty, they can legally leave a lease with no repercussions. That said, the tenant must be part of the “uniformed services,” which include the armed forces, commissioned forces of the National Oceanic and Atmospheric Administration (NOAA), commissioned corps of the Public Health Service, and the activated National Guard.
Similarly, tenants called to active military duty must provide their landlord with written notice of intent to terminate the lease. Once the landlord receives the message, the tenancy will end 30 days after the due date of the next rent payment.
Illegal Rental Unit
The requirements vary depending on which state or city you own property in. That said, it’s the landlord’s responsibility to know and follow state and local laws. If a rental license, state inspection, or lead test is required by law in your area, it must be done before a tenant moves into the property.
If a landlord is caught renting out an illegal unit, tenants can end the lease early without penalty. Similarly, in some cases, tenants may be entitled to their rent money returned plus extra expenses paid by the landlord associated with finding alternative housing.
Tenant is a Victim of Harassment
Both tenants and landlords must abide by the lease agreement. That said, landlords need to respect tenant privacy and give tenants proper notice before entering the property. While some states have specific laws regarding the notice, most leases state a minimum of 24 hours notice before a landlord may enter the property. Some even require more, except if there is an emergency.
That said, if you violate your tenant’s right to privacy or enter the property without proper notice repeatedly, your tenant may be able to terminate the lease without rental payment obligations.
Rental Unit is Unsafe
Landlords must provide tenants with safe and habitable rental housing. However, if you do not provide your tenant with safe housing under state and local housing codes, the court may grant them constructive eviction.
If the court system grants the tenant constructive eviction, they are no longer obligated to pay rent and must follow proper procedures to leave the property safely. However, this option is only provided to tenants in severe cases.
Tenant is a Victim of Domestic Violence or Assault
If a tenant becomes a victim of domestic violence or sexual assault, most state law indicates that they may legally terminate their lease agreement regardless of how much time is left. That said, tenants must give proper written notice to the landlord if they plan on leaving the property. Similarly, the tenant must move out after 30 days of notice to the landlord.
Can Landlords Break a Lease Agreement Early?
Although it’s typically a hassle to break a lease agreement early, there may be circumstances where landlords have to. It mainly depends on the lease terms and circumstances of ending the lease early. Let’s go over a few ways it may be possible for a landlord to terminate the lease early.
When Can a Landlord Break a Lease?
There may be a few circumstances in which a landlord terminates a lease early. For example, if a tenant violates the conditions of the lease, or if the lease terms specifically state that the landlord may terminate it before completing the term.
Typically, landlords make it a goal to keep tenants in the same unit for as long as possible. However, sometimes it’s necessary to remove a poor tenant from your property to avoid damages or complete repairs. Here are some reasons why a landlord may decide to break their lease.
Reasons For a Landlord to Terminate a Lease Early
- The Property is On the Market- If you are selling your property, you may need to terminate the lease agreement unless you are selling to other investors. In that case, you may be able to keep your current tenants while transferring ownership.
- Major Repairs or Renovations- Some repairs are so extensive that they require access to large parts of the property. It may be impossible to safely house tenants during this time, so a lease break may be necessary.
- Damaging or Illegal Tenant Behavior- Tenants don’t always follow through with their end of the lease terms. If a tenant damages the property or engages in illegal activities on the premises, a landlord may terminate the lease and evict the tenant.
Recommendations for Landlords on How to Terminate a Lease Agreement
When either party decides to break the lease agreement, it can be quite inconvenient for tenants and landlords. That said, landlords should avoid conflict and continue abiding by state and local codes. In addition, rental owners must provide a habitable and safe space for tenants during their total occupancy.
Some state laws require landlords to make reasonable efforts to re-lease their rental home, regardless of why the tenant leaves. However, in most cases, the tenant is still responsible for monthly rent payments until a new tenant signs a lease for your rental.
That said, landlords should find a new tenant for the property on their own. Sometimes an old tenant will offer to find a new occupant on their own, but it isn’t worth the risk most of the time. However, if you’ve verified that they are a suitable applicant, go for it!
Need Help Managing Your Rental Business?
Knowing how to terminate a lease agreement is something all landlords should know. That said, it can be challenging to keep track of all your lease agreements if you own more than one rental home. If you need help with managing your rental properties, contact an experienced property management company today.
Bay Property Management Group has a dedicated team of professionals ready to help you manage your rental business today. Contact us today if you are looking for complete leasing services, including tenant screening, maintenance, rent collection, eviction services, and more.