Landlords: How to Handle Early Termination Requests

by Chris on August 29, 2016

As frustrating as it is to discover that a tenant is leaving a rental property earlier than expected, taking a proactive approach to early termination requests often is the best way for landlords to avoid income loss.

That approach includes reviewing the landlord’s available options:

Regardless of the dates in the lease agreement, a landlord always has the duty to find a new tenant as soon as possible after discovering the current tenant needs to leave early. The current tenant likely will be liable only for the rent during the resulting vacancy, and possibly some of the landlord’s out-of-pocket costs.

tenant screeningFinding a new tenant relies in part on the cooperation of the exiting tenant. Rather than stoke a dispute, a landlord stands to gain from keeping the current tenant motivated. If nothing else, that makes property tours less awkward, and reduces the likelihood of property damage. In fact, the current tenant may be motivated enough to help find a replacement. Just be sure to apply your standard tenant screening requirements to the new recruit.

Another way to avoid income loss is to follow the same move-out procedures as if the lease were ending on time. A move-out inspection and report will be necessary when accounting for the security deposit. Even though the early termination is disappointing, the property will be returned in better shape if the tenant is getting his or her security deposit back.

Once a new tenant is cleared, a new lease can be signed. That generally allows the exiting tenant off the hook, except for any previous damage or unpaid rent. Conduct a move-in inspection with the new tenant to uncover any latent damage.

Other options for early termination include allowing the tenant to sublet to someone else. The advantage of this situation is that the original tenant is still liable for payment and will need to remain involved in the care and management of the property. As with any new tenant, the landlord must run a tenant background check on the subtenant, even though that person will not technically be on the lease, and may have no legal recourse against the landlord.

A disadvantage of the sublet is that the landlord’s only recourse for losses may be through the original tenant. With the tenant in the middle, it can be more difficult to determine if the property is being cared for.

A third option is assignment. That’s similar to subletting, but with an assignment, the rights and responsibilities legally pass to another tenant. However, the original tenant may still be a responsible to the landlord under the lease.

While that provides the advantage of generally being able to pursue both the current tenant and the original tenant for losses, the landlord is once again separated from the management process. To overcome this problem, control the tenant screening process, and provide a new tenant orientation for the occupant so the assigned tenancy has a better chance for success.

In the case of early termination, sublet or assignment of the lease, it’s always a good idea to review the lease and discuss options with an attorney.

It’s generally not practical to insist that the tenant stay once they request an early termination. Not only is there the duty to find a replacement tenant as soon as possible, but a disgruntled tenant is more likely to cause damage, tarnish the landlord’s reputation, or abandon the property without notice, which may require the landlord to seek an eviction ruling in order to take possession of the property.

In that sense, a landlord doesn’t gain any advantage by refusing a request for early termination, or failing to approve a qualified replacement. The better strategy may be to keep it amicable, and to focus on screening the next occupant.

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

Click Here to Receive Landlord Credit Reports.

Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

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