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AustinLandlord · Dec 23, 2008, 10:12 AM

These tenants (a married couple with kids) decided to purchase a home in the neighborhood, and emailed me saying that they were leaving long before the lease ends. I told them that I hope to be able to release them from the lease early, but that they would need to find a replacement tenant willing to sign a new lease, under new lease terms. They said they'd start looking. I started looking, as well.

I sent them a notice of intent to vacate form letter, spelling out that this notice doesn't alter the present lease, and that they are still liable for the full-term of the lease. Our lease stipulates that landlord is not obligated to find the replacement, and that tenant is responsible for all actual costs (property management co, advertising, etc.) of obtaining a new tenant, plus 85% of one month's rent. Their hoped-for early move out date is 31 January 2009. One month away from now.

It's Christmas time, and no one is voluntarily looking for new housing. We've received almost no interest in the ads we've posted. It seems clear that a replacement tenant will not be located to move in on 1 February.

So, today I am writing an acknowledgment of their notice to vacate before lease ends. I need help wording it. I want to convey that I would like to end the lease early, but must find a replacement tenant. I want to underline that abandoning the property will carry legal and financial consequences. Should I spell out the effects: damage to credit report, lien on their new home, garnishing wages, and legal fees and penalties? Or should I let their imagination suffice? Tenant has a fancy title at a fancy firm. Enough money to pay the rent until a new tenant can be located... I don't want to go to court, but I will if I get stuck for the bill.

What's the right approach here? How to inform them of possible costs of abandonment, without causing them to "fight back"?

Thanks

ScottGem · Dec 23, 2008, 10:26 AM

I'm a bit worried about the 85% of one month clause. From your description it sounds like an early termination fee. If so, then it would seem that and the cost of finding a new tenant are all they have to pay.

I'm also concenred about the clause stating you aren't obligated to find a replacement. Unless you are in Florida, that clause may run counter to state law. If so it could affect the validity of the lease.

But that doesn't answer your question. Frankly I don't think there is anyway to word it without antagonizing them. I would try something like this:

I am happy for you, that you have been able to purchase a home of your own. However, as a businessman, I have to remind you that you have an obligation under the lease that you entered into to rent from me.

I beleive we both have made a good faith effort to find a replacement tenant. But until one is found, you will be responsible for paying the rent under the terms of the lease.

I think you need to make a point that youa re running a business and, as such, have to maintain the profitability of that business. This can't be made a psersonal matter.

this8384 · Dec 23, 2008, 10:28 AM

Not sure of laws in your state so I'll quote mine here in WI. When a tenant breaks the lease early, the landlord is required to make reasonable attempts to re-rent the property. If reasonable attemps are made and the landlord is unable to rerent the property, then the original tenant is required to pay rent for the remaining months of the lease term.

AustinLandlord · Dec 23, 2008, 10:59 AM

Thanks for the replies! I think that wording from ScottGem sounds reasonable. I need to keep the acknowledgment that they're going to break the lease business-like, and firm, but not so firm that they decide: "we'll trash this house, and then see what he says"

Re the 85% fee: the early termination clause states that "If the landlord agrees to an early termination the landlord may, but is not obligated to, procure the subletter, assignee, or replacement tenant...regardless of who procures the replacement tenant, the tenants are responsible for all actual costs of reletting" and then in a "Special Provisions" section it says: Re Para. Xx section B: "actual costs of reletting include an 85% of one month's rent reletting fee" As I read it, I can help search for a replacement, but the burden of finding a replacement tenant is on the current tenant. If no new tenant is located, then I am not forced to cancel the lease. If a new tenant is located, then the current tenant pays all actual costs (including the 85% fee). The 85% fee is to cover the cost of a rental management company.

Maybe you guys know this part well: If the tenants abandon the property (move out before the lease ends on July 1), then (I think?) all rent becomes due at that moment--for the full remaining 5 months of the lease. If they fail to pay this, then I give them notice that they're behind. If they still don't pay... I nail and mail the notice that the property was abandoned (?) and then the burden is on the landlord to "mitigate their losses" by making reasonable attempts to locate a replacement tenant. I also have to go to small claims court, file there, contact credit reporting firms, and hope that I can prevail (no reason I shouldn't... ) and garnish wages to recoup the missing rent payments, plus legal fees (stated in the lease).

I'm confident I can find a tenant--but not during the week of Christmas! We gave these tenants a significant discount for a 2-year lease, and look where it got us. When I was a renter I never even thought of breaking the lease and abandoning the property.

If I suspect that the tenant will abandon the property, is there anything I can do to pro-actively prevent, or mitigate my losses (other than an all-out search for a new tenant, which is what I'm doing now)? Is there any tool for hedging against their (likely) abandonment?

Thanks

this8384 · Dec 23, 2008, 11:07 AM

As far as I'm aware, you can't demand rent in advance. You have to continue to attempt to rent the property for the remainder of the lease; if you find a new tenant, then the original tenant is released from their obligation to pay for the remainder of their lease.

ScottGem · Dec 23, 2008, 07:33 PM

I agree with This8384, You have to wait until you find a tenant or the lease expires.

I also wouldn't worry about them trashing the place. I assume you know where they are moving to and I doubt if they are going to want to get involved in litigation while they are trying to buy a house.

AustinLandlord · Dec 24, 2008, 10:31 AM

I drafted the letter, saying: Congrats on your new home. I hope you enjoy living there. As your landlord, I have to remind you that giving me notice of your intent to vacate does not alter any of the terms of our present lease agreement. Until I cancel the lease, you must continue paying the rent until the end of the lease. We're both making good faith efforts to locate a suitable replacement tenant, but until one is found, I expect us both to adhere to the terms and conditions of the lease. Abandoning the property, or any other breach of the lease, would carry serious legal and financial consequences. Neither of us wants that.

That's interesting about not being able to collect the rent for the entire lease term at the time the tenant abandons the property... I could have sworn the lease says that "once tenant abandons property, all rent for remaining full term of lease is due..." But I could be wrong.

ScottGem · Dec 24, 2008, 02:23 PM

Originally Posted by AustinLandlord

That's interesting about not being able to collect the rent for the entire lease term at the time the tenant abandons the property...I could have sworn the lease says that "once tenant abandons property, all rent for remaining full term of lease is due..." But I could be wrong.

The problem is a lease can't supercede state law. Most states have laws that say a landlord can't double dip. Meaning they can't collect from the previous tenant and the new tenant for the same time. So if you sue the tenant for the balance of the lease (5 months) and then get a new tenant in one month, that would be double dipping.

Good letter by the way.

AustinLandlord · Dec 25, 2008, 09:39 PM

ScottGem,

I see what you're saying about double-dipping being out of bounds. The way my lease is written, I believe it says that the full 5 months (or whatever) of rent is due as soon as tenant "abandons the property." Then, the landlord has to make reasonable effort to re-let the property under terms that are not less favorable than existing lease, and if any money is collected, landlord returns it to the original tenant. I'll have to re-read (for the 10th time) and see if this is true.

ScottGem · Dec 26, 2008, 07:14 AM

That may be a way around the legal restrictions.

this8384 · Dec 26, 2008, 09:11 AM

Even though your lease includes that statement about abandonment, you may want to check your state law before asking for rent in advance, as certain things are prohibited from being written into a lease. For example, in Wisconsin, landlords are prohibited from including eviction as part of the lease - I can't throw them out myself, even if the tenant agrees to it; I have to file in court before I can evict them.

And technically, the tenant isn't "abandoning" anything; they gave you notification of their intent to vacate. In my opinion, abandonment would be if you showed up to collect rent and found the premises empty.