Tenant wants to break lease

[Morbius]

Really? I have been gipped all these years!
I've asked about breaking contracts before. The agent told me to find a new tenant myself.

The agent was being nice. The cheapest way out for the tenant would be to find a new tenant to take over immediately after they left.

On the topic of breaking leases, do you have renovation work you want to get done? In the past I have released tenants from the obligations of lease-break costs if they allow me to (for example) paint and recarpet during the last month of their stay. Your tenant has at least been up-front and given you plenty of notice, and as you say, Jan/Feb is a better time to be looking for tenants than May, when you'd have the expense of finding a new tenant as well as perhaps a week or two downtime for renovations. It can be win/win.

 

[Morbius]

But alot of tenants stop paying rent for their last month, leaving you with no bond.

I had a guy do that to me once. He's on TICA now. Abandoning a property with rental arrears means you have no comeback on this in Qld, and it cost me nothing to get him listed. It is worth doing. My PM said that she has had people come back up to 3 years later to pay their arrears because it is the only way they can get off TICA.

 

[GreenGoblin]

Seems like my question has led to a fair bit of debate and learning for many - good! This way many of us learn something. Thank you everyone who provided advice or asked further questions. There are some really good answers here. I'll discuss with my wife and we'll come up with a proposal to take to the tenants.

Much appreciated,
GG

 

[GreenGoblin]

So, an update. I spoke to our tenant yesterday about breaking the lease and advised them they'd need to cover our pro-rata reletting fee, advertising costs and rent until we find a new tenant. He wasn't happy with this as he felt they'd want to move out sometime in Feb 2015 and didn't want to have to pay rent for an extended period if it took us a long time to find a new tenant. He said he'd prefer to pay up to two months rent so he knew how much money he'd be up for.

Our tenants have rented from us for about 7 years. We have a working relationship, though they are almost always late with the rent by at least a week, paying it in two installments at the end of week 1 and 2 (or so) each month.

If they move out in February, I have my doubts that they'd pay the two months rent he offered, coming on the back of Christmas expenses, a January holiday they're taking, the bond on their new rental property and any up-front rent. Also, once they've moved out, how could we ensure they actually pay what they've promised (even if they've signed an agreement in writing)?

Given this, I'm reluctant to agree to their offer, meaning they're likely to just stay until the end of the lease (end May). They won't be happy with this, so I'm also a little concerned about them just doing a runner/damaging the property prior to moving out.

What are your thoughts?

 

[wylie]

They pay late, you are worried they will skip anyway or not pay the last few weeks.

If this was me, I would try to minimise any loss to "me". That could mean allowing them to move when it suits them and you. If they are going away in January, maybe ask them "when do you want to leave?".

Perhaps they will meet you half way and give you two weeks' notice of their leaving date and allow you twice weekly inspections to show prospective tenants.

You can stick to the rules (which is fine) and risk them doing the wrong thing, or try to meet them half way and have them cooperate with you. We've always tried our best to work "with" tenants who are wanting to leave and turn the situation around to meet our needs as well.

 

[S.T]

So, an update. I spoke to our tenant yesterday about breaking the lease and advised them they'd need to cover our pro-rata reletting fee, advertising costs and rent until we find a new tenant.

re-letting fee? Do you self manage or is this through an agent? If it's through an agent why are you dealing with it? If you're concerned about them damaging the property this is why you pay for landlord insurance.

 

[GreenGoblin]

re-letting fee? Do you self manage or is this through an agent? If it's through an agent why are you dealing with it? If you're concerned about them damaging the property this is why you pay for landlord insurance.

We self-manage, but always engage a PM to find and place a tenant for us.

 

[jim1964]

You can stick to the rules (which is fine) and risk them doing the wrong thing

And i guarantee you they will!! Take control and move them on ASAP.

 

[perthguy]

A break lease/re-let situation worked out great for my parents when the previous tenant was on below market rent in a rising market. The old tenant left and the new tenant moved in at a higher rent with no gap in between. So it can work out in favour of the owner.

In your case, you have a lot of notice which will enable you to advertise and hopefully find a new tenant before the current tenant moves out. Personally, I wouldn't be too hard on the current tenants just in case.

I hope it works out well for you.

 

[Moyston]

a few things...we rent and had a look at our lease...and we are in wheelers hill...it clearly states and I know it is allowed, it says in my lease through Ray White and is when you break a lease.

- Tenant is responsible for rent until the date that a new tenant occupies the property.
- Tenant must pay all reletting costs to the Agency
- Tenant is also required to pay $250 advertising costs.

This through an Agent... if you do it yourself and you have not included it in your lease, you cant ask him to pay..they can leave when they want...

Insurance does not cover you for loss of rent when the tenant provides you with a termination date, so you cant claim loss of rent.

I know..Im a loss adjuster and travel around looking at damaged properties by tenants and rent claims...

I also point out..make sure you read your Landlord Insurance policy...if the tenant damages your place, you are not covered for it unless it is deemed malicious...see above point on why i know...

All depends on your policy, and if you have an accidental policy or a standard landlord policy....ohhh so many stories!..lol

Just come from one today...tenats decided to turn it into a meth lab and installs an alram and wires all over the place...you are not covered for this...its not malicious...so be careful and dont just pay for the cheapest..

 

[thatbum]

This through an Agent... if you do it yourself and you have not included it in your lease, you cant ask him to pay..they can leave when they want...

Yeah this isn't true at all.

 

[property_girl]

In these situations, I find it easier to be flexible. Sure, you are right--they SHOULD pay for reletting fees etc. But laying down the law can make the tenant cranky and recalcitrant, less likely to play nice and more likely to try to gip you.

I would ask them when they want to leave and just ensure that you get about six to eight weeks notice so that you have plenty of time to find a new tenant.

I don't like grumpy and unhappy tenants. If they want to go, the sooner the better in my view.

 

[Sez]

They sound a bit wishy washy with when they would like to leave. Perhaps ask them for 28 days notice when they want to move out and an extra 2 weeks rent to cover your costs. Then, you can start advertising the property and hopefully get a tenant in within the 6 weeks rent paid time you have. They should be happy as it's less cost for them, you still have the bond with the RTBA until you release it so you can cover yourself there and they will be happier which will reduce your risk of them doing the wrong thing .