What can a landlord do when a tenant tries to break their lease by leaving early?
This is a common problem for landlords. Sometimes, tenants don’t understand that a 12 month lease means they’re legally obligated to pay their rent for 12 months. So, they decide to move out. Your cash flow disappears and you have to spend months fixing up the property and finding a new tenant. Is there anything you can do to protect your real estate investment?
Yes! As a landlord, you have several options. Consider the following ideas:
Remind the Tenant of Your Rights As a Landlord
Contracts are a huge part of real estate investing. For long-term success as a landlord, you need a quality lease agreement that clearly explains the contractual obligations of the tenant. It needs provisions for late payments, missed payments, and breaking the lease, explaining the rights of the landlord and the consequences of breaking the contract. For example, in the event of a tenant breaching their contract, the landlord usually has the right to:
- Charge a late penalty for missed payments
- Keep the security deposit
- Begin eviction proceedings
- Sue for past-due rent and damages
Write a letter to the tenant explaining how they’ve broken their contract and cite the specific provisions in question. Also explain the consequences, including all of the steps you can take as their landlord. Make it clear to them that it’s nothing personal; you are just trying to protect your real estate investment. Once you’ve written the letter, send it by certified mail and keep the receipt in case you need to go to court.
Sue to Protect Your Real Estate Investment
Going to court is usually a landlord’s last resort for dealing with a tenant, but sometimes it’s necessary. If you notify the tenant of their contractual obligations and they are unable or unwilling to settle up with you, you can ask for a judgment for the rent they owe you. Because the property will be vacant while you find another tenant, you might even ask for restitution of damages. You may not always win, but it’s worth a shot.
Cut Your Losses and Find Another Tenant
Real estate investing is about properties and profit margins, but it’s also about people. You should always consider the tenant’s situation before filing a lawsuit against them. For example, many soldiers are unexpectedly called to duty and have to break their lease agreements. Sometimes, people have a ailing family member and have to move back home. Legally, you may have the right to sue them anyway, but do you really want to?
Your tenant might also run into financial difficulty. If they don’t have any money or assets for you to pursue, it doesn’t make sense for you to file a lawsuit against them. They would probably declare bankruptcy and escape you anyway. So, the best decision might be to let them go and find another tenant as quickly as possible, instead of wasting time and money chasing someone that can’t pay you.