In an ideal world, all of your rental units would be fully rented all the time with great tenants. Every landlord knows that vacant units can be a challenge to a rental portfolio. While lease agreements designate rental terms for a set period of time, unfortunately, tenants can have changes that occur in their lives or marital status that can lead them to leave the unit early. If a tenant vacates before their lease has ended, then this is termed “breaking the lease.” There are several reasons that a tenant can leave a place without financial consequences, and there are things that you can do as a landlord to help replace the lost income.
Reasons a Tenant Can Break Their Lease Without Repercussions
1. Active Military Duty
Under the Servicemembers Civil Relief Act, a tenant can terminate their lease early when they are called up to active military duty. Typically, this includes when they are stationed more than 50 miles away from the rental unit. A tenant must deliver notice that they are leaving early, and this notice usually should be given 30 days before departure.
2. Domestic Abuse
In Minnesota, special provision has been made for tenants and their dependents who suffer from or are threatened by domestic violence to obtain an early release from a lease. There should also be documentation of certain conditions, such as the tenant procuring an order of protection.
3. Unsafe or Uninhabitable Conditions of the Rental Unit
Your rental property must be habitable and safe for the tenant to occupy. If your unit fails to comply with these standards, then a tenant is legally able to break the lease early and seek better accommodations. This can be considered a “constructive eviction” in a court of law. Be sure that your unit is in good working order and complies with Minnesota health and safety codes. Check that the roof is free of leaks, the utilities work effectively, the stairs are safe, and resolve any pest infestations.
4. Landlord Violation of Privacy
A lease agreement outlines the conditions of the tenant’s use of the rental property, and a tenant is entitled to privacy rights during their time in your unit. If you intrude upon their privacy, they can send you a “notice to remedy or quit” that requests that you stop showing up unannounced or they can leave. They are allowed to break the lease without monetary compensation if things do not change.
What You Can Do When a Tenant is Breaking a Lease
1. Obligation to Find a New Tenant
In most states, landlords are required to find a new tenant for the rest of the lease instead of demanding that the initial tenant pay for the entire lease. This is called “mitigating damages.” However, in Minnesota, property owners are not obligated to mitigate damages, and the tenant can be held responsible for the entire length of the lease. In some cases, the tenant may also cover the cost of advertising for a new tenant and showing the unit to potential tenants.
2. Have the Tenant Pay an Early Termination Fee
In some areas, you can offer the tenant an early termination fee to help you recoup the cost of lost rent while you search for a new tenant. This often amounts to the cost of two to three months of rent. You can often keep the security deposit for at least one month of the rent owed for breaking the rental contract.
3. Ask Your Tenant for Help
If your tenant is leaving on good terms, they may be able to recommend a friend or colleague with good credit and references to sublease or take over the remainder of the lease. Please practice proper due diligence when exercising this option, but you may be able to get the unit rented quickly this way.
4. Allow Them to Break the Lease Gracefully
In certain situations, you may consider allowing the tenant to terminate their lease agreement early without pursuing further legal action or monetary compensation. In the event that your tenant loses their job, you may wish to allow them to leave since they no longer satisfy your initial criteria for finding a tenant. If your tenants develop a serious illness or go through a divorce, you might prefer to let them go without adding additional financial hardship. A long-distance job transfer may also be a reason to allow your tenant to go without repercussions.
5. Consider Legal Action
Finally, you may need to pursue legal action to encourage the tenant to pay the lost rent. Talk to your attorney further to explore your legal rights in your particular situation. Be sure that you have good documentation of your property in case the tenant claims one of the four reasons listed above for breaking a lease. Keep meticulous maintenance records and have photographic evidence of the state of the unit.
Resolving a Broken Lease
Which path you take can depend on the reasons that your tenant is breaking the lease and your situation. When a tenant leaves early, there are several options available to you to make the best of the situation and to reduce your risk of lost income.