Read this to understand when you can legally break a lease agreement.
Even before the pandemic, landlords filed 3.6 million eviction cases on average in the U.S. each year. The process is emotional and difficult for everyone involved, but there are circumstances for which you as a landlord will have to break a lease agreement early.
If you’ve got a month-to-month lease agreement, either party can terminate at any time with proper notification, at a minimum of 30 days. But if you’ve got a fixed-term lease agreement with a tenant, such as a one-year lease, you can’t break the lease mid-way through on a whim.
When can you legally terminate a lease agreement early?
Breaking a lease agreement with cause
You’ve got a lease agreement that’s legally binding that the tenant signed before moving in. If that tenant violates the lease agreement by having an unapproved roommate, unauthorized pet, unpaid rent, has caused major damage or conducted illegal activities, you have every right to terminate their lease “with cause.”
In this instance, you would send your tenant a “cure or quit” notice. Either they “cure” the problem by paying rent owed, for example, or they “quit” the property. You can even send an “unconditional” quit notice if the issue at hand isn’t cured. For example, if the tenant alters or damages part of the property without your consent and there’s no way to fix the problem. Check your state laws on these types of lease terminations.
Can a landlord break a lease agreement without cause?
You can do so but you must include the reasons for this kind of early termination in the tenant’s lease agreement. If it’s not in the agreement, you can’t just force a tenant out on a whim.
Add a clause to your lease agreement that allows you to break a lease with 30- or 60-days’ notice so the tenant has time to find another place to live. Work with an attorney to make sure the language is accurate. Be upfront and clear in your language and point it out to the tenant at signing. There’s no reason to hide your intentions. If you know well in advance that you may have to break the lease, sign a month-to-month lease.
Reasons to break the lease early
There are certain circumstances under which you can break a lease, including:
1. You want to sell the property
You can sell whenever you want, but you must have a clause in the lease agreement in order to terminate the lease legally. Lease contracts will transfer along with the property and the new owner has to abide by them. Some buyers want properties that are already tenanted.
Decide if you want the tenants on the property during the sales process or if you want them out before putting the property on the market. Also, check whether your state requires you to offer existing tenants the first right of refusal.
You want to keep your tenants happy if they’re staying on the premises. And they do have some legal rights, including 24-hour notice of showings, the right to stay during a showing and the transfer of their security deposit to the new owner once the property sells.
2. You need to renovate the property
As a landlord, you must keep your property safe and habitable. If you need full access to the property in order to renovate and remodel to keep your property in good condition, you can terminate a lease. If the upgrades are going to cause health and safety issues, you can terminate a lease early. Again, you must have a clause in the lease agreement in order to terminate the lease legally.
3. You need to move into the rental space
If you’re renting out a house, for example, and you need to move back in, you can legally terminate the lease early.
How to terminate a lease
There are a few steps you must follow to legally end a lease to avoid a tenant possibly filing a claim in court.
Send a notice to the tenant letting them know that you’re terminating their lease. Check your state laws on how to write and deliver this termination notice. There are specific requirements for doing this.
Depending on the reasons you’re giving this notice, it may state the tenant’s transgression and warn them that they must vacate the property or face eviction. Or, you might give the tenant a few days to act on fixing whatever they did wrong, e.g., find a new home for their unauthorized pet or pay any rent owed. Again, check your state laws.
If the tenant doesn’t comply with the notice, you may have to file an eviction lawsuit.
When a landlord is not allowed to break the lease early
The bottom line is if you haven’t included a clause in your lease that you may terminate the lease early, you can’t just go ahead and do so. And your state may have a list of circumstances under which you’re restricted from ending a lease early. For example, there are usually rules around breaking the lease on a rent-controlled apartment.
You may just have to wait
Nobody likes the eviction process, and you don’t want to end up in court. But sometimes, you must remove a tenant. If it’s possible, your best bet is to wait until lease renewal time and not renew the lease. Depending on your state laws, you may need to give 30- to 60-days’ notice on non-renewal.
If you didn’t have an early termination clause in your lease agreement, but you need your tenant to move out, you can pay them, a.k.a., offering cash for keys. You give a tenant enough money to cover their moving costs and a deposit on another place they might rent.
Always be open and communicative with your tenants for the best outcome. In all cases, if you’re a property manager or landlord and you need to break a lease agreement, check your state laws and get an attorney’s input.
Source: rent.com