Landlords have significant risks they must deal with when they lease rental property that they own. Landlords normally own the building they are leasing out and pay the mortgage payments using proceeds from the collected rents. In order to better protect themselves, a majority of landlords draft carefully worded leases in which the terms of the agreement, the amount of the security deposit and the duration of the lease are all outlined. When a tenant breaks a lease by leaving early, it is important for landlords to understand what their rights are and then to proceed accordingly.
What happens if a tenant breaks a lease and leaves early?
If you are a landlord who rents multiple properties, it is only a matter of time before one of your tenants will break a lease. While they may do this by violating any of the stipulations contained in the document, the most common way tenants break a lease is by leaving early. Some may do so without notice, disappearing without a forwarding address. Others may have job transfers that require them to move. There are several things you must do after the tenant leaves before the lease expiration date.
1. How soon can you re-rent?
As soon as you know that your tenant has broken their lease, you not only can start looking for a new tenant but in many states, it is your duty to take reasonable steps to find a suitable replacement tenant. This does not mean that you have to go out of your way to re-rent the property. You should advertise the space and take the time to show it. If you find a new tenant who meets your credit and background requirements, you are free to lease it to them. If you are unable to find a new tenant who is suitable, you have the right to file a lawsuit against the tenant who broke the lease for the remaining rent. You are also able to require them to pay rent until you find a replacement tenant as well as the costs you incur for advertising the space. If you do not take reasonable steps, you will likely be unable to recover the amount owed by your former tenant.
2. Can you use a security deposit to cover the remainder of the lease term?
In a majority of states, unless your lease states otherwise, the security deposit your tenant pays may be used to pay for damages he or she causes to the property. You will have a set period of time, ranging from 10 to 30 days, to provide your tenant with an itemized listing of damages and their costs that you are subtracting from the security deposit. If you contain a clause in your lease that the security deposit may be held to pay unpaid rent, you can keep all or part of it, depending on the amount that is owed to you and when you re-rent the property.
Because the states recognize the risk that landlords take when they rent out their property, protections are in place to protect them when tenants violate their lease agreements. Making sure that you take reasonable steps to re-lease the property and send an itemized list of damages that will be deducted from their security deposits is important. You may also want to include a clause in your lease that security deposits may be applied to unpaid portions of rent if they leave early. If you are unable to find a suitable tenant to replace your former one, you have the right to file a lawsuit and seek the balance of the contract.