Landlords: How to Handle Early Lease Termination

Whether initiated by you or your tenant, early lease termination must follow the terms and conditions laid out in the lease as well as any applicable laws in your state. Work with a lawyer to minimize the financial impact. As a landlord adding the Home Business Supplement to your Legal Plan gives you the ability to work with a lawyer on this important part of the rental process.

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Learn the laws that govern early lease termination

Did you know that if a renter is called for military service the Service Member Civil Relief Act allows them to terminate their lease?

While leases are legally binding agreements, there are a variety of situations that allow both landlords and tenants to terminate a lease early without any financial or legal penalties. For the long-term success of your real-estate business, it’s important that you understand your rights and responsibilities as a landlord.

Early termination by a tenant

There are federal and state laws that provide reasons tenants can break a lease early without penalty. In other situations, it may be in a landlord’s best interest to let a tenant out of their lease early even if the tenant is not technically allowed to under the law.

Circumstances that allow tenants to terminate early

Although tenants have significant rights in the situations outlined below, they still have certain legal obligations, such as providing proper notice, to terminate a lease early without any financial impact.

  • Military deployment (must provide proper notice)
  • Domestic violence (only allowed in some states)
  • Job transfer (only allowed in some states)
  • Landlord’s failure to provide a safe and habitable rental unit
  • Landlord entering the property unlawfully

Circumstances that do not allow tenants to terminate early

Although there are no laws that let tenants break a lease early for the reasons listed below, if a tenant is in bad shape financially or physically, it may be in your best interest to allow them to break the lease and move on to a new renter, rather than wasting time trying to evict them.

  • Job loss
  • Divorce
  • Illness

Know that landlords have a duty to mitigate damages by making an honest effort to find a new renter, even if a tenant breaks the lease without any legally permissible reason. Regardless of the specific circumstances you’re dealing with, speaking with a provider lawyer can help you sort through your options and create a strategy designed to minimize financial damage, reduce stress and avoid litigation.

Early termination by a landlord

Generally, landlords can legally terminate a lease early, without penalty, in certain situations.

If a tenant violates the lease or breaks other laws that impact your property, you may be able to terminate the lease early. For example, if a tenant fails to pay rent, allows a dog to live in the unit in violation of the lease, causes excessive damage or starts selling drugs out of your unit, you generally have a right to terminate the lease early. If you give proper notice and the tenant does not fix the problem or leave, you would then have grounds for evicting them.

The other situation that allows landlords to break a lease early involves clauses in the lease. For example, if you decide to sell the property or want to move in to the property, you may be able to terminate the lease early. However, you must have written a clause in the lease addressing these situations or you will not be able to break the lease early without cause.

LegalShield’s small business legal plans give you the legal help you need to deal with early lease termination for a price any landlord can afford.

Drafting a Notice to Terminate a Tenancy

In order for early termination to be legally binding, proper notice must be given. The first place to look for the notice requirements is in the lease document. That said, federal and state law often have specific notice requirements that landlords must follow.

  • Generally, even if a tenant has a legally valid reason to terminate a lease early, they must provide at least 30 days written notice. The specific time frame and format of the notice required may be indicated by a federal or state law and/or the lease.
  • Landlords can send a tenant an unconditional quit notice that requires them to leave very quickly (or immediately) if the tenant has repeatedly violated a lease clause, damaged the property or for other specified reasons. Every state has their notice laws to follow.
  • When you have a tenant under a periodic tenancy (i.e., month-to-month or week-to-week), depending on the state, you will generally need to provide either a 30-day or 60-day notice of termination.

The notices referenced above are not a complete list. In order to select the right type of notice for your situation and make sure it’s drafted so as to be legally binding, it’s a good idea get the help of a knowledgeable lawyer. You’ll increase the speed to resolution while decreasing your stress level.

The maximum security deposit a landlord can require

You may be wondering how much of a security deposit the law allows your landlord to require in the first place. The answer depends upon the state in which the rental unit is located. Here are a few examples:

  • Some states limit security deposits to an amount equal to one month’s rent.
  • California limits deposits to 2 month’s rent, unless the rental is furnished, in which case the deposit can be up to 3 months.
  • Some states have no limit on the amount of a security deposit a landlord can request.
  • Cities and counties might have different security deposit laws you need to check, especially if the unit is rent controlled.

If you’re about to sign a lease and have concerns about the security deposit required or questions about any other aspect of the agreement, it’s a good idea to get legal advice. When you join LegalShield, you can be on the phone with an experienced lawyer after your membership is approved and after initial contact. Your membership gets you unlimited legal advice by phone, the ability to submit your lease, help from a lawyer to negotiate your lease terms, and more.

Have a lawyer help you with early termination issues

A lawyer may charge $150-$400 an hour for even basic advice. As such, most people don’t think of calling a lawyer when they have legal questions or need someone to look over a one page 30-day notice of termination and provide feedback. That could be a mistake.

First, using a standard termination notice downloaded from the internet without having a lawyer make sure the document meets the legal requirements in your state can have significant legal and financial implications. Second, LegalShield makes having access to legal assistance from a provider law firm to protect your real estate investments easy and affordable.

Legalshield has flipped the script. There is no longer any reason to try to navigate the challenges of managing rental properties without the help of an experienced lawyer from your provider firm.

Our most popular legal plan for landlords allows you to have your lawyer review your lease (or any other documents starting at up to 15 pages each) and get unlimited legal consultation on all aspects of your rental business. Furthermore, your provider lawyer is available to make calls and write letters on your behalf to help negotiate lease terms or resolve an early termination dispute with a tenant.

How LegalShield works

Finding solutions to your legal issues doesn’t have to be stressful, complicated or expensive. LegalShield puts the power of legal representation within reach of any individual, family, or business. We work hard to make it easy, simple, and affordable to get the legal help you need, when you need it.

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