Incentivizing Tenants to Break a Lease

Posted by Teresa on October 22, 2010 under Eviction, Landlord and Tenant FAQs | icon: commentBe the First to Comment

tenant screening, tenant background checkHave you ever needed to break a lease with a tenant? We’ve heard from a few landlords who did just that, for different reasons:

Nancy rented out her home in Virginia when her husband was transferred to San Jose, CA. Six months later, he was laid off from his job and they returned to their hometown. Financial difficulties kept them from buying another house. Nancy and her husband wanted to move back into their home, but their tenant still had several months left on the one-year lease they signed when they moved.

Jerry rented an apartment above his business to the son of a friend. At first, everything worked out well—but soon, the tenant started paying rent a few days late, didn’t keep the apartment clean, and made way too much noise during Jerry’s business hours. He didn’t want to evict his friend’s son, but realized he made a mistake signing a one-year lease with him.

Steve’s situation was the opposite—he had a tenant who purchased a home and wanted to break the lease three months early. Steve’s first inclination was to say “no” and require the tenant to pay all three months’ rent. But the tenant had been great—never late with rent, quiet and no trouble—and he didn’t want to punish her. He was just concerned about renting the unit again.

Nancy and Jerry handled their problem with the same solution—they incentivized their tenants to voluntarily break the lease. Nancy calculated how much she and her husband were willing to offer before picking up the phone and calling the tenant. She explained the situation, offered to help the tenant find another place to live, and then asked if he would be willing to move out early. He accepted her offer of assistance and cash, and all was well.

Jerry also offered his friend’s son an incentive to move out. He had a talk with him, explained that it wasn’t working out but he didn’t want to evict him, and gave him the rest of the month (about 20 days) in free rent if the tenant agreed to move out. (And Jerry never rented to a friend or a friend’s kid again.)

Steve wanted to end his relationship with his tenant on a good note. He calculated the three months’ rent, inspected the unit and found that it was in good shape, and offered to let the tenant out of the lease in exchange for keeping the security deposit and one month’s rent. She quickly agreed, and recommended the apartment to a co-worker, who signed a lease with Steve soon after.

It is possible to break a lease with a tenant, whether it’s you or the tenant who wants it broken. Usually a little incentive does the trick—but it doesn’t hurt to be reasonable, polite and open-minded! The next time one of your tenants wants to break a lease, think about solutions rather than problems. You might be surprised to see that it can work out for both parties.