An occupied property and a consistent cash flow are the goals of every rental property investor in Merced. However, if your tenant decides to break the lease before the contract ends, you have many questions like the reason for this abrupt termination, your potential recovery cost, whether you can hold on to the security deposit, and so on.
Here are some tips to help you with this unexpected contract termination, based on our tried and tested experiences as property managers in Merced.
Find Out the Reason for Early Termination of Lease
There are several genuine reasons why the tenant might not be able to continue living in your property. In case of a valid reason, you will need to let your renters go without any legal repercussions. However, in each scenario, they are expected to provide you with a written notice informing their intent to vacate the property at least 30 days in advance. Some of the reasons are:
If tenants lose their job, they are likely going to struggle to pay the rent on time due to limited or no sources of income. This invalidates your selection criteria considered during the tenant screening process and may lead to termination. In such situations, you should simply allow the tenant to move out without causing any trouble, considering the amount of stress they must already be facing.
- Military Deployment or Job Transfer
The Service-members Civil Relief Act allows citizens working in the military the option to break the lease early if they are deployed. The people working for the National Guard, the US Public Health Services, armed forces, and the National Oceanic and Atmospheric Administration (NOAA) are given this privilege. Alternatively, if a person has to transfer to a different city away from Merced for their work, that is a legitimate cause for termination of lease as well.
If your tenant or any of their family members are sick, they might need to suddenly move out. Some other unforeseen situations that would compel them to break the lease early are sudden death in the family and serious accidents or injuries.
- Domestic Violence or Sexual Assault
The California State law allows the tenant to break the lease early if they or their family member (who might or might not be living with them in your rental home) are a victim of domestic violence or sexual assault.
If the tenants are going through a divorce or separation, they want to leave home.
- Lack of Safety and Privacy
This happens only in the direst circumstances, but if you fail to offer habitable living space, are overly intrusive, or your rental home lacks essential services such as hot water, safe drinking water, heat, electricity, and operational appliances, the tenant would find it difficult to live there and can ask to break the agreement. The renters may also break the lease if they feel unsafe or if the owner is invading their privacy.
Include an Early Termination Clause in Your Lease Agreement
If your lease agreement includes an early termination clause, the renter can break the lease before the contract tenure ends. However, this clause needs to clearly specify the legal repercussions of breaking the lease. Mention the situations in which the renter can be permitted to break the lease and the penalty you will be charging for the same. Also mention the procedure to be followed in the case of an abrupt exit, such as,
- The tenant must give a written and signed notice at least 30 days before vacating the home
- The tenant must pay the early termination penalty fees, which cannot be more than two months’ rent
Dealing with the Security Deposit
The security deposit is given by the tenant and is supposed to be used for any damages or necessary repairs to be done in your rental home. If the renter follows all the right procedures while terminating the lease, you are obligated to repay the security deposit in full, provided there are no damages to the property.
You cannot keep the security deposit for any reason apart from the ones mentioned in the lease, as it can turn into a legal battle and you will not be able to claim the early termination fees.
Every lease termination case is different and may require to be dealt with differently. Therefore, it is beneficial to have a trusted property management company, like River Drive Properties, by your side who can guide you through the process and ensure that you do not lose out on your rightful rental payments. Contact us at River Drive Properties for more advice about how to proceed when your tenant wants to prematurely end the lease.