Dear Patty - Broken Lease
Friday, October 5, 2012
One of my tenants signed a one-year lease three months ago. He just called the office and told me he’s leaving town today for "personal reasons” and won’t be returning. What do I do? I mean, his lease is a legal document, right?
---Tenantless in Bithlo
There’s no joy in a tenant’s failure to fulfill their entire lease term (regardless of the reason), but it does happen from time to time. Tenants might bounce out on you for a number of reasons: a job loss that renders them unable to pay rent, a job transfer to another city, general unhappiness with the property or the area (or even you), etc. That’s the bad news. The good news is that a solid lease agreement that clearly defines both tenants’ penalties and landlords’ remedies can lessen the pain a bit.
When your company decides on a lease to use, ensure that it is keeping with Florida Statutes 83, which governs residential tenancies. Ensure that you stay current on the statute, and ensure that your lease remains in compliance with it should it be changed in any way. That’s important to remember because the statute includes a portion that specifically addresses remedies landlords are able to seek in these cases.
There are two typical courses of action when dealing with broken leases, one where the tenants pay early termination fees and/or liquidated damages and the other where the tenants decline to do so and remain liable for any and all charges until you place a new tenant in the property. You must ensure that your tenants’ lease includes clauses explaining these choices to them, and you must ensure each of your tenants has indicated which course of action they prefer at initial lease signing.
Early termination fees/liquidated damage charges allow tenants to pay a dollar amount (not to exceed the value of two months’ rent) to completely satisfy any funds due to you for their breaking the lease. In not selecting the early termination fees/liquidated damages option, the tenants remain liable for monthly rent charges, advertising, and various other costs until you have secured a new tenant. With that said, the statutes require that you act in "good faith” and try to get a new tenant as soon as possible.
Is it ever a great thing when a tenant breaks their lease? No. But if you stay abreast of the Florida Statutes, use a lease that conforms to the statutes, and enforce your lease’s provisions consistently and honestly, you can keep it from being a terrible thing.
"Patty the Property Manager” appears courtesy of the ORRA Property Management Subcommittee. Readers are invited to submit property management related questions to Patty by sending an e-mail to firstname.lastname@example.org.
The ORRA Property Management Subcommittee provides this property-management advice column as a service to ORRA members. The column is intended to provide a general understanding, not as a substitute for individual legal consultation. The column should not be relied upon in specific situations without consulting a real estate attorney.