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What penalties do you enforce when tenant breaks lease early?

Discussion in 'Real Estate Investing' started by GetRichODT, Jun 10, 2018.

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  1. GetRichODT
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    GetRichODT Contributor Read Millionaire Fastlane FASTLANE INSIDER

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    I have a 60 day notice on my leases.

    I have a tenant that on March 20th, 2018 informed me they would be breaking their lease early.

    The lease was signed through 8/25/2018

    They will be moving out June 17th.

    Monthly rent is $1,400 and security deposit is $1,400.

    Given this scenario, I have 3 main questions:

    1) How much do you charge your tenants for June on June 1st? (remember they are moving out June 17th)

    2) Do you keep the full security deposit (i.e. 1 months rent in this scenario)

    3) For any clean up, carpet cleaning, etc for the turnover for the next tenant, do you simply cover those costs from the security deposit you keep?
     
  2. jon.a
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    jon.a Legendary Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    You have to look up your own state laws, they vary.
     
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  3. Nomadic
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    Nomadic Contributor

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    Why not just make your lease legally binding until the date in which the lease was signed? Property management is my slowlane job and our lease is legally binding for an entire year. Only way to cop out early is to find a sublet/re-let to take over the rest of your lease.

    I would let them know that since they are moving out earlier than the agreed date, you will be keeping that months worth of rent security deposit. Inform them that still comes out cheaper than if they were to move out on the assigned date and that they technically would still owe another months rent but you will let them off of the hook for it. Which isn't a lie. They are actually still supposed to owe July and majority of August. They should be thanking you for letting them off the hook for that.

    Like mentioned above, check your state laws since they can vary so greatly before taking ANY action. But if law allows it, I would keep that security deposit. Which, I don't know of any law that says its not up to the discretion of the landlord whether or not you can keep the security deposit.
     
  4. Nomadic
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    Nomadic Contributor

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    As for turn costs for the next tenant, absolutely pay for that with the security deposit. That is what it is for.
     

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