By Salvatore Friscia, San Diego Premier Property Management, San Diego, CA
It was just a few months ago when the tenants were in the office signing the one year lease agreement. The leasing agent followed the office procedures and made sure to review the lease terms and obligations prior to asking for binding signatures. Then with the swipe of a pen the property was considered off the market and occupied for the year.
So, it can be somewhat frustrating when two months later you receive the dreaded call from the tenants stating that for some unforeseen reason they need to move out of the property earlier than expected, consequently breaking their lease agreement. As a property management expert, and owner of San Diego Premier Property Management, I’ve had the opportunity to prepare, execute, and negotiate lease agreements for the better part of a decade, and I can say with all honesty that this scenario happens on a regular basis to the most qualified of tenants.
Whether the breach occurs one month or six months into the one year lease agreement it is important to understand that the lease agreement, and the terms agreed upon and signed by both parties constitute a legally binding contract that when breached can carry monetary and legal consequences toward the tenant. With that said, the situation doesn’t have to escalate to a legal issue since it can be mitigated to the benefit of both parties. If the lease has an opt out clause then advise the tenants of the cost associated with that clause and make arrangements to cancel the existing lease agreement in writing. If not then I suggest reminding the tenants that they are legally responsible for the loss of rental proceeds for the remainder of the lease term until the property is re-rented. However, with their willingness and cooperation to assist in finding a replacement tenant they could minimize any potential out of pocket cost and help find a solution that limits rental losses in exchange for an early lease termination.
If the tenant agrees to assist with finding a replacement occupant there are many things they can do that will minimize or completely avoid out of pocket expenses for both parties. Having the existing tenant pay for advertising and marketing of the property (craigslist, newspaper, etc), conduct daily showings, allow easy access for potential applicants, and keep the unit spotless for showings are all ways they can assist with re-renting the property. If the existing tenant is successful in finding a new applicant which meets all of your office criteria and written rental requirements then a solution may have been found.
There is no guarantee for success in this situation but offering the tenants an option that includes paying for advertising and marketing, keeping the property spotless, and even conducting showings with potential applicants might make for a winning solution that minimizes rental proceed losses and allows the tenant to move on without incurring costly fees and blemishes on their credit and rental history.