Landlords

6 Valid Reasons Why Landlord Can Break the Lease

As a landlord your aim is always to have your rental property tenanted for as much time as possible. However there will be occasions when you need to serve notice on your tenants.

Most contracts will offer favourable conditions for breaking the lease to tenants and will make it difficult for landlords to simply serve notice on tenants. There are reasons that you are able to terminate the lease that will be noted by law in your contract but there may also be reasons that you need the property back for that are not mentioned in the lease.

In this article we will discuss what you can terminate the agreement for and also what and how you can go about getting possession of the property back should you need to.

Valid Reasons

The law in most states offers you a number of reasons that you are able to terminate the agreement with the tenants for. These reasons tend to be available to landlords who have suffered some form of wrong at the hands of the tenants and gives you the right to regain possession of your property. Sometimes this will be in the form of an eviction order.

Rent Arrears

Rent arrears or failure to pay rent is a valid reason in most countries and often gives a very clear reason for terminating a lease. Most states will have specific criteria and processes you must go through to claim your property back due to unpaid rent.

Laws relating to the amount of unpaid rent that you are owed or the length of time that the tenants have been in arrears make it easy to understand whether your claim to terminate the lease due to unpaid rent will be successful.

It is likely that your tenants will need to be two clear months in arrears before you can start eviction proceedings and it is worth pointing out that even part payment of rent at this stage can send the eviction proceedings all the way back to the beginning.

Once your tenants fall into substantial rent arrears it may be worth broaching the idea of terminating the agreement with them and seeing if you can avoid a legal eviction by simply negotiating to cover the missing rent through their deposit and them vacating the property.

This may not be an option that is available to you if you are aware of them causing significant damage at the property that needs to be covered by the deposit or if you are in a lease that does not have a deposit.

Find out what your legal rights are in relation to rent arrears and be prepared to take your tenants to court if needed to regain possession of the property. Be prepared that evictions are often a lengthy and costly process so it may be better to try to negotiate a break in the lease that leaves you suitably compensated without having to go through the courts.

Additional Tenants

Should your tenants move additional people into your property without you’re permission you may have grounds to serve notice on them and terminate your agreement.

The contract for the property must be in the name of the individuals living at the property and should explain whether or not additional tenants are allowed. My advice would always be to make it impossible for tenants to have the right to just add additional tenants without your permission.

Ensure that you keep the legal right to refuse any additional occupants and that you retain the right to terminate the agreement should the tenants violate this part of the contract.

Pets

Most landlords will try to avoid pets at their properties. Pets can cause damage and can lead to pest infestations. Both undesirable outcomes of a tenancy. Ensure that the tenancy agreement mentions whether or not pets are allowed and makes a point of stating that you must give permission to keep a pet a the property.

Should your tenants ignore this and keep a pet at the address ensure that your lease gives you the right to terminate the agreement in the event that the tenants violate the pet clause.

As with additional occupants you may wish to give the tenants the option of moving the pet out of the property, perhaps to a friend or family member. When carrying out inspections ensure that you or your property manager look for signs of pets at the property that the tenants have forgotten to hide.

Disturbance or Nuisance

Be it late night parties or loud arguments, noisy and problematic tenants can cause you to suffer complaints from neighbours or building managers. Ensure that your lease makes allowances for problem tenants and makes clear what they are allowed to do.

City and State laws often define what noise pollution is and will have rules in place to charge landlords of problem addresses. If the tenant’s behaviour is affecting you in this way you will need to have allowances in the agreement to terminate the tenancy.

In addition to noise disturbances tenants that are engaging in criminal activities at your address will need to be dealt with. Most states will give landlords the right to terminate agreements with tenants that are engaging in drug taking, prostitution or illegal gambling at your property.

Ensure that you make police reports and have evidence to back up any termination claims you have in relation to noise or crimal disturbances. It often pays to give the tenants the opportunity to correct their behaviour after the first report and then make a claim to terminate the agreement should their negative behaviour continue.

Other Reasons

On top of the completely legal reasons you have to break a lease there may be times when you need possession of the property that fall outside of the more valid termination reasons.

Selling

You may find yourself in a financial situation which requires the sale of your property or you may simply wish to free up some funds and cash in on a strong property market.

As the legal owner of the property you are obviously well within your rights to sell the property but you may find that the lease does not allow you to sell from under the tenants.

You may have the option to sell to a fellow investor who will view having readymade tenants as a positive, but if you wish to sell with vacant possession you will need to negotiate a lease break with your tenants.

You may be able to offer them compensation, perhaps you are prepared to guarantee that they will get their deposit back or are happy to give them the final month’s rent free to make it easier for them to fund new accommodation.

Should you choose to sell aim to give the tenants as much notice as possible to allow them the best chance to find a replacement home. Most tenants will understand your situation and it should be fairly simple for you to come to an agreement.

Once you have reached an agreement have a surrender document drawn up detailing what has been agreed and when you will be able to take back the property. This should be signed by both you and the tenants. If using a broker it may be best to have them mediate the situation and draw up the surrender document.

If you feel you may wish to sell the property at some point in the lease it pays to add a clause to the agreement stating what you offer the tenants in terms of notice should you wish to sell. This helps as it avoids any doubt when you do come to sell and lets the tenants know what will happen if you choose to sell.

Moving Back In

You may be going through a life altering event such as divorce and therefore need the property for yourself or you may have a family member or friend that needs the property.

As such it is likely that you will have to negotiate a tenancy break with your tenants. Inform your tenants at the earliest possible time and discuss the issue with them. As with selling aim to reach an agreement on compensation and when you expect to take the property back.

Have your agreement documented in a surrender document and have this signed by all parties. Once you have come to some sort of agreement ensure that you stick to it. Aim to help your tenants vacate the property in a smooth manner by trying to avoid causing them problems with future rentals. Perhaps offer to give them a glowing reference as well as returning their deposit swiftly thus making it easier from them to find a replacement home.

How to Break a Lease

When dealing with a reason that falls outside of what the law would consider valid you will have to work with your tenants to come to an agreement and have them vacate the property. In this section we will look at what you can do to come to an amicable end for the tenancy.

Clause in the Contract

Try to make your life easier by having a few clauses added to the agreement that you feel may be suitable for your need to terminate the lease. Perhaps you could pre-agree some form of compensation with the tenants that relates to your desire to sell the property.

Another option may be to give a date after which you are able to serve notice for a number of reasons. This pre-agreed “Break Clause” gives you the right to terminate the agreement for a number of agreed reasons. This is particularly helpful when you wish to sell the property but are not sure at which point you intend to sell.

Negotiate

As soon as you realise you are going to have to serve notice on your tenants you will need to reach out to them and negotiate a break of tenancy that is beneficial for all parties.

Come to the table with something to offer, perhaps a free month’s rent or letting them off cleaning the property at the end of the tenancy. Also consider guaranteeing the return of their deposit if you are confident that the property is in good condition.

If you do not feel comfortable dealing with the tenants directly have your broker or property manager do this on your behalf. It is likely that they have had to deal with this before and will be better suited to handling what can sometimes be a difficult situation.

Monthly Lease

If you are keen to keep an element of flexibility in your rental lease perhaps you could look at entering into a monthly lease. This is a lease that runs month to month and can be terminated very simply with a months notice.

If you feel that you wish to sell or are going through some life issues it may be a good idea to preempt this and give yourself the flexibility that a monthly lease offers you.

The negatives of this are of course that your tenants can also serve notice on you at any point. This means that you may find yourself without tenants at very short notice. Something that most landlords would consider too much of a risk to enter into.

Conclusion

Laws that relate to problematic tenants offer you the ability to terminate your agreement relatively easily. Albeit with the hassle of eviction proceedings in some circumstances.

However the ability to break the lease outside of these valid reasons is difficult, but if you be open and honest with your tenants you may find them surprisingly accommodating.

Be sure to offer them compensation and look to make their move as smooth as possible. Avoid getting into confrontational arguments and look to keep an admittedly difficult situation professional at all times.

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