What To Do If Your Tenant Wants To Break The Lease
Find out how to handle things when a tenant wants to break their lease on your property.
Your tenant wants to break the lease - What happens now?
As a property owner, you know that life can sometimes be unpredictable, your situation can change at a moment's notice and the same goes for your tenant too.
Your tenant may have signed a fixed-term lease, but for whatever reason, they are now breaking their lease early, and you are scrambling to figure out what you should do next. It is not only a little bit of a logistical headache trying to find a replacement, but it can also put you in a tough spot financially if your tenant breaks their lease early.
Never fear, in this article we’ve put together the steps you should take to make sure that you’re doing the best for everyone involved and get the right result.
Where do you stand if your tenant wants to break the lease?
Let’s start with the contract. Lease break terms all depend on the type of lease agreement you have with your tenant as the notice periods and terms are very different.
There are two types of agreements you can have for your tenancy - a fixed-term agreement or a periodic agreement.
Terminating a Periodic agreement
A Periodic tenancy also called a month-to-month or rolling contract, gives both tenants more flexibility than other rental contracts because there's no specific end date.
The downside here is that the tenant is able to end the contract whenever they like as long as they give the required notice which is usually 14 days, depending on the state you are in.
Terminating a Fixed-Term agreement
This is the most common type of agreement for tenancies in Australia. A fixed-term agreement means that your tenant is locked in for a specific amount of time, which is usually 12 months but it can vary.
The big question here is, can a tenant break a fixed-term agreement?
The short answer is yes, but it requires consent from the landlord or property owner. There are also rules and costs associated with breaking the lease on a fixed-term agreement.
These costs can include things like paying the rent until a new tenant is found or re-letting and advertising costs but these rules vary from state-to-state.
Can a landlord refuse a tenant's request to break the lease?
As a landlord, you are able to decline the tenant's request to break a lease if they are on a fixed-term agreement, and you might be inclined to do so if their reason is something 'non-essential' like just wanting to live in a bigger place. In most cases however, it is usually easier and more cost-effective to just let your tenant go.
We find that the best course of action is to reach a mutual agreement where both parties compromise instead of forcing them to stay or pay out the rest of the contract.
You want your tenants to care about your property. After all, it's their home, too. If you refuse the tenant's wishes to break the lease, then you're likely left with an unhappy tenant who no longer cares as much about the property - not a great situation to be in. If you're looking out for the best interests of your property, it's usually just easier to find a new long-term tenant.
Situations where you’re unable to refuse to break the lease:
There are certain circumstances in which you’re unable to refuse to break the lease - These circumstances usually relate to family violence and domestic abuse and you should consult with your state's regulatory body to find out the correct action to take in these unfortunate cases.
If there is a safety issue with the property your tenant may be able to break the lease early without any penalty.
Landlords are responsible for providing a safe and habitable living environment for their tenants. Tenants are legally entitled to break the lease early if there is a safety or health hazard on the rental property.
What steps to take after being notified by your Tenant
First things first, if they haven’t already given their reasons, you should try to find out why they wish to break the lease. Perhaps it’s something that you can work together to overcome.
If they say they're going to be moving out because they don't like the apartment or area anymore, there's not really much you can do to fix that. However, if they cite an issue with their unit or something else in the building that needs fixing, you should talk with them about getting things resolved.
If the situation turns out to be something that can’t be overcome, we’d recommend going back to check your lease agreement to look for any break clauses and then you should then check the legislation of your state to find guidance on how to handle it and then come up with a plan of action and respond.
- Determine the reason for the break request
- Check your lease agreement
- Check your state’s legislation
- Come up with a plan or offer for the tenant
- Respond
Things you should look for and take note of when reading your state's guidance:
- What notice period is required?
- Can you claim rental losses?
- On what conditions can you deny a lease break?
State Guidance on ending a fixed-term tenancy:
How to come to a fair agreement with your Tenant
As a landlord, allowing your tenant to break the lease can be a tough decision to make. This is where determining the reason for the lease break is essential, as it can help you make an informed decision on what action you should take and how lenient you should be.
Perhaps your tenant has lost their job or is suffering from other unforeseen circumstances affecting their ability to pay the rent. It's probably not in anyone's best interests to force them to stay on a lease that they’re no longer able to pay for.
You should take into account how much notice they have given you and your best judgement to determine what is the right action here. If you've been given enough notice, it's likely that you wont have much trouble finding a replacement.
There are no set fees for breaking a lease but having a fixed-term lease agreement means that you’re entitled to not be out of pocket.
Each state has its own rules on the costs you can claim and the fees involved which you can see in the links above.
Sometimes a tenant may come to you with a solution already which is a good outcome - perhaps they’ve even found a replacement tenant for you. You’ll still want to ensure you screen them thoroughly but it can be a ‘win-win’ for both parties.
You should consider all options with the tenant and then come to an agreement on a reasonable date for vacating the property as well as any additional terms, like the tenant having to cover advertising costs.
How RentBetter can help you handle your lease and tenancy with ease.
Regardless of whether you can make your tenants stay or not, it's not always the best decision to do so. If they wish to break the lease, the best you can usually do is remind them of their legal obligations and hold them financially responsible (depending on the cause of the lease break) for the period until you are able to find a replacement tenant.
Ensuring you have a solid Lease Agreement in place as well as a Condition Report, will go a long way to ensuring a smooth process if the time comes.
The Lease Agreement is there to ensure that the terms are able to be enforced and the Condition Report helps in the case of any damage that may have been caused to your property throughout the lease, determining who may be responsible, or in the case that a tenant claims that the property was not suitable to live in.
If you’re using the RentBetter platform to help you manage your property, you’ll have access to all the tools to help make things smooth and ensure any issues that need resolving, are done so with ease.
If you’d like a demo of the platform you can sign up for one here or get started for free. If you’ve got questions, just jump right on the chat to be connected to our team or send us an email at info@rentbetter.com.au.
