Chapter 5

Breaking a Rental Lease and Grounds for Eviction

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The Complete Guide to Rental Leases

Breaking a Rental Lease

There are several reasons why a lease might end early. The tenant may need to leave early, you may sell the property before a lease ends, or in some cases, it’s because you have good reason to evict your tenant. In this chapter, we’ll go over what to do in various situations where the lease is broken or needs to end.

What Happens When a Tenant Wants to Break the Lease Early?

Generally, a tenant is bound to the lease unless the landlord violates its terms. A landlord has violated the lease’s terms if he or she doesn’t follow the rules, doesn’t make necessary repairs, or fails to keep the building in a safe and habitable condition.

If a tenant doesn’t have good reason to break the lease, then he or she is responsible for the remaining rent due under the lease term. Even though the tenant is obligated to continue paying rent, most states require that the landlord put in reasonable effort to find new tenants no matter what the tenant’s reason for leaving.

To avoid sticky situations like this, you can use a buy-out clause. This clause allows you or your tenant to break the lease with 60 days’ notice. In addition to providing notice, the individual breaking the lease typically pays a penalty fee. This gives you reasonable time to find new tenants. And the penalty helps with any costs associated with finding new tenants.

Read chapter three of our Complete Guide to Rental Leases for more on important rental lease clauses, including the buy-out clause.

Valid Reasons for a Tenant to Break a Lease

  • Military reasons (leaving for active duty or permanent change of station)
  • A few states allow tenants to break a lease due to health problems or a job relocation
  • The landlord violated the terms of the lease by failing to:
    • Comply with lease clauses
    • Make necessary repairs
    • Keep the unit and building in a safe and habitable condition

Tenants in the Military Who Break a Lease 

According to the Service Members Civil Relief Act (SCRA), service members are allowed to terminate a residential lease if they have written orders for active duty or a permanent change of station (PCS). Landlords must comply with a lease termination within 30 days of the military orders being provided.

Buying or Selling a Rental Property in the Middle of a Lease Term

What Happens When You Buy a Rental Property That Already Has Tenants? 

Fixed-term leases do not expire when a property is sold. The lease transfers from previous owners to you. Before you buy a leased property, you should ask to view the existing lease.

Be sure to have the previous landlord transfer the security deposit to you. Whether the previous landlord does this or not, you are still responsible for returning the full deposit to your tenant.

What Happens When You Sell Your Property and Your Lease Isn’t Up Yet? 

If you’re selling your property and handing the lease over to a new owner, then you should review the lease with the new owner. If your lease is month-to-month then you could opt to cancel the lease with adequate notice. If you have a fixed-term lease, then you could choose to sell once the lease expires.

In the case that your lease is being transferred to the new owner, the security deposit becomes the new landlord’s responsibility. You should transfer the deposit to the new landlord and notify the tenant of the transfer and the amount transferred.

Make sure to notify your tenants of the following changes:

  • The new owner’s name and contact information
  • If the security deposit was transferred and the amount

What If a Tenant Stops Paying Rent?

The lease is a legal and financial contract that binds the tenant to monthly rent payments. If a tenant doesn’t pay rent, then he or she is violating the terms of the lease.

Read below for more on how to start an eviction.

What If a Tenant Breaks a Rule in the Rental Lease? 

If a tenant fails to pay rent, breaks a rule, or significantly damages the property, then it is considered breach of contract and you have grounds for eviction. If there are people living in the unit that are not on the lease, then that is also breach of contract and you have grounds to evict them.

Before evicting, we recommend trying to work the issue out with your tenant. It can potentially save you and your tenant a legal hassle. And sometimes the tenant simply misunderstood a rule. Communication can be very helpful.

No matter what the situation, you’re not allowed to change the locks on the tenant, physically remove a tenant or his or her belongings, or shut off utilities. Below are the legal reasons you can evict a tenant and step-by-step instructions for evicting a tenant.

Grounds for Eviction 

Here are five legitimate reasons to evict a tenant:

  • Breach of lease
  • Nonpayment of rent
  • Property damage
  • Doing anything illegal on the property
  • The lease expired and the tenant hasn’t moved out

Next Steps for Eviction

Step 1: Review your local and state eviction laws

Step 2: Make sure you have a legal reason for eviction (listed above)

Step 3: Communicate with your tenant about the issue in an effort to resolve it

Step 4: Provide your tenant a formal Notice of Eviction (see our template below)

Step 5: Go to your local court and file for an eviction

Step 6: You and your tenant will receive a Notice of Hearing in the mail telling you where and when your court date is

Step 7: Attend the court hearing

Step 8: If the court rules that you’ve won, the court will send a sheriff to provide the tenant a Writ of Possession (sometimes called a Writ of Restitution), which tells your tenant he or she needs to leave the property by a particular date. It typically provides the tenant eight days to leave.

Notice of Eviction

You are allowed to provide the tenant the eviction notice yourself. It does not need to come from a sheriff. Here’s our template for writing a Notice of Eviction:

To Tenant’s Name:

You are hereby notified that your tenancy at property address will be terminated on date.

I am terminating our rental lease for the following reason: You have violated this particular section of the rental lease.

A court hearing may follow if you do not correct the violation above or leave the premises by termination date.

Your Name
Date 

If your tenant does not remedy the issue or move out by that date, then it’s time to file your eviction at court. Read more here on how to evict a tenant.

What If a Tenant Abandons the Property?

Abandoned Rental Property

State landlord-tenant laws usually have laws about “reasonable presumption of abandonment.” You can usually presume the tenant has abandoned the property if he or she has left belongings and hasn’t paid rent for two or more months. If you are not sure, we recommend not changing the locks because it is illegal to change the locks on a tenant, as it’s considered forced eviction.

Deciding whether or not the property is abandoned is often a judgment call, but here are a few factors that can help:

  • Ask neighbors if they saw the tenant move out
  • Find out if the utilities have been turned off
  • See if furniture and belongings have been left behind

In rare cases, it’s possible the tenant has been hospitalized or arrested. But if you have good reason to believe the property is permanently abandoned, then be sure to fully understand your state’s laws surrounding abandonment.

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In some states, you are allowed to throw away the tenant’s belongings. In other states, you are required to put the belongings in storage.

Next Steps 

As we’ve covered, there are numerous reasons why a lease might end early. However, not all leases end early. When you have a great tenant, you should extend the lease with a lease renewal. Read the next chapter below to learn everything you need to know about lease renewals.

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Also published on Medium.

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