It’s becoming more and more common for tenants to terminate their lease before the lease end date. It is very important to remember the lease is in place to cover a tenant, agent and also owner in all facets of renting.
What does terminating a lease earlier mean for a tenant?
It is quite clear that if a tenant requires to terminate a lease earlier than the lease end date, they must first provide the property manager with the correct form (form 13) and notice. A property manager will need to notify the tenant what is required of them. Please note, there is no such thing as a ‘break lease fee’, however, the tenant must:
- Must keep paying rent and maintaining the property until a new tenant is found
- Reimburse the owner for any out of pocket expenses that may incur i.e advertising fees, letting fee
It is in the tenants best interest to work with the property manager, for them to gain access to show enquiries through the property. This will help the property rent as quickly as possible especially during a time where the tenant needs the property rented as soon as possible. The tenant also has to understand that the owner has to treat this as any normal application process and that the application must check out with good references.
What does terminating a lease earlier mean for an owner?
When a tenant is terminating a lease earlier, this mean the tenant pays for any out of pocket expenses to the owner. It also means the owner is getting a new tenant into the property with no out of pockets to them. BUT it is very vital that the owner takes everything into consideration when approving a tenant for the property, as it is their investment property. We still need to do all the correct checks and make sure they can pay the rent. We do need to make sure we minimize the timing as the tenant is paying for extra expenses.
What does it mean for a property manager when a tenant terminates a lease earlier?
When a tenant terminates a lease it can become a very stressful time for the tenant and also property manager. The property manager must do everything possible to minimize the cost for the tenant in every way. They also must keep the owner up to date but also the tenant due to the circumstances. Having a good relationship with your tenant from the start of the lease and also the start of the terminating the lease earlier, does make it a lot easier on all parties. The property manager must:
- Work with the tenant to gain access to show enquiries through
- Process applications as quickly as possible
- Speak with the owner to get applications approved, get all monies, documents signed and returned.
- Perform a a vacate inspection and make sure the property is left as per the Entry condition report (ECR)
- Organize for the bond refund
- Organise for the new tenant to move in
When it comes to terminating a lease, for all parties involved it can be a very difficult and stressful time. It is very important that as any parties is to just breathe, not to get angry, upset in the situation. It is a time that all parties must work together to get the best outcome possible.