Most tenants enter a lease with every intention of honoring it, but sometimes unforeseen events prevent them from being able to do so. While there is no way to force a tenant to stay in your property you might be able to hold them financially responsible for the remainder of the lease, or at the very least not lose money due to their early termination. The following are things to consider when a tenant breaks a lease.
A Lease is a Binding Agreement
A lease is a binding agreement and cannot be unilaterally broken. By signing a lease you, the landlord, agree to provide your property to the tenant for the term of the lease and the tenant in turn agrees to pay you rent for the use of that property for the entirety of the lease term. From the outset a tenant knows how much the total rent will be and how many payments (in the form of monthly rent) are to be made.
If rent is $1,000 a month and the lease term is 12 months, the tenant has agreed to pay you a total of $12,000 to occupy your property for one year, to be paid in monthly rental payments of $1,000. If after 6 months the tenant decides to break the lease, he technically owes you the remainder of the sum promised, $6,000 in this scenario. But even though you are still owed money for future unpaid rent you may not be able to legally collect the entire amount left under the lease, at least from this particular tenant.
You are required to mitigate your damages
California law requires a landlord mitigate damages in the event that a tenant terminates a lease early. This means that you are not allowed to simply let the property sit uninhabited for the remainder of the lease term and continue to collect rent from the tenant who broke the lease early. You are required to make a good faith effort to re-rent the property to someone else. (Civ Code § 1951.2(c)(2)).
This does not mean that you must take the first person that makes an application for the rental – you are allowed to screen applicants as you normally would and take a reasonable amount of time to find the right fit for your property. You are also allowed to continue to charge the tenant rent, even after they have moved out, as long as you are actively seeking a replacement tenant. However, once you find a replacement tenant, you are not allowed to collect rent from both the old and new tenants, so your former tenant’s obligation to pay any more rent terminates once a new tenant is in place.
Servicemembers Civil Relief Act
Federal law allows military personnel to break their lease to start active military duty or if they receive orders that take them “far away” – approximately 50 miles. This applies to those in the armed forces, activated National Guard, the National Oceanic and Atmospheric Administration (NOAA) and the U.S. Public Health Service. (Servicemembers Civil Relief Act). If a tenant breaks the lease for military reasons they are required to give you at least 30 days notice and pay rent during that time, but they are not obligated to pay any more thereafter, even if the property remains unoccupied.
The property is uninhabitable
A landlord is required to provide a safe and habitable place to live. This includes at the minimum sufficient access to essential utilities such as water and electricity and the absence of dangerous conditions such as exposed wires. Of course, a problem affecting habitability could arise anytime, such as a hot water heater going out, but as long as you fix the problem as soon as practicable you have not necessarily violated the warranty of habitability and given your tenant license to break the lease. (California law spells out the requirements that make a place habitable; see Civ. Code §§ 1941.1 and 1941.3 for more detail.)
You intrude on their privacy
Even though it is your property if it is tenant-occupied you are not allowed to simply drop in anytime you like. You are allowed to enter the property if you have given proper notice or during an emergency, such as a flood, but your tenant has a right to privacy, or “quiet enjoyment ” and can break the lease early without penalty if it is found to be violated.
The tenant or a family member is a victim of domestic violence, sexual assault or stalking.
If your tenant, or a member of the tenant’s family that lives at the property, is a victim of domestic violence, sexual assault, stalking, human trafficking, elder abuse, or dependent adult abuse, they can break the lease early by providing 14 days written notice and proper documentation of the incident within 180 days. In this event, your tenant is only responsible for paying rent through the end of the 14-day period, unless you find a replacement tenant before that time is up. (Civ Code § 1946.7) After the 14 days expire, the tenant is under no more obligation to pay you for future rent, even if you have yet to find a replacement.
Early Termination Fees
You and your tenant may agree for them to pay an “early termination fee” instead of the rent due for the remainder of the lease term in exchange for you letting them out of the lease early. Such a provision might be a part of your lease agreement or you might decide to create an addendum to the lease if early termination becomes an issue. California considers such a provision “liquidated damages”, which are not guaranteed to hold up in court if your tenant decides to challenge it. Liquidated damages are available if it would be extremely difficult to measure actual damages, but in the event of a broken lease it is quite easy to measure actual damages in the form of lost rent, so for this reason such clauses are rarely appropriate in this context. (See Civ Code §1671)
Enlist your tenant’s help
If your tenant has informed you that he plans to break the lease ask him to help you find a replacement. You never know, your tenant might know someone who is willing to take over the lease. Of course, you should thoroughly screen any potential lessors, but this could be a way to defray advertising costs and save both you and your tenant money. At the very least ask for your tenant’s cooperation with showings, as it will ultimately benefit him if you get the property rented out sooner rather than later.
Sue them for rent that accrued while the property was vacant.
Although you are required to mitigate your damages, it is likely that you will miss out on at least one if not several months’ rent. If your tenant is refusing to pay what they legally owe you for breaking the lease early, you might consider suing them to recover the money. Ideally if you sue them you will be awarded a judgment for the past due rent, but keep in mind that a lawsuit can cost both time and money and it is not always easy to collect even with a judgment.
Also keep in mind that if you take your tenant to court they might lie in order to avoid having to pay you. They could claim there was a pest infestation you did nothing about or that you came to the property multiple times without proper notice. They could claim there were unsafe conditions or that basic utilities did not work and you failed to fix them. If you decide to sue your tenant, be prepared to present the lease and detailed records of pest control services, maintenance, and any notices you gave in the event you did have to enter the property during the tenancy.
When a tenant tells you they plan on leaving early, let them know they are legally responsible for the remaining rent until you get the place re-rented. They may not be aware of that responsibility and might decide to stay until the end of the term in order to avoid paying rent on two places. If they do decide to go ahead and break the lease early, remember that you have a duty to mitigate your damages but are owed lost rent in the meantime.
The following is not a substitute for legal advice and should not be construed as such. When it comes to lease issues your best bet is to consult with a licensed, experienced landlord-tenant attorney, especially if you have never dealt with a broken lease.