New Tenant Wants Out of Lease: Should Landlord Hold, or Fold?
We are all susceptible to buyer’s remorse, but when tenants get cold feet right after they sign the lease, landlords have a dilemma. Do you let the remorseful tenant off the hook, or should you hold tough to your lease negotiation?
The right answer may depend on the situation. There are some good reasons for letting a tenant leave:
They are coming clean and admitting they can’t really afford the rent;
There’s been a change of plans, like a job loss, and the tenant anticipates problems down the road;
If they stay, it is likely the tenant will be complaining constantly, and that could disrupt other tenants — and your cash flow;
The tenant is in the military or a military family; or
There is a local law that allows the tenant to rescind within a certain time period.
If you find yourself confronted with a tenant who wants to move on, the best thing to do is talk it over.
Find out why they are doubting their decision.
Your instincts may tell you to defend your position. After all, you do have a signed lease. But before you get too tough with the tenant, be aware that they may call your bluff: most local rental statutes require the landlord to mitigate damages by finding a new tenant as soon as possible, regardless what the lease says. You can’t kick back and let the term of the lease run and then collect rent from the tenant.
In some case, cooperation and negotiation are better tools for avoiding financial losses and keeping the property running profitably. For example:
If the tenant seems indecisive, try reminding them of the reasons they choose the unit in the first place. Give them a night to “sleep on it” and talk again the next day.
Offer to allow the tenant to pay an early termination fee. That cost may quell their fears. Your lease probably needs to address early termination for this to work, so speak with your attorney first if there is any question.
Tell the tenant to stay and pay rent while you look for another tenant. This assures their cooperation when it comes to showing the property.
If they are leaving at a slow time, allow them go month-to-month with 30-days notice — it may relieve commitment anxiety and buy you some time.
Whatever you decide, make sure you get it in writing so you don’t make promises to a new tenant only to have the current one suddenly decide they want to stay.
Let tenants know you appreciate their candor. Negotiating an earlier termination is far less painful then discovering the unit has been abandoned, left to strangers, or damaged — and your spooked tenant is no where to be found.
American Apartment Owners Association offers discounts on products and services for all your property management needs. Find out more at www.joinaaoa.org.
|American Apartment Owners Association | Company Website |At the American Apartment Owners Association (AAOA), our mission is to serve the interests of landlords, real estate brokers, property managers, real estate owners and apartment building owners nationally. Visit www.AAOA.com for more information about membership details!|