Can a Landlord Break a Lease? (A Landlord’s Guide)

by NEW YORK DIGITAL NEWS


Not all tenants work out the way we hope. Maybe a renter is habitually late paying rent, disruptive to other tenants, or engages in illegal activity. Whatever the reason, you may be wondering: “Can a landlord break a lease?”

The short answer is—it depends. Before you break a lease agreement, make sure you have a valid reason and that you follow all the legal requirements.

Can a Landlord Break a Lease?

A landlord can break a lease, but only for certain reasons. It depends on the terms of the lease agreement and local and state landlord-tenant laws. 

If a landlord breaks a lease, written notice must be provided to the tenant, with a reasonable time to move out. The notification period varies depending on where the property is located. In some cases, a landlord will have to go through a court proceeding to terminate a lease and remove the renter.

Valid Reasons for Early Lease Termination

Because a lease is a binding legal contract between two parties, it can only be broken for certain things. Here are some of the most common reasons a landlord may break a lease.

Non-payment of rent

As a real estate investor, you rely on timely rent payments each month to make the payments on your properties and earn a monthly income. Your rental properties are a business, not a charity. A tenant who falls behind on paying rent isn’t just an inconvenience; this can set you back financially and cause other problems.

Payment of rent is typically included in lease agreements. If a tenant falls behind, the lease agreement is broken. You can then notify the tenant that they need to move. The number of months a tenant is behind on rent before you can remove them will vary based on local and state landlord-tenant laws.

Property damage or violation of lease terms

Routine rental property maintenance is part of being a landlord. You may have to occasionally repair or replace a water heater, HVAC unit, leaky pipe, or something else. Property damage that’s a result of tenant negligence or is intentional, however, may be grounds for breaking a lease.

Lease agreements usually include damage clauses. If you need to remove a tenant for property damage, be sure you thoroughly document it and take pictures. Depending on landlord-tenant laws, you may have to provide written notice for them to repair the damage before you inform them that they need to move out.

Illegal activity on the property

Like most landlords, you probably want your properties to be safe, secure places for everyone. If a tenant is engaging in illegal activity, it could create an unsafe situation or give your properties a bad reputation, which could make it hard to attract good tenants in the future.

Examples of illegal activities that could be grounds for breaking a lease include:

  • Making or selling illegal drugs
  • Domestic violence
  • Theft
  • Running an illegal business
  • Hosting parties that disturb the peace

If you remove a tenant for illegal activity, be sure to collect evidence of the activity before you notify them. This could include police reports, witness statements, photographs, and anything else you can think of that would support you during the process.

Sale of the property

After owning a property for a few years, you may decide to sell. You may want to diversify your portfolio by investing in a different type of property, or perhaps you need the cash.

When a rental property is sold, the existing lease agreements typically transfer to the new owner. If you are selling, it’s good practice to notify your tenants of the sale and provide them with information about the new landlord and what they can expect. This will help to ensure a smooth transition and alleviate concerns.

Extensive repairs or renovations

A property you are renting may need extensive repairs to ensure it’s properly maintained or that it meets local code requirements. You may also want to completely renovate a property that has appreciated and sell it for a profit. A lease can typically be broken to do the needed work if it includes a renovation clause.

Before you break a lease, consider the extent of the renovation. If the work is minor—like painting, installing new flooring, or adding security upgrades—the tenant may be allowed to stay, and you will have to work around their schedule. If you are planning an extensive renovation that will disrupt the tenant’s use of the property—like major remodeling, foundation repair, or completely rewiring a property—breaking the lease may be necessary to prevent a disruption to the renter’s life.

Legal Process for Terminating a Lease

If you want to break a lease, be sure to follow the legal process to the letter. This will minimize your chances of ending up in a legal dispute.

  1. Review the lease terms and conditions: Look for tenant violations of the lease. This will give you an easy “out.” If a tenant makes unauthorized alterations to your property, like painting, installing fixtures, or removing walls, you may be able to break the lease based on the property damage clause.
  2. Review local and state landlord-tenant laws: A tenant may have special protections, or you may have to follow certain procedures before you can break a lease. Be sure to review the landlord-tenant laws where your property is located to make sure you are compliant.
  3. Make sure you have a valid reason: If you break a lease without a valid reason, it could result in time-consuming, costly legal problems. Make sure your reason for breaking a lease is legally permitted before notifying the tenant.
  4. Provide proper notice: You must give a tenant sufficient notice, typically in writing, that you are terminating the lease so they will have plenty of time to find new housing. The length of the notification will vary depending on where your property is located.
  5. Document the process: Be sure to keep a detailed record of the lease termination process in case you have to go to court. Keep a copy of the written notice you give your tenant and document all communication. If you are breaking the lease because of property damage, illegal activity, or something similar, be sure to take photographs or keep copies of police reports.
  6. Start the eviction process (if necessary): If a tenant does not move out after the notification period has ended, you will have to file an eviction lawsuit in court.
  7. Return the security deposit: Conduct a move-out inspection, and then calculate security deposit deductions for any unpaid rent, cleaning costs, or repairs that are beyond normal wear and tear. Provide the tenant with an itemized list of the deductions with an explanation when you return the remaining balance.

Tenant Rights to Be Aware Of

Depending on where your property is located, tenants may have special rights that affect lease termination that you should know about.

Squatters’ rights

As hard as it is to believe, you may have a difficult time removing some people from your property—even if there’s no lease. These are people who take up residence in your property without your knowledge and consent. Known as squatters, they have strong legal protections—or squatters’ rights—in many jurisdictions.

Although most landlords consider squatters trespassers, not tenants, you can’t have them removed by calling the police in many places. You will have to file an eviction lawsuit. In addition to legal costs, you will also have to deal with lost revenue until the issue is resolved.

Tenant rights to terminate the lease

Just as there are several reasons why a landlord can break a lease agreement, tenants can also break leases if the landlord doesn’t follow the lease terms or landlord-tenant laws are not followed. A tenant could break a lease if the landlord doesn’t maintain the property, for example. Additional reasons may include the landlord entering the property without giving the required notice, or if the landlord harasses the tenant.

Tenant rights to advance notification of lease termination

You are required to give a tenant sufficient notification that a lease is being broken so they can find a new place to live. How much time you are required to give varies, but is typically 30 to 60 days.

Proactive Measures to Avoid Early Lease Terminations

Breaking a lease is a hassle. You may also lose valuable rental income until you can fill the vacancy. Although an early lease termination can’t always be avoided, there are some things you can do to minimize the risk and help you find great tenants, including: 

  • Thorough tenant screening: Taking the time to carefully screen applicants can help ensure you find tenants who will pay their rent on time, respect your property, and be considerate to their neighbors. Although it can take some time to screen tenants, it could help to minimize the need to break leases.
  • Clear and comprehensive lease agreements: Making sure your lease is easy to understand could reduce the need to break a lease. Your lease agreement should also cover potential issues that could occur to make it easy to end the agreement. Be sure to provide new tenants with copies of signed leases to refer to if needed.
  • Maintaining open communication with tenants: Some misunderstandings can be avoided by making sure your renters know how to contact you if they have questions, concerns, or tenant complaints. Also, be sure they have a clear understanding of their responsibilities.
  • Accommodate reasonable requests: Your tenants may have special needs or circumstances—like a medical emergency, death in the family, or job loss—that could affect their rent payments or something else. As long as the situation is temporary, consider being flexible on the lease terms if they are otherwise responsible and easy to get along with.
  • Pre-lease walkthroughs: The condition of your rentals may not be perfect due to age and wear and tear. Perhaps the carpet is worn or stained, a laminate floor is scratched, or painted walls are peeling in places. Conducting a property inspection with tenants before move in may help to minimize disputes and misunderstandings. Be sure to document the property’s condition and have tenants sign off on it before they move in.

Final Thoughts

Although breaking a lease isn’t fun, it is sometimes necessary. Before you break a lease, be sure you have the legal right to do so where you live. A thorough review of the landlord-tenant laws where your property is located can help you know if you have a valid reason.

If you aren’t sure if you can break a lease, consult with an attorney. Although you will have to pay an attorney fee, it may be a good investment if it helps you avoid costly legal issues.

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In The Self-Managing Landlord, Amelia McGee and Grace Gudenkauf share the secrets of efficient property management, tenant screening and onboarding, and scaling your business—all to help you break free from the 9-to-5 grind and create lasting wealth through real estate.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.



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