How Much Should My Tenant Pay for Early Termination of the Lease?

The amount you can charge depends on your lease and losses.

A lease gives your tenant the obligation to pay his rent for the entire period of the lease term. If your tenant moves out early, you have the right to get him to pay for any losses you incur from the rental vacancy. The amount you can charge depends on the situation.

Lease Provision

First check your lease for any provisions for early termination. It may contain details regarding when early termination is allowed and what terms would apply in such a situation. If your lease does contain early termination provisions, you must follow them. If your lease details a certain amount of penalty, then that is the amount you can charge. For example, the provision may require the tenant to forfeit his security deposit for pay the equivalent of two months' rent.

Rent

Depending on your circumstances, you may be able to charge your tenant all the rent for the entire term that remains under the lease. For example, if your tenant moves out six months after the beginning of a 12-month term, you may be able to charge him six months' rent. However, if you re-rent the property before the end of the term, you have to deduct the new rent from the old tenant's liability. For example, if you find a tenant after four months, then the old tenant only has to pay four months' rent.

Re-renting Fees

You have the legal obligation to mitigate your losses and minimize your tenant's rent penalty by making an effort to find a new tenant. For example, you can place advertisements online or in the local newspaper; you also can put up a sign on the property or you can distribute flyers. You can charge your tenant any money you spend on advertising the property for rent and other re-renting costs.

Lawsuit

If your tenant fails to pay the amount you charge for early termination of the lease, you can sue your tenant in small claims court. If you get a judgment against the tenant, you may be able to get money from his wages, bank account or even place a lien on his property. This also hurts his credit. However, your tenant can also start a lawsuit against you. If your early termination fee is exorbitant, your tenant may go to court, and a judge may refuse to enforce it.

References

• North Carolina State University: Landlord/Tenant Handbook
• University of California Berkeley: Terminating a Lease
• Colorado State University: Breaking a Lease
• Bills.com; Early Termination of Lease; November 2007