What Happens if you Have to Early Termination Your Lease?
Congratulations! You got a promotion at work or even a new job offer that requires you to move out of the area? But, what about your current lease with 1st Choice?
Most leases in Texas are written for a fixed term, usually 12 months. Renewal periods are also usually written for a fixed number of months. During these fixed terms, You, the Tenant, have agreed to remain in the property and pay rent through a certain date, and the Landlord is obligated to allow you to remain for that period of time. The only exception is a month-to-month lease which can be terminated with a 30-day written notice by either party to the lease.
So what happens if it is May and your lease doesn’t end until November 30th and circumstances force an early departure from your rental home?
You lost your job and found a new job out of the local area? You are getting a divorce and can’t afford the rent on your own? You found a great deal on a home to purchase and want to terminate early, and simply include the early termination costs in the financial decision to buy the new home.
There are a number of reasons that can cause a Tenant to contact us and ask ‘what happens if I can’t finish my lease term”?
This is covered under paragraphs 27 and 28 of the Texas Association of Realtors Residential Lease Agreement. Paragraph 27 covers DEFAULT, where a Tenant moves out and does not pay the rent. This will result in legal action and will damage the Tenant’s credit report. Ultimately the account will be placed for collection and will be on your credit report for years.
Normally, Tenants try to avoid damaged credit and the resulting collection process and the bad rental history that goes with this. Therefore, most Tenants will attempt to mitigate the circumstances by doing what is covered in paragraph 28 entitled EARLY TERMINATION. This involves locating an acceptable replacement Tenant which will allow the Tenant to leave the home on good terms with the Landlord. Here’s how this works:
You need to vacate the home early and want to leave on good terms and follow the provisions of your lease agreement to avoid the negative consequences of breaking your lease. All of the costs of your decision to terminate early must be absorbed and paid by you the Tenant, not the Landlord. You can’t expect the owner of your home to subsidize your moving costs by absorbing lost rent and other turnover expenses that are created by your early departure. The end result is that the Landlord and 1st Choice expect you to pay all costs associated in getting the property ready for rent. The following is what must happen:
- You must provide the required 30-day written notice of your intent to terminate early which must include a definitive move out date.
- Your written 30-day notice must include payment of the reletting fee listed in paragraph 28 of your lease agreement.
- You must continue to pay rent on the first of each month until a replacement tenant is located and begins to pay rent. Texas law does not all the Landlord to collect rent from two Tenants for the same period of time. Example: New Tenants moves in on June 10 and begins to pay rent that date, your rent obligation ends on June 9th.
- You must continue all utility services after vacating, until a new tenant moves in.
- You must arrange for lawn service after you vacate, until a new tenant moves in.
- There is no ‘Fair Wear and Tear’ if you don’t fulfill your lease term, i.e., the home must be in ‘Rent Ready Condition’ upon your returning the home to us.
- All other terms and conditions of your lease agreement must continue to be met by you.
In a nutshell, that is it! Once you fulfill your obligation, you will leave with a good rental history, receive your deposit refund, and have completed you lease on good terms. Technically, you have not broken your lease as you have satisfied the requirements of paragraph 28 of your lease agreement. However, you should know that you are still legally obligated until the original termination date of your lease in the event that your replacement tenant defaults. In over 20 years of experience, we have never had this scenario play out, but you need to be aware of it.
Q: Can I wait until you find a tenant to provide notice?
A: No. We won’t initiate any effort unless we have notice from you that you are vacating on
X-Date. We don’t even have the legal right to promise the property to a new Tenant if we have not received written notice from the current Tenant. So, you are either IN or OUT, and there is no maybe. Also, we can not market a property without a defined availability date for move-in.
Q: I don’t want to pay the Early Termination (relet) fee. Do I have to, or can I pay it later?
A: You already agreed to pay it when you signed your lease. You are simply keeping an agreement you already made. It must be paid up front, as agreed to in the lease.
Q: If I know someone who wants to rent the house, can I refer them to you?
A: Yes. They must submit an application, pay the application fee, and qualify the same as any tenant. You may not ‘market the house’ once we begin our marketing effort. You can tell your friends and co-workers about it and try to assist in finding a tenant, but you can’t ‘market the property’, for example put up a for rent sign in the yard.
Q: Why should I have to keep paying rent after I move out?
A: That was a part of the agreement you made when signing the lease. Failure to pay rent will represent a default of the lease. Continuing to pay rent allows us to keep sending the owner their monthly proceeds and keeps you in compliance with your lease agreement. All of which is the goal of Paragraph 28 of your lease.
Q: How long will it take to find a new tenant?
We normally are able to locate a new tenant within 60 days, quite often much sooner. That said, it could take longer depending on the time of year and current market conditions, including the condition of the home and the street appeal.
Q: What if I only have 2 months remaining on my lease? Can I avoid the Early Termination (ReLet) Fees?
A: Yes. If you have less than 3 months remaining on your lease, most likely you would be better off honoring the remainder of your lease rather than terminating early. When you pay the final month of a lease and provide notice of your intent not to renew, we will immediately begin to market the home. But again, remember that you are responsible for everything through the last day of your lease, unless we get a Tenant into the home prior to that date.