“Information You Need To Know About Termination Of Lease Agreement”
Are you looking to terminate a lease?
Let’ face it, even with the best tenant screening you are bound to get a bad tenant occasionally. OR you may have a great tenant (at first) but then a life event happens and things go downhill.
A tenant causing a lot of troubles and worries is something a property manager must not tolerate. It can be grounds for termination of lease agreement.
The termination of lease agreement comes with a process a process that property managers must know and understand. Property managers should also know when to start taking appropriate actions to terminate a tenant.
That’s why today I want to share with you the information you need to know when it comes to the termination of lease agreement.
Understanding A Termination Of Lease Agreement
As a property manager, your biggest challenge that you will face while making your business successful is the termination of lease agreements. Getting rid of or making your rental property vacant is sometimes a difficult process. However, we are going to go through the process of a termination of lease agreement to help you better navigate and be successful when the process arises in your rental business.
Like everything in real estate, there is a process that every property manager must understand when it comes to the termination of the lease agreement. As a property manager, you cannot simply terminate a lease whenever he or she wishes. The key to being successful when termination of a lease agreement is following a specified and legal process correctly and efficiently. When termination of a lease is desired you as a property manager must have valid reasons before proceeding on the termination of lease agreement of a tenant.
There are many reasons you would want to terminate a lease agreement but let’s look at the most common reasons why termination of lease agreement happens in the first place.
Most Common Reasons For Termination of Lease Agreement
Not Paying Rent
One of the most common reasons why a termination of lease agreement happens is because of the tenant failing to pay his or her rent. Either the tenant lost his or her source of income or the tenant just doesn’t have enough money to pay the rent. During the rental application process, you should have done a credit check that would have helped avoid this issues. Additionally, you should have in the rental contract that the tenant signed and agreed to pay rents during the lease agreement which makes them legally accountable for any and all lost or unpaid rents.
Violation of Clauses In Rental Contract
The second possible reason is when one of the parties involved violated a clause in the rental or lease agreement. Often times when finalizing a rental contract you add clauses that would begin the termination process of the lease agreement. Common clauses added would regard to the number of tenants allowed living at the property, authorization for pets or no pets, the requirement for quiet after 10PM, Smoking or non-smoking units etc.
When a violation of the clauses occurs it is best to write a letter to ask the tenant to fix the clause or face eviction or termination of lease agreement. By making a paper trail trying to resolve the violation will help if you must go to court to remedy the process through eviction of the tenant.
Being clear in making and enforcing clauses to the rental contract is key to the contract being run and interpreted by both parties correctly. When all parties have a clear understanding of the clauses to the contract the possibility of having a misunderstanding between the landlord or property manager and tenant goes down significantly.
Violation of Rental Contract Responsibilities
The rental contract and lease agreement is a legal document that details all parties responsibilities required during the rental of that property. Responsibilities can include a requirement for landlords or property manager’s to fix broken items at rental or for the tenant not to significantly damage rental. Additional responsibilities to the contract can be not conducting illegal activities at the property or not using the property as stated in the rental agreements.
When either of the two parties involved violates one of their responsibilities that are imposed by the law this can cause the termination of the lease to begin. If you as the property manager was made aware through police reports that the tenant is dealing with illegal activities like selling drugs or engaging in prostitution at the property. This would be good enough reasons to start the termination of lease process with a letter asking the tenant to cease illegal activities or leave the property.
Violation of other responsibilities that could hurt or affect property negatively can also be those that the lessee and lessor have agreed on and is stated in the lease agreement.
When Can A Property Manager Terminate A Lease?
The property manager can legally terminate a lease when one of the three common reasons stated above is present. However, certain circumstances may arise where the property manager can also terminate the lease when the property manager or landowner wishes to take back possession of the rental for any reason.
As a property manager, you can also choose to early terminate the lease when the tenant requests to end the lease earlier than expected. Often time the tenant may have personal circumstances like losing a job or relocation for work. In these types of cases, the tenant should talk or write a letter stating why they need to end the lease early and ask if the property manager will consent to end the lease early.
When a tenant request you to terminate a lease early you need to remember that you have no obligation to consent on breaking a lease. However, to come to a mutual parting of ways for the tenant, you as the property manager might be willing to give consent to end the lease if the tenant will be able to find someone who will fill up the vacancy.
Having a subletting clause in the lease agreement is a very lucky condition favoring the tenant who wants to break the lease. The subletting clause will also give the tenant a greater chance to end the lease early especially if the property manager disagrees on giving consent. The tenant can sublet the unit under his or her name until the contract ends.
The property manager can officially terminate a lease only when he or she had sent a notice to the tenant that the agreement has been terminated. Also, one of the three conditions should also be met by the tenant.
Types Of Notice For Termination OF Lease Agreement
A notice must be given by the property manager as a warning to the tenant. This termination notice may state that the tenancy is over. It also warns the tenant that he or she must vacate the rental unit and the premises or the tenant will face an eviction lawsuit.
There are three types of notices that a property manager can give to the tenant. All three types of notices have certain conditions that the tenant must meet in order for the property manager to terminate the lease agreement.
Pay The Rent Or Quit
The first type of notice for termination of a lease agreement is the “Pay the Rent or Quit” Notice. This notice should be sent prior to the property manager or landlord beginning the eviction proceedings.
In this notice, the tenant is given two options: either he or she must be able to pay the rent within a set of time or the tenant must vacate the unit. If the tenant chooses to pay the rent, a certain amount of time is provided on the notice and it is usually around 10 days.
However, if the tenant fails to pay the rent within the given period, he or she will be forcibly evicted pursuant to a court order.
Receiving a “pay the rent or quit” notice means an effective break of the lease. It will not appear on a tenant’s credit report since there is no eviction that involved the courts. However, it can damage the rental history of the tenant as the property manager can provide a negative feedback on the tenant.
Cure Or Quit
The “Cure or Quit” type of notice has two conditions as well. The notice orders the tenant to cure the violated clause of the lease agreement or quit. In this case, the tenant must either cease a certain behavior which is the cure option or the tenant must vacate the unit. A certain number of days is given to the tenant to in order to cure the violated clause.
The most common reasons for a “cure or quit” notice are having a pet which violates a “no pets” clause, or causing a nuisance or disturbance.
If the tenant doesn’t cure his/her behavior within the given timeframe, the property manager can proceed to an eviction lawsuit.
The “Unconditional Quit” notice for termination of lease agreement has no other options but for the tenant to move out of the unit. The given period of time is short and there is no other way for the tenant to cure the clause that he or she violated.
This type of notice is allowed in all states when a tenant has repeatedly violated a lease clause even after warnings are given to him/her or when the tenant has substantially damaged the rental unit, or the tenant is dealing drugs. This is also allowed for non payment of rent where I live in Ohio, we go straight to a three day notice to quit the property.
Eviction After The Termination Of Lease Agreement
Once the termination of lease agreement process is done, the property manager can now evict the tenant. But…
Eviction can only be done by the property manager once the court has ordered the physical removal of the tenant along with his or her properties from the rental unit.
The property manager is required to file an eviction lawsuit or an unlawful detainer action with the local court. Then the tenant is required to file a written notice or answer. If the tenant files the written notice or answer, the eviction process may end up without a court hearing. But if a court hearing happens and the tenant did not present his or herself then the other party prevails.
If the tenant does attend, only the court can determine whether the tenant should be evicted. The court hearing will proceed and a monetary judgment may be given to the property manager or the tenant. The monetary judgment is the amount of money owed for the rent, any attorney fees, and other costs.
The court will also grant the property manager or the landlord a writ for repossession of the premises.
Final Thoughts On Understanding A Termination Of Lease Agreement
In this blog post, we talked about the terminal of lease agreement process.
The termination of lease agreement happens for three common reasons: when the tenant fails to pay the rent, the tenant violated a clause in the lease, or the tenant violated their responsibility under the law. And a property manager cannot just simply terminate a lease agreement without following the process we talked about today.
When a tenant is causing you concern, don’t hesitate to take the right action on that tenant.
Note that these are only suggestions. Please seek legal advice from an eviction lawyer for information pertinent to your particular case.
If you have other questions, feel free to leave it in the comment section below.
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