When it comes to rental properties, one of the main goals for investors is to have tenants that stay long-term. This stability provides a consistent rental income stream that can be counted on and helps property owners maximize returns. However, sometimes tenants need or want to break their lease agreement.
When renters break long-term leases without a valid reason, property owners have some recourse to collect unpaid rent or penalties for moving out early—as long as they have a valid rental lease agreement that holds up in court. Are there any situations when a renter can break a lease without penalty? If you invest in rental properties, keep reading to find out!
Valid Reasons Your Tenants Can Break a Standard Lease Agreement
While it's not ideal for an investor's bottom line, there are a few different scenarios in which a tenant may be legally allowed to break their lease agreement. In these situations, property owners must work with their tenants to end the lease term with reasonable terms or no penalties.
Failing To Keep Up With Landlord Responsibilities
One of the most common reasons renters request to break a rental lease is when they feel unsafe or uncomfortable in their living situation. This can be due to a number of reasons, such as the landlord failing to keep up with repairs or maintenance on the property. If the rental unit becomes unlivable or hazardous, rental property tenants are well within their rights to break their lease agreement without penalty.
As a property owner, you must comply with landlord-tenant laws about operating safe and habitable rental properties. In addition, the rental agreement outlines your responsibilities to residents regarding the care of the property. To avoid losing renters due to unsafe living conditions, be sure to keep a rental property well maintained.
A Property Owner Violates the Rules Of Entry
Another common issue that can arise is when a property owner violates the agreed-upon rules of entry in the rental contract. If tenants feel like they are being harassed by their landlord or that their privacy is being violated, they may choose to break their lease and move out without consequences.
Even if you operate under a month-to-month lease agreement, renters have a right to privacy that real estate investors must follow. Be sure to give plenty of notice before arriving at a property occupied by a tenant.
Your Renter is a Victim of Domestic Abuse
We hope your renters never have to end their lease for this reason, but it's a worthy exception that can be a big help to tenants if needed. If a resident is a victim of domestic violence, they can break their standard residential lease agreement to move to a new location without penalty.
In most cases, to qualify for this exemption, tenants must provide written notice to their landlord and submit proof of the abuse. This exemption can also apply if the tenant has a restraining order against their abuser.
Tenant Deploys for Active Military Assignment
Owning rental properties for military personnel and their families is an excellent way to provide needed housing while making money. However, if a tenant is called to active military duty, they can break their rental lease agreement without penalty. This exception applies as long as the tenant provides written notice to their property owner and proof of their deployment.
The Lease Agreement Is Invalid (or Rental Unit Isn't Operated Legally)
There are many reasons to have strong lease agreements that your attorney and a property manager have reviewed to help ensure it's legally binding. A renter can terminate a lease that isn't valid or doesn't comply with landlord-tenant laws.
In addition, if you're operating a residential property as a rental unit without proper permits for your market or through processes and conditions that violate landlord laws, your renters can move out without penalty.
While rental properties can be lucrative real estate investments, they require hard work and legal know-how to maximize returns. If you're not sure how to manage your properties within the law or create a lease agreement that protects your investments, a property manager can help.
Invest In Excellent Rental Properties With the Privy Advantage!
Building a successful rental property portfolio starts with the right investment properties! Finding quality renters who don't break the lease means finding and maintaining quality rental homes in markets where demand is high.
Privy helps investors find those properties that maximize returns. With insights into multiple real estate markets throughout the country, Privy delivers the properties that fit your long-term plans directly to your inbox. Our software also analyzes the behavior of successful investors in those markets then brings those insights to you to help you make smart offers and close great deals.
If you're ready to build your portfolio with buy-and-hold rentals or your next fix-and-flip investment, reach out to learn how the Privy Advantage can help you spend less time searching for new investments and more time benefiting from the returns!
Our “The Ultimate Guide to Lease Agreements” is a free resource for rental property investors. Download it for free today!