Q: What happens when I want to end my lease before the Termination Date?
A: Received a great new job offer in New York, but what about my lease in San Mateo?
Most leases in California are written for initial fixed terms, usually 12 months. Renewal periods are also usually written for a fixed number of months. During these fixed terms, the tenant has agreed to remain in the property and pay rent through a certain date, and the landlord is obligated and required to allow the tenant to remain for that period of time. The only exceptions are the month-to-month lease which can be terminated with a 30-day notice by either party or United States Military Service members protected during their military service period under the Service members Civil Relief Act.
So what happens if it's February, your lease doesn't end until the following end of November, but life circumstances are forcing an early departure from your rental home?
Perhaps you've lost your old job and already found a new one, but the new job requires relocation to another city? Sometimes tenants divorce and neither can afford the rent alone, so both have to move. Sometimes tenants are under no financial duress but elect to buy a new home and terminate early, and simply include the early termination costs in the overall financial decision to buy the new home.
There are a number of life circumstances that can cause a tenant to contact us and ask "what happens if I can't finish my lease term"?
First, we recommend, if you have any questions regarding an interpretation of your specific lease agreement, or the parties' respective rights or obligations under it, please consult your attorney.
Generally, this is called an "Early Termination" and is covered by the Breach of Contract and Early Termination clause of the Residential Lease Agreement. It is a violation of the Lease. If you wish to vacate the premises before your termination date, you will be held liable for lost rent, the cost of re-renting the premises (rental commissions), advertising expenses and painting costs necessary to ready premises for re-rental. Also, the Landlord may withhold any such amounts from your security deposit.
Also, in a lease agreement, the tenant makes representations and obligations covering default, whereby if a tenant simply moves out and stops paying rent. If this happens, the Tenant's record may be submitted to a credit reporting agency. We call this a "skip" and it usually results in legal action, damage to the tenant's credit report, and ultimately the account being placed for collection. In other words, the worst financial and credit consequences possible are realized, and the price is paid for years to come.
Most tenants want to avoid damaged credit, ruined rental history and collection, so we operate under California Law that requires us to make good faith efforts to mitigate the potential risks for all concerned parties. This involves a process whereby you notifying us of your intent and work with us on locating a replacement tenant to take over the occupancy of the home. Being reasonable and allowing this process to work can allow you to depart on good terms. Below, I outline the specific steps to follow.
In a nutshell, when you want to move early and wish to do so in a way that follows the lease agreement and avoids negative consequences, all of the costs of your decision to terminate early must be absorbed and paid by you, not the property owner. This is a simple concept for most to understand. The owner of your rental has no obligation or desire to subsidize your moving costs by absorbing lost rent and other turnover expenses created by your early departure, so all of the financial consequences of your decision to leave early belong to you.
The following steps must happen if you are a tenant:
You must provide written notice of your intent to terminate early, including a move-out date. Please request a "Tenant Notice to Terminate Residential Lease Agreement" form.
Your written termination notice must include payment of the re-re-renting fee. The Marketing fee is 75% of one month's rent.
You must continue paying rent each month on the first, until a replacement tenant is found and starts paying rent for you.
You must continue your utility services after vacating until a new tenant moves in.
All other terms and conditions of your lease agreement must continue to be met.
That's it in a nutshell. Once this is accomplished, you leave with a good rental history, receive your deposit refund, and have completed your lease agreement on good terms. You haven't technically "broken" the lease, but instead satisfied the requirements of Early Termination. It should be noted, however, that you are still legally obligated until the end of your remaining lease term in the event your replacement tenant defaults. I've only had that happen once though, as we carefully screen replacement tenants the same as any other new tenant.
More Frequently Asked Questions:
Q: Can I wait until you find a tenant to provide notice?
A: No. We won't initiate any efforts to locate a replacement tenant until/unless we have written a notice to vacate with a move-out date. Understand that we don't even have the legal right to promise the property to a new tenant if we haven't received written notice from you, so your status is either one of 100% staying, or 100% leaving. There is no "maybe" or in between allowed. And we can't market a property without a defined availability date for move-in.
Q: I don't want to pay the re-renting fee. Do I really have to, or can I pay it later?
A: You already agreed to pay the re-renting fee when you signed your lease. You are simply keeping an agreement you already made. It must be paid up front, as agreed in the lease.
Q: Can I sublet the property in order to avoid the Early Termination Fees?
A. No. This topic covered by the Assignment and Subletting clause of the Residential Lease Agreement which states the Tenant shall not sublet all or any part of Premises, or assign or transfer this Agreement or any interest in it, without Landlord's prior written consent.
Q: If I know someone who wants to rent the house, can I refer them to you?
A: Yes, of course. They must submit an application and qualify the same as any tenant. You may not "market" the house though once we begin marketing efforts. You can tell your friends and co-workers about it and try to help find a tenant, but you can't, for example, put your own sign in the yard.
Q: Why should I have to keep paying rent after I move out?
A: That's 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 her monthly proceeds and it keeps you in compliance with your lease agreement and in good standing.
Q: How long will it take to find a new tenant?
A: We normally locate a new tenant within 30 to 60 days, sometimes sooner. But it could also take longer depending on the time of year, market conditions, how well the house shows, and other variables. Often times the new tenant needs to give 30 days notice to their current landlord to move.
Q: What if I only have 2 months remaining on my lease? Can I avoid the Early Termination Fees?
A: Yes. If you have less than 3 months remaining on your lease, you're probably better off finishing your lease or paying out your remaining rent in full rather than terminating early. When a tenant pays the final month of a lease term and also notifies us in writing they will be vacating (return all keys, garage and gate remotes) by a date sooner than the last day of the lease, we will market the property as available on the earlier date. You will still have to maintain utilities per your lease agreement through the final day of the lease, but if a new tenant is located and moves in prior to the end of your lease term, you'll receive a rent rebate and will have successfully completed your lease term without having to pay a re-renting fee.
If you have more than 3 months remaining on your lease term, you're probably better off paying the re-renting fee though and letting us find a replacement tenant.