Reduce the Risk of Court
If youâ€™re concerned you may have to take your tenant to court for refusing to pay rent while the unit is vacant, an early termination clause is a good way to reduce that risk. In the event you do have to take your tenant to court, your best evidence is a signed copy of the lease and proof of which months your tenant owes you for.
Be prepared for your tenant to present false charges citing inhabitability or intrusiveness if the issue escalates to court battle. Keep maintenance records and photographs to show you maintained the unit well and made repairs quickly. This is especially necessary if the tenant vacates without warning.
Seizure of the Security Deposit as Rent
Requiring an early termination fee is a legitimate way for both owners and renters to protect themselves, however, seizing the security deposit and applying it towards rent is not advisable. The security deposit is collected to make any repairs to the unit caused by the tenantâ€™s occupancy beyond fixing normal wear and tear. If you put this money toward rent, you no longer have the funds to make necessary repairs as you normally would when a tenant moves out.
It is also important for owners to consider that a tenant who wants to terminate their lease will likely anticipate losing their deposit. In this case, theyâ€™re more apt to leave the unit a mess or even deliberately damage the unit. Youâ€™ll need this deposit to make the repairs and then file a claim for uncollected rent.
Should You Let Your Tenant Terminate Early?
As always, it depends. Your relationship with your tenants and reputation as a landlord matters just as much as your bottom line. You canâ€™t force them to stay, but you can remind them that the lease continues to hold them financially responsible until you fill the unit. A rock-solid lease will help you out and make sure youâ€™re compensated when tenants want to leave.
Keep in mind that if you let one tenant break their lease and not another, you run the risk of discrimination. Itâ€™s best to have a policy you can apply to all tenants. Managing your tenants, finances, and documentation gets complicated. Consider bringing on a property manager to handle the ins and outs of caring for a rental property. If youâ€™re looking for a reliable and experienced property manager in the Colorado Springs area, consider Sellstate Alliance Realty & Property Management for all of your realty and property management needs.