When a tenant breaks the lease and moves out of your rental property earlier than expected, it creates a financial hardship for you, and a lot of stress.
At Service Star Realty, we don’t run into this situation very often because we have a strict tenant screening process which ensures we are placing tenants who will follow the terms of their lease. However, things happen. When one of our tenants needs to break a lease, we try to work with that tenant to create a win/win situation for everyone.
We’ll tell you about that today, as well as the rights and responsibilities of both landlords and tenants when you’re faced with this situation.
Know the Arizona Residential Landlord and Tenant Act
According to Arizona law, landlords are permitted to charge the tenants for two months of rent as a penalty for breaking the lease. This is good news for you, because you should be able to find a new tenant to rent the property within those two months. But, you’ll still have the hassle and the expense of finding a new tenant, marketing the property, and turning it over.
Another thing to remember is law does not permit you to charge double rent. So as soon as the new tenant moves in, you need to prorate the rent and refund the old tenant any prepaid rent they may have paid.
When your tenant notifies you that they will be leaving the property before the end of the lease term, send them a letter outlining your legal right to collect rent up to the day the new tenant moves is. Your tenant will likely not want to continue paying rent until the property is leased again, so you need to work something out with them. The security deposit often does not cover all the rent, utilities, pool service, landscape service for the interim time frame.
Re-Renting Your Phoenix Investment Property
You’ll want to get the property rented as soon as possible; we like to work with our tenants so that we can meet that goal and allow them to leave without owing us any additional money. Our goal is to have them work with us and show the property to prospects. We ask them to pay for the advertising fee and the leasing fee, and we also require them to keep the property clean while they help us show it .
Tenants who are moving out usually agree to this. They know that if they don’t cooperate, they will be responsible for paying the rent, utilities, and other housing-related costs until a new tenant is moved in.
It usually takes us two weeks to find a new tenant, so the process works smoothly. The current tenant is responsible for turnover costs as well because you as a landlord would not have to pay for them if the tenant had fulfilled the lease.
Communication and Cooperation
No landlord likes this situation. However, you want to have a good relationship with the tenant who is moving out, and you want to keep communication open. If you get into a raging conflict about the broken lease, you run the risk of having the tenant move out immediately, leaving you on your own to rent out the property, or you’ll have a bitter and angry tenant who damages or vandalizes your property on the way out. Work with your tenant to find a resolution everyone can live with.
If you have any questions about how to handle a tenant breaking your lease, please contact us at Service Star Realty. We would happily serve as your Phoenix property management resource.
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