Early Termination Fee? - Landlord Forum thread 334112

Early Termination Fee? by NJ999 (NJ) on April 25, 2015 @19:49

Can I legally add an early termination fee clause to my lease?

Something like "if tenant moves out before the end of this lease, tenant must pay an early termination fee of 1 month's rent. Security deposit cannot be used as early termination fee."

In 2015, I've had 2 tenants break their 1 year lease. I was able to re-rent with only 2 week vacancies but I'd really like to impose some kind of penalty to encourage people to stick it out.

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Re: Early Termination Fee? by Garry (Iowa) on April 25, 2015 @20:47	[ Reply ]

Do not do it. You are only hurting yourself by limiting the penalty amount to 1 months rent, even if you could not get your place rented for 4 months. In most states, the LL must try to re-rent the place asap, and charge the former T any loss you suffer in rent loss, advertising costs, and utilities that the T was supposed to pay during that time they should have been in their name. However, most judges will limit the loss of rents to 2 months, as they figure that was enough time for you to get the place re-rented. If you had to re-rent the place for,say, $25 less per month, that is also chargeable against the deposit. And, yes, you must use the deposit against any losses you incur. If the losses are more than the deposit, then you can sue them in court for the remainder.

Re: Early Termination Fee? by Anonymous on April 25, 2015 @21:50	[ Reply ]

Yes, you can add a late fee to your lease for use with a new tenant. I charge 2x rent plus $300 as a single sum for my early termination fee. That differentiates the amount from the SD so tenant's don't assume they can use the SD as the ETF. Because it is a fee, in my state I'm allowed to collect it without regard to how long the vacancy lasts. I've collected 3x this year due to tenant's leaving early. In the case of a long-term tenant, I usually work with them to get the unit re-leased with no gap in tenancy and when I can do that, I will waive the fee, although I don't have to.

Re: Early Termination Fee? by Anonymous on April 25, 2015 @22:02	[ Reply ]

I was wondering as to the reason the tenants left early?

Re: Early Termination Fee?

Re: Early Termination Fee? by anon on April 25, 2015 @22:26	[ Reply ]

A buy out fee. Include in your lease a 2 month rent buy-out fee if the tenants want to leave their lease early.

Re: Early Termination Fee? by Joel on April 26, 2015 @12:58	[ Reply ]

I do not think you should give the option to the tenant in the lease because they start out knowing they can break the lease whenever they want and they can get away with the cost of the termination fee. What if they are responsible for 6 more months and they stick you in the middle of the winter? Na uh. No way. LPA advice I got: Worry about the deal when it happens. You have more leverage when they are bound to a good lease agreement.

Re: Early Termination Fee? by altagracia on April 26, 2015 @18:33	[ Reply ]

Check your state law .It is the best thing to do.

Re: Early Termination Fee? by Daniel (CA) on April 30, 2015 @14:01	[ Reply ]

I tried adding a fee like this, and it ended up being interpreted as permission to break the lease and the amount open to negotiation. = extra hassle.