Tenant wants to break lease early

I have a rental property in NYC. The tenant wants to break the lease early (6 months before lease termination). According to what I’ve read online, the tenant is obligated to pay the remainder of the lease term. Tenant’s first offer to me is 2 months of rent ( last month, and security). Looking for some advise? Thanks

decoart

in General Discussion 6 years and 4 months ago

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drobinson | 6 years and 4 months ago

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Hello Susan,
I am an agent with Corcoran Group in Park Slope and I come across this all the time with my landlords and their tenants requiring a lease break.

Best advice I can offer; I would list your apartment right away with professional photos, draft a floor plan, and start showing right away. For the landlord, I would hold the current lease holder responsible for the monthly rent until the new tenants move in. This way you are covered in case it does not rent and you have empty days on the market paying out of pocket.

I have a 99.9% success rate for renting out lease breaks and saving the current tenants money, in addition, finding a new tenant for the landlord so everyone is happy in the end.
Hope all is well
Michael Hartman

drobinson | 6 years and 4 months ago

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Hello Susan,
I am an agent with Corcoran Group in Park Slope and I come across this all the time with my landlords and their tenants requiring a lease break.

Guest User | 6 years and 4 months ago

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What is the cost benefit for hiring an attorney for the risk of collecting on the 13 days? I personally would not want to take on the headache

Guest User | 6 years and 4 months ago

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What is the cost benefit for hiring an attorney for the risk of collecting on the 13 days? I personally would not want to take on the headache

decoart | 6 years and 4 months ago

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@Slopefarm good idea on the escrow. thx

slopefarm | 6 years and 4 months ago

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13 days of rent is not a lot to sweat. 2 months’ rent is a lot better than if they move out and stop paying you and then you higher a lawyer and sue for it.
Make a counter offer — 2 months’ rent plus a third month in escrow which you keep if it is not rented out and you return if it is. There is value in the certainty of the money.

decoart | 6 years and 4 months ago

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Some great advice here guys. Thanks. I had my broker pull up the recent average days to rent in my area/ my apartment size/etc. Average days to rent is 73. Add in the fact that I have a finicky condo board when it comes to applicants. Yes this is a condo and not a coop. My fear is I go over the 2 month period and I start losing money.

A potential solution is to put the unit on the market and the tenant pays rent until it’s rented. The tenant could end up paying less than two months rent. Win for the tenant. At the same time I’m not riding the risk of having an empty apartment. I’m not trying to get a windfall here, I just want to be made whole.

Tenant and tenant’s parents are on the lease as tenants. Parent’s are not actually residing there. They are wealthy people. I don’t think the parents want their credit impacted b/c of a few months rent. They are RE investors that tap the banking system for financing.

And as @mozeeatupu, which I confirmed with my attorney friend, the law is on the side of the landlord.

gto1 | 6 years and 4 months ago

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What is the time frame in terms of their exit if you accept the lease break? What I often do is have my broker coordinate a walkthrough with the occupant, list it, and coordinate showings. 90% of the time this works within a month and we are able to re-let without rent loss, especially during Spring. This only works with proper notice from the tenant, but may be a worthwhile course of action considering the tenant is financially obligated through the lease term.

NeoGrec | 6 years and 4 months ago

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Don’t use Craig’s List! It’s such a mess. I don’t think too many legit apartment seekers look there these days. I have StreetEasy to be entirely effective.

mozeeatupu | 6 years and 4 months ago

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In NY the residential landlord has no duty to mitigate its damages and may recover the full value of remaining payments owed under the lease for the entire lease term even if the landlord makes no attempt whatsoever to offset, minimize, or cover its losses.

brokelin | 6 years and 4 months ago

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Well, it is hard to tell if it is just slightly more nice and expensive than average, or really much more highly priced. If the latter, then the tenant not having the funds if you hold him to the lease may not be an issue. In any event, you should try to rent it to mitigate your damages, whether or not the law requires you to, as it is cheaper and easier to get $ from a new tenant than pursuing the tenant legally. Craigslist is free, and it can’t hurt to put it there – you may or may not get bites for a very highly priced place, but there’s no harm in trying. If it is really highly expensive, a brokerage that specializes in rentals, and who actually does a lot of high end rentals, may help. If you are concerned about the fee, you can always pay it yourself, as is routinely done in some other cities where rents are quite expensive (though next down in price from NYC prices). Any smart tenant (or landlord) simply calculates any broker’s fee into the expense of the time the renter will live there – so it really doesn’t matter who pays the fee when you just compare dol lars to dollars. If it is really highly expensive then a prospective tenant may not mind paying the fee. You or your broker might market such a place on Zillow or Trulia and other such places where you are likely to find people who are relocating to NYC – that’s what comes to mind when I think of people willing to rent the really highly priced rentals. For those sorts, if they are coming from someplace where the landlord pays the broker’s fee, then paying the fee and building that into the rent may give you an advantage psychologically with some prospective renters.

panda10 | 6 years and 4 months ago

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I get it jaymes- and ultimately it’s your decision. I don’t know your business and I don’t mean to seem glib with advice. But let me please make one final point. If this tenant stays, at the end of the 6 months you have to re-rent anyway. If you say it may take longer than 2 months and your plan was to start marketing in the last 3 or 4 months of the lease, you really only bought yourself one (or 2) extra month(s) (I’m comparing the 2 months rent your current tenant is willing to pay now vs the amount of potential time you think it takes to rent). So any “marketing time” minus the 2 months you literally “banked” is the way you should evaluate your potential loss. In this case it seems minimal. I would then compare that with the costs of suing to see if its worth it. Good luck.

decoart | 6 years and 4 months ago

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@ brokelin This is a high end apartment with high end finishes. I’m not sure craigslist is the place to rent it. I have considered it, not sure what type of clientele is on CL. Its sucks to pay the brokers fee, so I’d guess “for rent by owner” should be an option for me.

I worry about timeline b/c it’s not a $3500 cookie cutter apartment where there’s a huge supply of potential applicants. There are a few applicants and the timing needs to be right for them.

brokelin | 6 years and 4 months ago

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Panda is right, and spot on with legal advice. What your tenant is offering you is more than fair. People have reasons to move outside of contracts (new job, lose job, personal relationships, etc.), and recognizing that is just recognizing that life trumps contracts. Most renters can’t pay for two places to live at once, regardless of the fact that we make them sign year-long leases.

If you think you can’t find an acceptable tenant in 2 months, in this hot rental market, is there something wrong with the apartment? Have you not maintained it – do you need to do some basic upgrades to make the place reasonably habitable? Decent (not even necessary nice) apartments rent quickly. Is the apartment priced competitively, in line with the market? You don’t mention why you tenant is moving – is there something about the apartment?

If you only rely on brokers to rent, depending on the neighborhood and the local market, it may take many months to rent. Brokers earn so little on apartments that many don’t even bother to market or show them. In my neighborhood, I’ve see n brokers who don’t do rentals price any random rental that comes their way from some unsuspecting owner at about twice what the place will actually rent for, and then watch it sit until the owner wises up and rents it through other channels for a market price. You can find renters yourself easily via craigslist. If you use a broker, make sure you use one who specializes in rentals.

decoart | 6 years and 4 months ago

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@panda10….. you make some good points. I’m worried It takes longer than 2 months to rent. Then I’m out of pocket. I’ll call my real estate broker and get a gauge of how good the market is now.

bedstuy06 | 6 years and 4 months ago

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I agree with panda10. Sounds like a reasonable offer. If the rent you will ask is not too high and the the apartment is well maintained, you will have many applicants to choose from. I’m so grateful to have had reasonable and kind landlords until I could buy. Whatever happened to working with tenants amicably?

panda10 | 6 years and 4 months ago

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Why wouldn’t you take the two months and re-rent? The rental market is hot and you can get more than what the lease says. Consult a lawyer? I’m a lawyer. People who say that have no idea how much it costs, how long it takes, and the chance of actual recovery. On the one hand you have a tenant that is responsible and offering 2 months rent to break early. On the other hand, you want to refuse the 2 months, hire a lawyer for a few thousand (minimum- and no one will take a contingency in this instance), wait for a court date, make the other person hire a lawyer and defend, and then wait for a judgment. It may cost less assuming you’re just going to hire someone to file papers and a motion for summary judgment, but really, I think you’re missing the point. Most tenants who break leave with no additional comp. Save your “Call a Lawyer” card for when you need it. Take the 2 months, throw a coat of paint on it, hire a cleaning lady, rent it out, make money.

decoart | 6 years and 4 months ago

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Yeah I think off laying the potentially lost rent risk onto the existing tenant is a better gamble than accepting the two months and hoping I get an acceptable tenant.

The rental property is in Manhattan.

slopefarm | 6 years and 4 months ago

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Consult a lawyer on this but you might have a duty to mitigate, which means you would need to try to list it and get a replacement tenant. Your breaching tenant would owe you whatever amounts were due through the lease term less any rent received from the new tenant during that period. Whether you have this duty may depend on what borough you are in. Whether two months is a good offer depends on how many months are left and how fast you think you could rent it out again.

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