Pre-termination of Lease Agreement

[reinvestors88]

Hello everyone,



We are new in the rental business and wondering if anyone had experienced tenants pre-terminating the 1yr. lease agreement with a day notice. Reasons: doors are not closing properly (which according to them are not safe; we fixed them and change the main & side doors lock), 'very dirty' (not true as we sent cleaners to clean it thoroughly; we are again sending cleaners to clean the garbage that the tenants dump in the driveway), smoke & carbon detector is not working (the tenant/s who already in there removed the unit including battery; we put new battery and put it back in the ceiling), cooling system is not properly functioning (we have ordered a technician to check and fix it), the glass in a small portion of the window has crack (this will be fixed later on as it is not really a matter of urgency; the window is covered with two layers of curtains), the window is not easy to open, etc. We believe the issues are minor and fixable.



We informed them the day before they sent us the termination notice that we have basically fixed everything and will continue to improve the place (we have repainted the whole area, renovated the bathroom, resanded/tainted the hardwood floor, replaced the old stove with a new stove, etc.).



But, still they decided to vacate the place and gave us a notice of termination. Now, they are asking for refunds of last month's rent and the utility deposit and a confirmation that we are releasing them from the lease.



Our options are:

1 - let them go and return the last month's rent and utility deposits, and give them confirmation of release or

2 - go to Landlord and Tenant Board and file a claim against them for the rest of the rents.



If you are the landlord, what action/s would you take? Are there any other options for us - landlords? Can anyone share their expert opinions or brutal comments on this matter? Much appreciated.



REInvestors88

 

[jonathanb]

Im not an expert on the matter, but if it were me i would let them go and get the property ready to list and market it to find a higher quality tenant.



Other more seasoned investors may have more insightful things to say.



Also, knowing what province the property is in is always helpful.



Good luck!



jon

 

[reinvestors88]

We are considering to let them go. But, our problem is it would be difficult to find new tenants as most students at this school time have already their own place to stay till next year. We may end up vacant for few more months perhaps 1 year (?).



The student rental property is in Ontario.



Thanks a lot Jon for your prompt feedback.



REInvestors88

 

[TodorYordanov]

If you are in Ontario....



Maintenance issues as the one you describe are not acceptable reasons for termination of lease agreement.

Tenants have rights and responsibility. One of their responsibilities is to abide by the lease agreement and pay rent on time. They must give you 60 days notice if they want to vacate the property before the lease end date.

Do not return the last month's rent! Keep it, but do try to rent the unit immediately. If successful you may return all of portion of their money, minus expenses related to renting the unit.

If you made fixed all problems within reasonable time than you've done your job.



Having said that you are very limited in what you can do with a tenant who decided to leave early or left already.

You can go to LTB and plead your case with supporting documents of repairs and communication. You will probably be successful. But collecting money will be very difficult. You have to prove that despite your best efforts the empty unit was not rented and go after your former tenant's income - small claims court.



Here is what I would do:

1 Count this one as an experience that made me a better investor.

2 Start advertising your unit immediately.

3 Fix up the property to my standards.

4 Wait for the right tenant to come along the next time. Sitting empty for a month or two in Ontario is cheaper than having the wrong tenant. Trust me on this one.

5 Do a proper move-in inspection before the tenant moves in to discover all deficiencies and fix them ASAP.

6 Deliver on what you promise.



Hope this helps.

 

[jonathanb]

If its a student rental you could likely still get short term tenants. Market it like nuts and see what you can get. You may have to settle for 8 months or maybe even 4 months this year. But you could likely have it rented for a portion of the season to help out a bit.



Good luck.



jon

 

[reinvestors88]

Here is what I would do:

1 Count this one as an experience that made me a better investor.

2 Start advertising your unit immediately.

3 Fix up the property to my standards.

4 Wait for the right tenant to come along the next time. Sitting empty for a month or two in Ontario is cheaper than having the wrong tenant. Trust me on this one.

5 Do a proper move-in inspection before the tenant moves in to discover all deficiencies and fix them ASAP.

6 Deliver on what you promise.



Hi Todor,



Thanks for your expert advise.



1 - Yes, I agree. This is one will make us a better investors.

2 - We already advertised the units.

3 - We believed that it is in a very habitable condition compared to other rental units we've seen in the area. I would say it can be considered a home not rental units.

4 - This is the first time we experienced it. You must be right as you have experienced it before.

5 - We will do again.

6 - We promised only the brand new cooking stove. The rest are part of our continuous plan to improve the place to provide tenants with comfortable living space.



So, can we also keep the utility deposits until we find new tenants? Do we have to give the tenants confirmation accepting the pre-termination of lease agreement as per their request?



Thanks again for your help.



REInvestors88

 

[Thomas Beyer]

Tell them that THEY cannot terminate the lease and neither can you except for

a) nonpayment of rent

b) damage to property

c) assault



Tell them that they are liable for any repair bills and lost rent.



They canNOT terminate the lease because they believe s.th. is dirty or needs fixing. They can also not withhold rent.



Now, they might move out anyway. Thus: get ready to re-rent it after you made it rent ready !



Keep the damage deposit, deduct any repairs that might be required plus any lease losses and send them an invoice for the remainder.



So, if they signed a 12 months lease, say for $1000, and are now gone after 6 months, and it takes you 2 months to re-rent after spending $800 to clean and fix their place .. send them this invoice: -$1000 (damage deposit) + $800 repair + $2000 lost rent = $1800



Now, usually you will not have their address and will have a hard time collecting. Try anyway .. or give it to a collection agency.



This happens a lot .. get used to it !!

 

[reinvestors88]

[quote user=jonathanb]If its a student rental you could likely still get short term tenants. Market it like nuts and see what you can get. You may have to settle for 8 months or maybe even 4 months this year. But you could likely have it rented for a portion of the season to help out a bit.



Good luck.



jon




Thanks Jon. That's exactly what we are looking for - short term tenants. As you said, even 4 months rent can help out a bit. Thanks again.



REInvestors88

 

[reinvestors88]

Thank you Thomas for taking the time to share your expert advice.



Sorry...just follow up questions...do we need to go to LTB or just tell the tenants that they can not simply walk away and terminate the contract. Is there a form (?) from LTB to fill up and notify them about tenants leaving the house with a day notice? Will it cost us a lot to go to LTB if we need to?



Again, thank you very much Thomas.



REInvestors88

 

[Thomas Beyer]

You can go to any person at any time and tell them something. Keep in mind that some tenants are "professional tenants" and know the in's and out's of the landlord-tenant act and how to manipulate it to their advantage, especially with rookie landlords. You may need professional help here, ie a property manager or eviction firm. Sending a stern letter outlining their responsibilities and likely futue liabilities might do the trick with this tenant. Also, law differs by province. Keep good records as it may go to court.

 

[reinvestors88]

Thomas, Jon and Todor,



Thank you very much for unselfishly sharing your expertise and experience on this topic.



We will weigh our decision based on the expert opinion and advice we got from you guys.



You really did a great favor to us. Thanks again.



REInvestors88

 

[jonathanb]

Keep us posted on how it turns out!

 

[reinvestors88]

For sure so others will learn from this experience. Thanks again.



REInvestors88

 

[ShannonMurree]

For future, always do a move-in checklist with the tenants upon first taking possession. This potentially could have been avoided unless, and it sounds like from my professional opinion and experience they're using these as excuses and could have potentially just found something cheaper or some circumstances changed.



Depending on your rental agreement (I assume you have the lease in writing, not verbal specifying a term/time period in place); in Ontario it cannot be terminated prior to the expiry of that term unless you both mutually agree in writing and use the Board approved forms. However, the tenants have the right to sub-lease and you cannot unreasonably with-hold this but they're still financially on the hook. If only a month-to-month tenancy, they can leave providing you're given 60 (sixty) days written notice.



Otherwise, you can take steps above as mentioned OR say "look, here's the situation and we can make this as difficult as easy as we can. Legally, you have to complete your lease term and have to pay for it. Or, if you can find really good tenants to replace you (you still MUST do all your due diligence and credit/reference checks), on successful checks, will rent to them and release you. Or, ask if there's an ulterior motive, honesty and see if there's validity to it before coming across as a tough person. If all else fails - then take the legal route. I find I get more cooperation from my tenants when I'm nice, show an interest yet they know the boundaries and not afraid to use anything and everything I can within the confinements of the law (this will come for you with more time and experience)



Much success either way. Some great resources mentioned above from other experienced investors too.

 

[reinvestors88]

Thanks Shannon.



We agree to all you mentioned. It is a great learning experience for all of us.



Thanks again.