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Help with tenants

Simondial

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Hi I just purchased my first rental property a month ago.
It is a triplex and I am living in one of the suites.
I have assumed the leases of the sitting tenants and the lease is up at the end of August.
The tenants in one of the suites have decided that they want to move out at the end of April.(Two weeks notice)
I am looking for advice on how to proceed as it was kind of out of the blue.
Thanks.
 

dpeacock

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What does your lease say? Is it a fixed term or month to month?
In the case of a fixed term, you have some options. They can move out and break the lease. The tenants are still responsible to pay the rent until you find another tenant or the lease terminates. You're required to put forth your best efforts to find a tenant if they break the lease. If you find a new tenant for less money than they were paying, then the departing tenant must pay the difference for the remainder of their lease. We also put in our lease that a tenant who breaks a lease will pay us a re- leasing fee of between 500-800. I'd suggest talking with the tenant, and leering them know that you're sorry to see them go and this is how we do it. Often, the tenant will decide to stay for the term of the lease. This assumes you have a tenant with good credit that cares about keeping their credit in good condition and wants to avoid a judgement against them if you have to go to court. Fair and firm.
 

Simondial

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Excellent information. Thank you.
It's a tricky situation as I have inherited the tenants mid lease. It's a 1 year lease that expires in August.
I'm probably going to let them break the lease at the end of May, also forfeiting the damage deposits if they can't find new tenants. Essentially meeting them half way.
 
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dpeacock

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I'm assuming they want to use the damage deposit as last months rent? Not allowed, but if you let them do that, you may want to do a walk thru right away so you don't get left with damages. Or you begin the eviction process on may 1 if rent is unpaid.
 

Thomas Beyer

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Treat it like a business. If tenant breaks a lease why give them any breaks ? You can raise rents in AB with two months notice, to any amount, once a year. Do that three month before any lease is up. Of course right now tenants are harder to find and rents are lower than the boom boom Tiger Woods years of 2013-2014.
 
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Caleb West

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Just don't let it turn into a battle , they can do more harm to the building than you can collect. Give them a fair deal and expect to give them a great deal, referrals can be great, maybe an incentive if they help land a tenant
 

Sherilynn

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Treat it like a business. If tenant breaks a lease why give them any breaks ? You can raise rents in AB with two months notice, to any amount, once a year. Do that two month before any lease is up. Of course right now tenants are harder to find and rents are lower than the boom boom Tiger Woods years of 2013-2014.

Yes, why give them the break? Tenants should be expected to fulfill the contract or pay the lost revenue (in the case of vacancy or a rent reduction).

It's all in the approach. I politely inform them they are free to break the lease at any time, but they are responsible for rent and utilities until the end of the lease or a replacement tenant is found; and the best way to ensure we find a replacement tenant quickly is if they keep the place in show-home condition at all times and allow short notice showings arranged via text, phone, or email (to capitalize on people moving to town or having to move suddenly due to an emergency such as a fire or flood - I got a great tenant this way on December 15th). All of my tenants have cooperated because they appreciate that we're doing our best to accommodate their needs/wants.

Pretty sure it's 3 month's notice for a rent increase on a periodic (month to month) lease. And no notice is required for a rent increase on a fixed term lease providing the increase is made at renewal and it has been at least a year since the last increase.
 

dpeacock

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Sherilyns approach is exactly right. Tenants will often want to break a lease early. If you don't develop a strategy early on you'll be the one who loses every time. That's why you signed a lease. We had an identical situation last month and were also able to place a new tenant right away. The departing tenant was very cooperative. Once they understood their obligations. They were very eager to make sure the space was clean and presentable regarding showings. We were even able to rent for more. Now you're both working in the same direction.
 

Allison9856

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Question for you dpeacock - is the releasing fee legal and enforceable? We have one written into our lease right now and just signed in a lawyer as a tenant. His "free legal advice" to us was that a re-leasing fee in Canada is not actually enforceable....
 

Wayne Hillier

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Great question.

I've been meaning to look into that as well. I believe when it goes to the RTDRS the definition of "damages" is something that you can prove was paid for. Ex. Repairs, missed mortgage payment fees etc.

That's why late rent penalties don't work.

Best of luck with your new tenant Allison ;)
 

dpeacock

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He may be right. However our research indicted that you might collect if the expenses are documented and reasonable. We do everything we can to work with a tenant who wants to leave early, however we're all bound by the lease and we remind them of the agreement they signed with us, and the consequences of leaving the lease early. For example, if our lease ends in march and a tenant wants out in Dec, that's a bigger challenge. Typically, a reasonable tenant is willing to work with us to solve their problem. Having a strong lease gives the tenant a bit more motivation to co-operate. We've only had one tenant pay the fee. The others have worked it out with us and we haven't gone to court. For me, and the tenant, I believe, court is the very last option. Diligent tenant selection helps a lot as well.
 

Sherilynn

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The RTDRS will not enforce a re-letting fee. However, we include it in our leases and deduct it from the security deposit (for tenant turnover not involving the RTDRS) because it was agreed upon in the contract.

The RTDRS definition of damages includes "lost revenue." Yes, you must prove lost revenue, but they will enforce it.

For a tenant breaking his lease last December (mid-month), we discounted the rent to find a tenant quickly. Our other choice was to keep the rent the same and potentially face a long vacancy.

We sued for damages and included the new lease (redacted for privacy) to prove we were losing revenue. We were awarded the difference in rent to the end of the original tenant's lease.

Be sure to attend the Alberta REIN events in May for more on RTDRS strategy. :)
 

Wayne Hillier

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The RTDRS will not enforce a re-letting fee. However, we include it in our leases and deduct it from the security deposit (for tenant turnover not involving the RTDRS) because it was agreed upon in the contract.

The RTDRS definition of damages includes "lost revenue." Yes, you must prove lost revenue, but they will enforce it.

For a tenant breaking his lease last December (mid-month), we discounted the rent to find a tenant quickly. Our other choice was to keep the rent the same and potentially face a long vacancy.

We sued for damages and included the new lease (redacted for privacy) to prove we were losing revenue. We were awarded the difference in rent to the end of the original tenant's lease.

Be sure to attend the Alberta REIN events in May for more on RTDRS strategy. :)


We're looking forward to it!
 
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