Keep Tenant Who Breaks Lease Early on the Hook for Rent Owed
If a tenant tells you that she’s moving out before her lease ends and she stops paying rent, it usually isn’t a big deal. In the best case scenario, you’ll be able to quickly re-rent the apartment to a qualified tenant and apply the former tenant’s security deposit toward any unpaid rent. So the tenant wouldn’t be on the hook for anything.
But what if you run into a string of unqualified applicants and it suddenly becomes harder for you to quickly re-rent a vacated apartment? Rushing to rent the apartment to an unqualified applicant may increase problems for you in the long run. In this situation, you may want to take your time to thoroughly screen applicants. New York courts have ruled that the owner has no duty to mitigate damages or re-rent an apartment during the lease term if the tenant breaks a lease and moves out [Smith v. James, January 2009].
In one case, an owner sued a former tenant for unpaid rent. The tenant’s lease didn’t end until April of the following year, but the tenant moved out of the apartment in June. The owner claimed that the tenant owed rent for the months of August through the following April, and the tenant claimed that the owner couldn’t demand this rent from him because it didn’t try to re-rent the apartment soon enough. The court ruled that the tenant was still responsible for paying rent due for the full lease term [Hudson Waterfront Co., D, LLC v. Stonebridge, November 2004].
It may take you months to re-rent the apartment. That’s why it’s important for you to send a letter to the tenant, letting her know that she’s responsible for paying the rent owed until the end of her lease or until you re-rent the apartment. Sending this letter makes clear to the tenant that you expect her to continue paying the rent owed until you re-rent the apartment. And if she doesn’t and you have to sue her for the rent owed, the letter may give you a stronger position in court.
Here’s a rundown of your rights, and a Model Letter:Inform Tenant She’s Responsible for Paying Rent Until Lease Ends, which you can send if a tenant tells you she plans to move out early.
Tenant Responsible for Rent Owed Until End of Lease
A tenant who breaks the lease must pay you the rent due until the end of the lease, or until you re-rent the apartment. For example, in one case, an appeals court ruled that an owner was entitled to collect rent for the four months an apartment remained vacant after a tenant moved out before his lease ended [320 Realty Assocs. v. Nunez, October 2001].
However, you should try to make an effort to re-rent the apartment to someone else as soon as possible, although you’re generally not legally required to do so. It’s a smart business decision, since it may be hard to get the rent owed from the tenant who vacated. It’s best if you can re-rent the apartment at the same rent the tenant was paying, or higher. But this may not be possible. If you can re-rent the apartment only at a lower rent, the tenant is responsible for paying the difference between the rent she was paying and the lower rent you’re collecting from the new tenant, for the months remaining in the tenant’s lease.
For example, an owner sued a tenant for the balance of the rent due under his lease after the tenant moved out. The tenant’s monthly rent was $4,500. The owner re-rented the apartment two months after the tenant moved out, but could get the new tenant to pay only $3,000 per month. The court ruled that the tenant was responsible for paying the $4,500 rent for the months the apartment was vacant, plus—for the months left on the tenant’s lease after the apartment was rented—the difference between the tenant’s rent and the new tenant’s rent [BMB Properties, LLC v. Koondel, November 2002].
Send Letter to Tenant Planning to Move Out Early
If a tenant tells you she’s going to break her lease and move out early, send her a letter telling her she’s still responsible for the rent until the end of the lease or until you re-rent the apartment. Sending this letter will help avoid confusion by making it clear to the tenant that she’s responsible for paying the rent. So it may increase the chances that the tenant will do so.
Another reason to send this letter is that it may help you in court if the tenant doesn’t pay the rent for the vacant apartment after she breaks the lease. That’s because tenants often argue that you or one of your employees told the tenants that they were off the hook for the rent owed after they moved. But the tenant will have a hard time making this argument if you have written proof (in the form of the letter) that you told the tenant she was responsible for the rent until the end of the lease. Your letter, like our Model Letter, should:
- Confirm that the tenant is planning to vacate the apartment before her lease ends.
- Advise the tenant that she’s responsible for paying the monthly rent until the lease ends unless you can re-rent the apartment for the same rent as, or a higher rent than, the rent that the tenant was paying. Also, tell the tenant that if you’re unable to re-rent the apartment for the same or higher rent and must settle for re-renting the apartment for a lower rent, the tenant will be responsible for the difference between the two rents for the months until her lease ends.
- Let the tenant know that you’ll apply her security deposit toward the rent she owes.
- Give the tenant a chance to call you to arrange a settlement. Leave the door open for the tenant to call you and arrange a written out-of-court settlement. For example, if the tenant still has six months to go on her lease, you may agree with the tenant to let her off the hook for the entire six months if she pays three months of rent to you. That way, you can avoid the time and money it will take for you to go to court to get the entire six months of rent from her.