When your resident breaks their lease, you have some specific steps that need to be taken, and we want to share those with you today.
The State of Colorado makes this process interesting because if the tenant notifies you that they are breaking the lease, the burden has shifted to the landlord. That burden is that the landlord must seek to mitigate any financial damages as much as possible.
How to Mitigate the Loss during a Lease Break
Your responsibilities as a landlord includes a few things:
- Posting the property for rent at a market price.
- Seeking to approve and place new residents as quickly as possible.
- Going out of your way to assure the transition from the old tenant to the new tenant is done in a timely manner.
Here is what the courts will not want to see. They will not want to see that your tenant dutifully gave you notice that they have to break the lease and vacate the property early, only to have you as the landlord insist that the tenant has 10 more months left on the lease agreement, and must pay for those months of rent while you do nothing to re-rent the home.
You cannot tell the tenants that they must pay you those next 10 months of rent while you do nothing. The courts are not a fan of that type of landlord behavior in Colorado.
It almost seems as if the law is promoting that residents can break their lease because as long as that tenant notifies you, the landlord must immediately take action to seek a new tenant. When a tenant walks out of the home without giving you notice, the provisions in your lease agreement should prevail, even in court. Always check with your attorney on these things.
Rental Agreements: Lease Breaks and Abandonment
The provisions in your lease should explain what happens when it comes to abandonment, which is different than a lease break.
Your lease should also have lease break provisions in it.
As part of those provisions, it will explain to your residents that if the tenants are unable to fulfill the obligations in the lease, they will need to take specific steps in order to ensure everything goes okay for all parties. Some of these steps might be:
- Give a notice of at least 60 days, so they will owe rent for at least that period of time.
- Possible penalty fees for breaking the lease which could include a month’s rent.
- Date by which they must vacate.
- What the property condition must be in when they vacate.
Details like these should be spelled out specifically in the lease. If there is a lot of ambiguity in the lease, there is going to be a lot of ambiguity when tenants break the lease and this confuses the process for everybody and only elevates the frustration.
Hopefully, you’ll never need this lease break information. However, things happen – even to great tenants. We expect residents to fulfill their full term but in situations where they are unable to, these pointers should help. If you have any additional questions, please feel free to contact us at Muldoon Associates, where we are always happy to help you through the process.