Posts Tagged Security Deposit
Tenant Breaking Their Lease
Life happens and Tenants break their leases for many reasons . . . they can’t pay any longer and are skipping out or something as innocent as getting a great deal on a short sale and just learning that they have to close in 2 weeks . . . YIKES!! Either way, you have to know the Tenant’s and your responsibilities when this happens.
As you probably already know, the Tenant has the responsibility for the rent through the end of the term of the lease as stated in their lease agreement . . . and to leave all the utilities on and pay for them until the property is re-leased (if you used our lease form). You, as the Landlord, if you want to be able to collect any rent through the end of their lease term, must immediately and diligently market the property for lease again. Be careful not to market the property at a higher rent amount than the previous Tenant paid or you may have difficulty in collecting money for lost rent in court if . . . you “Jacked the Price up” which is how a judge may see it. You will only be entitled to the lost rent between the time your previous Tenant vacated or last paid rent and the beginning of a new lease with your new Tenant . . . no double dipping!
One other very important detail, as soon as the Tenant vacates the property, do an “Estimated” final accounting of their security deposit . . . or Move Out Statement. Of course you won’t know all the final numbers when you prepare this and that is why it is called an “estimated” statement. But, in this statement, you are going to assume that you will not find another Tenant for the property before the end of the lease term. You will also estimate the costs of any repairs over and above “normal wear and tear” the Tenant may have caused. This will show a worse case scenario. Send the statement out within 21 calendar days (in the State of California) of the Tenant moving out with a check for any amounts left over from the funds (typically security deposit) you are holding for the Tenant.
Within 21 days (calendar) of all the repairs having been completed and either the end of the lease term has come or your new Tenant has moved into the property, you will need to do what I call a “True-Up” Move out statement. This will show all of the actual costs to your Tenant, giving them credit for any time of their lease that the new Tenant will be in the property (you can’t double dip on rent) and cut a check for any differences. Oh yeah, be sure to include copies of receipts for all work performed that you are charging the Tenant for.
The subject of Tenants breaking their lease along with many other property management challenges are covered extensively in the new Property Management Training Program; Manage to Make Money . . . . the Real Estate Series. This new series has been developed around the book: Manage to make Money . . . Your Guide to Profitably Managing Rental Properties (available for California, Oklahoma, Kansas or Missouri) written by Pat and Kris Larkin who are seasoned real estate professionals and specialists in the area of Property Management.
To visit their website and see the full spectrum of Rental Property resources; Books, E-Books, Documents, Forms, Form Letters for nearly every occasion, Checklists, Videos more money saving tips and tools . . . and the list goes on and on, go to: ManageToMakeMoney.com
For a short video on this subject CLICK HERE
Thank you for reading!
Pat and Kris Larkin