What to do if your tenants break up?

by Michael Currie | Apr 10, 2016 | 0 comments

This is a common tenant relation question.

I was asked this question most recently last week.

There are several possible outcomes to the situation. I will give you some possible scenarios and the pros and cons of each.

You also need to remember the object is to keep the unit full and collect all the rent all the time.

I was told by a mentor early in the business, that the easiest way to rent an apartment stress free is to collect the rent on the first of the month.

We all know that, this is not always possible.

The first question can be: is it a mutual or at least amicable break up, or a I hate your guts kind of break up?

The second question could be: how much time is left in the lease?

The third question is: can either of them afford the rent on their own?

The fourth question is: If one person is going to take over the lease, is a roommate or co-signer possible to help make sure the rent gets paid?

The fifth question is: Is there high demand for the unit, if you terminated the lease could you quickly find qualified tenants?

The sixth question is: What outcome would be best for you?

Scenario 1: The do nothing approach. If the tenants signed a one year lease, they are responsible for the lease. It is not your problem that they are breaking up. They signed a legal agreement, they can deal with it. Leave you out.

The pro – If they are a professional couple with good jobs, and a reputation both financially and morally that they want to maintain, they will find a way.

You need to interpret correctly the reason they are reaching out to you. Is it just an FYI or is there going to be a financial problem.

The con – The more likely reason they are contacting you is that it is not a mutual breakup, and neither one feels they can afford the apartment on their own. If you do not arrange a meeting to talk to them, you could end up with a mid-night move situation. It is not good for them or you, if they leave unannounced. They will also likely leave stuff behind for you to clean.

Scenario 2: Removing one tenant from the lease approach. Have one of the two take over the apartment, and do up a new lease in their name for the remainder of the term.

Pro: If the tenant that is taking over the lease can afford it, this would be a neat and tidy option.

Con: If the tenant taking over the lease cannot afford it, they could end up falling behind on rent. This could lead to a lot more hassle for you having to chase the person for rent.

Scenario 3: Allow the tenants to break the lease. Make them give you one full months notice, fill the vacancy and move on.

Pro – If you are able to rent the apartment quick, it might be a good way to cut your losses, and allow the tenants to move on. You might even have an opportunity to move them into other cheaper apartments. Maybe if you have a couple of bachelors available (not in the same building would be best).

Con – If it takes a couple of months to fill the vacancy, you could end up with a month of last revenue. It also costs money to turn over an apartment.

Scenario 4: Allow the current tenants to sublet the apartment.

Pros – It puts the burden on them to find a qualified tenant.

Cons – It puts the burden on them to find a qualified tenant. You are a professional, I would be very cautious about having breaking up tenants find their ideal replacement.

If they bring you several unqualified tenants, they may think you do not actually want to help them. They could blame you for not accepting a potential sub-letter.

In the case of the landlord who contacted me last week, he met with the breaking up tenants, and allowed for one of them to take over the 6 months remaining on the lease. He is confident based on the original application that the tenant who is staying will not have any problem covering the entire lease payment.

In my opinion, I always believe it is better to be open minded in these situations. If you handle your tenants well, you may get them back, or keep one of them long term. If you are willing to explore several options with your breaking up tenants; I am confident that the odds of a positive outcome are much greater.

What have you done in this situation?

Until next time,

Design Your Landlord Experience,

Michael P Currie

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