Q: I own and have rented a townhouse in one of the northwest suburbs of Chicago since 1990. I used to get my renters through newspaper ads, then Craigslist. More recently, I hired a local Realtor to list the unit in the multiple listing service (MLS). The Realtor found a new tenant much faster than I would have, and provided a credit check report, so it was worth her fee.
My question is about what I can do if a tenant moves out before the lease ends. My understanding is that I have a legal right to keep charging the tenant monthly rent until I find a new tenant or the lease ends. I also have to diligently begin seeking a new tenant. I’m wondering if I can expect reimbursement for cleaning and repairs beyond ordinary wear and tear, and advertising fees.
With regards to advertising fees, can I charge them the Realtor’s fee to find me a new tenant? That fee is typically one month’s rent, and it is based on the new rental rate, which may be a bit higher than what the renter had been paying. What if they move out just one month before the lease ends? Is it still appropriate to charge them for the Realtor’s fee?
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A: It’s nice to get a letter from a generally happy landlord. We’re delighted that you’ve had success renting out your townhouse for more than 30 years. Clearly, you know how to find good tenants and keep them reasonably (or very) happy.
These days, landlords have lots of options for listing their rental properties. These include listing the property with a real estate agent, or using online listing services such as Zillow.com, Apartments.com, Trulia.com, Craigslist.com, and Nextdoor.com, among others. Or, you might go the old-school route and put a listing sheet in your neighbors’ mailboxes (or under their doors), or stick a sign in the window or in your front yard. Each of these carries different costs and benefits.
Your question is really about your tenant and their decision to move out prior to the end of the lease term. Your lease agreement should contain a paragraph that describes the remedies you have should the tenant default under the terms of the lease. However, some municipalities may limit those remedies based on whatever landlord-tenant ordinances they may have passed. So, you’ll need to look at both your lease agreement and any local landlord-tenant ordinances to understand what actions you may take against a tenant who breaks your lease.
What happens if the tenant breaks the lease before the term ends? If you have advance notice and are able to re-lease the townhome without a financial loss, you may not have any actual damages to claim from the tenant. (Physical damage to the property is another story. We’ll get to that shortly.)
You’re right about attempting to minimize your financial loss by trying to re-lease the property quickly. In general, the law doesn’t look kindly on landlords who don’t take some action to limit the damage, particularly if the action doesn’t require much time or money.
In your case, you could relist the place for rent. If you find someone quickly, so that you don’t have a gap in your rental income, your only expense would be the fee paid to the listing broker for their service. However, if the property remains unoccupied for a month or two, your tenant should be responsible for making you whole. Generally, we think that you should be able to recover the listing agent fee, as well as any loss of rent you sustain due to the tenant’s early termination of the lease. But, you’ll need to talk to an attorney in your area to confirm what local laws allow.
Now, let’s talk about physical damage. There’s a difference between actual physical damage to the unit and ordinary wear and tear. For that matter, there’s also a difference between ordinary wear and tear and someone who leaves your property looking and smelling like a garbage pit.
Whether a property has been damaged can be subjective. Many landlords understand that a tenant’s ordinary use of a property will entail some wear and tear. But there is a line where “wear and tear” becomes physical damage that the tenant should be responsible for fixing.
For example, if a tenant leaves walls with holes punched in them, you should be entitled to recover money from the tenant to repair it. But if the walls have some scrapes from the tenant moving in or out, we don’t see that as a reimbursable expense. If you lease your home to a tenant with a cat or dog, and the pet repeatedly digs into the carpet or wood floor or has accidents inside the property, that could damage the floor (ask us how we know!). However, a small nail hole made in a wall to hang a picture may not be reimbursable damage.
We often recommend that landlords set the rules and guidelines for tenants, and go over those with them, before they move in. That way, the tenants understand what you will consider damage to the unit.
Cleaning is separate. Typically, landlords arrange to professionally clean a property after it turns over. We don’t think you can recover a cleaning fee unless the tenant leaves the property filthy, with garbage left everywhere. We once owned a property where the tenant’s cooking left a film of sticky grease on the kitchen ceiling. Ultimately, we couldn’t clean it and had to repaint.
There isn’t really a clear line for you to follow when it comes to weighing physical damage versus ordinary wear and tear. If you’ve had a good tenant, and they leave the property in fairly good condition, you’ll likely look over some minor damage.
But when a tenant defaults on the lease and vacates the property without paying in full, you should be entitled to recover money from the tenant for damage they caused to the home along with the expenses you incur in re-leasing the home — even if there is one month left in the term of the lease.
(Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask” (4th Edition). She is also the CEO of Best Money Moves, a financial wellness technology company. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact Ilyce and Sam through her website, ThinkGlink.com.)