CONTRIBUTORSElite AgentEPM: Best Practice & Legislation

Nick Brown: Why PMs shouldn’t fear the words “break lease”

The term we hear so often in our day-to-day life as a property manager (PM) is “break lease”.

Life changes and nothing is permanent, so a tenant wanting to move out before their lease end date is something we will never avoid as a PM. 

For me personally, I struggle with the term “break lease” as the tenant is not breaking the lease, nor is a new tenant ‘taking over’ the existing tenancy.

These terms have been used for so many years now but don’t really describe what is happening.

The fact is that the current tenant is ending their agreement early.

A new tenant, once found, commences a new tenancy with no direct relationship to the outgoing tenant or their lease and terms.

Of course, in this circumstance the outgoing tenant may be liable to reimburse the owner for financial loss (advertising costs, letting costs, cleaning, and garden upkeep as well as rent loss etc).

This is something that is assessed on a case-by-case basis.

Over my career there have been some interesting issues that have caused the tenant to either be asked to vacate or choose to end their agreement early.

When I look back at what has caused a tenant to vacate, sometimes I laugh, sometimes I cry and sometimes I just think we couldn’t have predicted that!

Afterall, we are managing the property that the tenants call home.

Home is where a lot happens and sometimes those things are not necessarily fun or happy.

We all know that not only are we PM’s we often feel like financial advisors, counsellors and even punching bags.

What we must continue to remind ourselves of is that sometimes everything is out of our control, and we simply must do the best to mediate, communicate and keep both the tenant and landlord informed through each step of the vacating journey.

Mother nature certainly plays her part and can impact tenancies.

Cyclones, tornados, floods, and storms to name just some of the impacts we face.

Properties being rendered wholly or partly unliveable will cause reason to end a tenancy.

Sometimes that may not be because the property is physically coming down around the tenant. 

But there may be an instance of a vermin infestation because of a flood, mould taking over because of substantial leaks, or reptiles calling the property home without asking permission.

Sometimes it could even be that the tenant doesn’t like the feel of the home as they think there is a ghost at the property or some element of spiritual impact that makes living at the property difficult.

Our role is to not pass judgement nor challenge a tenant on their beliefs.

Our role is to, as best as possible, communicate the tenant’s thoughts and wishes to the landlord and hopefully reach an amicable and mutual agreement as often as possible.

With that said we do need to be mindful that we work for our landlord and must ensure that their best interests are always put first in any negotiation, communication or advice provided.

I recall a tenant reaching out to me some years back as they felt that the property was haunted and that they had been physically dragged down the hallway on two occasions.

They wanted to be able to move from the property as quickly as possible as they didn’t feel safe living there.

Now some of you may think that the tenant sounds crazy.

Whilst I am not siding with the tenant (nor against them), this instance led me to understand that I truly cannot make a judgement call on what I felt was right or wrong and that I had to simply remind the tenant of their obligations under the tenancy agreement and we worked through ‘ending their agreement early’ with them. 

The result was that we found a new tenant to move into the property.

The current tenant was responsible for the rent loss the landlord suffered between tenancies along with compensating the owners for the letting and advertising costs (as per the terms outlined in the tenancy agreement). 

Whether the tenant was physically dragged down the hallway or not is yet to be proven, but the moral in the story is that no matter the reason, or how quirky it may seem to you at the time, your role is to negotiate between both landlord and tenant and bring each party back to the terms (and obligations) of the agreement they entered in to.

The best case scenario, no matter the circumstance around why the tenancy is ending, is for both parties to have not only a clear understanding of what lies ahead but also agree on the terms that are outlined.

In some instances, landlords may be advantaged by the tenant ending their agreement early.

If this is the case it’s up to the PM to educate the owner around this as this will help with negotiating between parties.

Remember, our role is to negotiate and communicate, we are not the decision maker!

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Nick Brown

With over 20 years’ wide-ranging experience in real estate, Nick Brown is the founder of Edge Property and runs his own Training and Advisory Service to educate agencies and their teams.