A signed lease is a binding legal agreement that can’t be broken — except in the few exceptions when it can. Here are some common scenarios to watch for as a landlord or a real estate investor.

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A signed lease is a binding legal agreement that can’t be broken — except when it can.

Landlord-tenant laws vary widely between cities and states. If you’re a landlord, consult your local laws or a good attorney before terminating a lease or taking legal action against a tenant. 

There are circumstances in which tenants can walk away from a lease without any legal or financial repercussions. On the other hand, there are conditions that allow landlords to remove tenants, regardless of how long they have left on their lease.

When can a tenant break their lease?

There are a number of conditions under which tenants can break their lease — an illegal separation that, according to some estimates, is undertaken by one-third of tenants. That can be a little discomfiting for a landlord to hear, but the good news is that most conditions are avoidable for responsible landlords.

1. If the unit isn’t habitable

A tenant can legally break a lease if the landlord fails to keep the rental property in a habitable condition. This is generally defined as meeting local health and safety codes and supplying basic living requirements, such as running water, heat and clean and hygienic common areas. 

In general, a tenant can’t just pack up and leave the moment the rental doesn’t meet livability standards. The process usually requires the tenant to file a complaint with the landlord or the local health and safety agency describing the conditions. 

The landlord then has a certain period of time to address the problem. If the landlord doesn’t make the rental habitable during that timeframe, the tenant can legally break the lease and move out.

Most tenants who break their lease because of uninhabitable living conditions do so after months or years of landlord neglect. With regular maintenance and cleaning, conscientious landlords can easily avoid this situation.

2. If the landlord trespasses on the property

When a rental is under lease, tenants have rights nearly equivalent to homeowners. That means a landlord can’t just show up and barge in. 

Landlords may only enter a property for legally recognized reasons, such as inspections, repairs or showings, and they must give 24 hours notice. They are also prohibited from badgering tenants into allowing them entry. If they do, tenants could accuse them of harassment. 

Landlords must respect tenants’ boundaries under the law. If they enter a property without notice, authorization or a valid reason, a tenant can legally break the lease.

Similar to the habitability rule, a tenant can’t just pack up and leave because of an unauthorized entry. Typically, tenants have to obtain a court order directing the landlord to cease intrusive behavior. If the landlord violates the court order, the tenant can then break the lease.

3. If the tenant is a military service member or victim of domestic abuse

The Service Members Civil Relief Act allows active duty military members who are transferred to terminate their lease with 30 days’ notice. Similarly, in most states, victims of domestic violence are allowed to terminate their lease with only 30 days’ notice. In both cases, landlords can ask for proof, such as military deployment documents or a police report.

4. If the rental is illegal

Tenants can terminate their lease if the rental is an illegal unit that doesn’t meet local safety or zoning codes. In some states, they can even ask for a partial refund of all rent paid, as well as relocation funds to help them move, which costs an average of $1,400.

When can a landlord break the lease?

It’s a little more difficult for a landlord to break a lease, but it is possible. 

5. When a tenant violates the terms of the lease

With condominium and apartment building ownership becoming more accessible — half of all apartment buildings sold for less than $1 million last year — there are more landlords who have to deal with problem tenants. 

A landlord can ask tenants to leave if they break the terms of the lease. Breaking the terms could entail damaging or failing to maintain the unit, living with unauthorized long-term guests or pets, disrupting other tenants in the building, or not paying rent. 

Affording rent can be difficult for many tenants when rent prices have increased 149 percent and income has grown just 25 percent from 1985 to 2020. Landlords can issue tenants who miss payments a “pay or quit” letter, but it may be better to negotiate with renters instead of forcing an expensive eviction.

For other problems, a landlord can issue a “cure or quit” letter outlining a timeline for tenants to remedy the problem. If they do, the landlord can no longer terminate the lease. If they don’t, the landlord can proceed with an eviction.

Eviction is a legal process that takes place in a court. The process can be lengthy and expensive because you’ll likely have to hire a lawyer. Your tenant may stop paying rent while the case unfolds, and that double whammy to your cash flow can wreck even a seasoned investor.

6. When the landlord wants to occupy, renovate or sell the property

About 55 percent of Americans intend to perform repairs on their homes, and landlords may want to make lucrative improvements so they can move into their property. Landlords can remove tenants despite their lease — but only if they’ve inserted clauses in their lease explicitly granting themselves these rights.

If you fail to insert such a clause in the lease, you don’t have any legal right to terminate a tenant’s lease. In that case, your best bet is to entice a tenant to leave through “cash for keys.” Cash for keys works exactly how it sounds. You pay your tenant to walk away from the legal rights granted to them through the lease. 

If you decide to go this route, make sure you get everything in writing. Don’t actually pay your tenants in cash. Use a check so you have a paper copy, and consider paying in installments — issuing the final payment after they’ve vacated the property.

This highlights the importance of thinking ahead as a landlord. Anticipate your future needs when you prepare rental leases and have an experienced lawyer review them.

Luke Babich is the CSO of Clever Real Estate in St. Louis. Connect with him on Facebook or Twitter.

Get Inman’s Property Portfolio Newsletter delivered right to your inbox. A weekly roundup of news that real estate investors need to stay on top, delivered every Tuesday. Click here to subscribe.

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