Help! We Changed our Minds about a New Tenant.
We provide here a few questions that have been posted in the Community Forums and our answers to them.
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Q1
Please help! We just signed a lease with a new tenant yesterday that is to begin in 2 weeks. We now have a gut feeling that we made a bad decision and we don’t know how long we have to cancel the lease. We have not deposited any money and want to tell the prospective tenant that we will not be able to go through with the lease agreement and void her check. What are the NJ laws regarding this? I haven’t been able to find anything. Please help!!!
A1
I can’t comment on specifics of NJ law, but to my knowledge no jurisdiction in the country has a law that allows either a landlord or a tenant to change his mind after he signs a lease. An exception would be if it could be shown that one or the other parties committed fraud. Some states have laws regarding rescission of a contract within a few days for contracts such as home improvement contracts. However, any consumer protection law that allows cancellation of a contract applies to the rights of a consumer, not the merchant, again unless the consumer committed fraud against the merchant.
Landlords should not make rent/not rent decisions based on gut feelings. Decisions should be made based on the results of a number of objective screening procedures, including identity verification and credit reports as a bare bones minimum. If possible, screening should also include verification of employment, eviction record checks, previous landlord checks, and criminal record checks.
You don’t say anything about the length of the lease. If a month-to-month lease you could immediately give a termination notice (30 days notice in most states) and you would likely find that the tenant would prefer to cancel the lease rather than again move in a month. Whatever the length of the lease, you could inform them that you will not be renewing the lease and perhaps the tenant would like to cancel, but this could also result in problems during the term of the lease if they don’t want to cancel because they would likely worry less about paying the rent on time or taking care of your property during their tenancy.
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Q2
What is the fastest way to get new tenants?
A2
The best way to find prospects and the lowest cost way is usually to use “For Rent” signs in locations that are visible to people driving or walking by the property. The fast way to get a prospect that has viewed the property to sign a lease is to offer good value. This includes providing clean, well-maintained, and safe units at or below market rent for the area. This can also help one get “good” tenants because those who are financially qualified and have a good rental history do not usually need to live in bad rentals.
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Q3
I have a husband and wife who signed a lease for 1 year on April 26th. They were not to move in until May 15th, a week from now. They just called me today to say that the deal on selling their house fell through and now they will not be able to rent our home (single-family residence). This is the only property that we are currently renting out. Do I have any recourse and can I keep a certain amount of money to cover me until we find a new tenant. Any advice would be appreciated.
A3
Tenants do not usually have the right to break a lease no matter what their problems might be unless that problem was a contingency stated in the lease agreement.
First, I recommend that you require them to put their intent into writing so that there is proof it is the tenants who want to break the lease.
Second, you have basically two choices. One is to negotiate a written cancellation of the lease whereby you let them out of the lease for some consideration, say a month’s rent. The other is to simply tell them that you intend to hold them to the lease. In the second case, the laws of most states require the landlord to make “reasonable” effort to find a replacement tenant. The landlord can charge the tenant rent from the commencement of the original lease until commencement of the replacement lease. In addition, any other actual expenses resulting from the tenant breaking the lease, usually including additional advertising and/or leasing commission, can be charged.
In the first case, the amount of negotiated settlement would cover everything. I would recommend the first choice unless you think that it would require more than a month to find a replacement tenant or such longer time that will be covered by the amount of settlement you can negotiate.
Third, be sure to follow the law of your state regarding returning any portion of the security deposit not being applied against allowed costs, provide a detailed accounting for any amount not returned, and do both within the time limit provided by the law of your state.
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Additional Information
Most of the issues discussed in these Q&A’s are covered in considerably more detail in our eCourses and/or in our Mini Training Guides.