The Solution to a Broken Lease: The Buy-Out Clause

The Solution to a Broken Lease: The Buy-Out Clause

Tenants breaking the lease is a common landlord “issue” and seems to occur regularly. The default legal language does not allow for any penalty for breaking a lease beyond holding a tenant to the lease until a replacement has been found.

The Problem:

Landlords, by law, are required to re-list the house and show the house in a good faith effort. If a landlord has never lost a day of rent, then why are they always penalized. Seeing how little “legal documents” mean on the tenant side but how the landlord is bound to the document can be extremely frustrating.

The Solution:

Break Lease/Buy-Out Clause

  • Both Parties are allowed to break the lease under the following conditions.
  • 60 days notice and 2 months Break Lease Fee.

Reason

  • Provided sufficient notice to replace tenant.
  • Monetary payment pays for the time and effort of the Landlord or the Tenant.
  • Applies to both sides creating a balanced lease.
  • Clear Cut “Costs” for the both sides.

Landlords should consider this buy-out clause because life happens. If either side has to break the lease it becomes “business” and not personal. Below is an “example” wording. As always please check your local and state laws.

Buy-Out Clause:

“This allows either the tenant or the landlord to break the lease without penalty as long as they have provided 60 days’ notice and two months break lease fee (______). 60 days’ notice begins on the day that the fee is received. If the tenant moves out before the end of the 60 days’ notice, the additional days will be accessed as a fee. For military provisions please refer to XVIII.”

Initial ______________ ______________

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