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A lease-break doesn’t have to be a headache

By Hermione Gardiner
19 September 2014 | 13 minute read

Hearing the words “I want to break my lease” can bring fear and terror into even the most experienced property manager. These words can almost always predict a headache in one way, shape or form and it can become a stressful situation for the tenant, landlord and of course us as the property manager.

It seems that tenants, and even landlords, breaking their leases are becoming far more common these days. The break of lease situation is not something we are immediately taught to handle, and has traditionally been left unspoken about as nobody wants a client to break their lease. So I know I learnt very quickly from some of the mistakes I made when dealing with a lease break.

I learnt very quickly from some mistakes I made when dealing with a lease break, so this week I ran a webinar on this exact topic to share everything I have learnt to make the situation the least stressful as possible. In preparation for my webinar session I delved down into how to best handle a break-of-lease situation, create a procedure and communicate this effectively to your tenants and landlords to reduce stress for all parties involved.


Beyond the legislation side of things, a few of the main points to take away included:

$-  A strong procedure – Your break-lease procedure needs to be set in stone and consistent across all staff in the business. I need to be able to walk into your business and sit in the property managers seat and know exactly how to deal with it at every step of the way. When you know the procedure it makes it much easier to train on it, communicate it to your clients, and leaves less room for grey areas.

$   Transparency – Being transparent to all parties on their obligations and risks is key, ensuring the person breaking the lease agrees to all the terms in advance in writing and is aware of any risks. Why not even provide the tenant with a This email address is being protected from spambots. You need JavaScript enabled to view it. from the sign up meeting (along with a normal vacate form) so the tenant knows exactly what they need to do if a situation does arise. This also keeps communication lines open and hopefully they will be open to talking to you ahead of a potential lease break, and know that you have a process to deal with it.

$    Communication – You may think you communicate well normally. However, in a break-of-lease situation you need to step this up even further. Lease breaks are one situation where you need to over-communicate with both parties. Remember to keep both the landlord AND the tenant updated across the leasing process.

$    Understanding – Remembering that generally speaking, no one has started their lease planning to break it. There are some really difficult and challenging situations that cause people to have to break a lease  financial, relationships, relocations and more. We need to put ourselves in their shoes and do what we can to make it less stressful. When they are getting fired up, remember where they are coming from and it will help you respond in a better way.

        Keep good records  Keep records of everything, from copies of notices down to the number of enquiries received each week, price reductions, reasons for applications not being accepted, comparable properties and more. Keep everything in one place (for a free copy of my checklist on what evidence to keep in case the break lease escalates, This email address is being protected from spambots. You need JavaScript enabled to view it.)

$    Mitigating loss  Our main duty in the break-of-lease situation is to minimise any potential loss to landlords and mitigate the tenant's potential loss. This means that the methods we usually rely on to get a property leased may not be sufficient. What more can we be doing to assist in finding a replacement tenant? Additional marketing? Rent reduction with the tenant paying the shortfall?

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