Free Lease Default Letter Template (Notice of Rent Default)

For any successful commercial and industrial landlords and property managers, tenant problems and defaults are situations they have to deal with occasionally. As a tenant, probably the first time you hear about default is when you are issued with a default notice from your landlord or property manager. This can be very stressful as you may not know what to do in such a situation.

A lease default letter can be sent either by the tenant to the landlord or the landlord to the tenant. For the tenant, they can send a demand letter if the landlord breaches any part of an agreement they made. The landlord can also send a lease default letter to the tenant due to late rent payment or due to non-compliance.

There are two types of leases. Before signing a lease agreement, you should know the difference to understand what to do in case of a breach:

1. Periodic Rental Agreement: this agreement typically operates on a week-to-week or month-to-month basis. The agreement renews itself after for the duration with each rent payment made.
2. Lease agreement: the tenant has the option of paying their rent every month for the duration of the lease, typically one year, but the landlord may decide to a shorter or a longer-term.

Tenant default is a situation whereby a tenant fails to fulfill what they had agreed to do in the lease agreement.

There are several ways in which Tenant default can arise, including:

• failure to pay the rent and other sums reserved under the lease
• Breach of the repair agreement
• Breach of the alienation agreement
• Breach of permitted use
• Unauthorized alterations
• An act of insolvency

A lousy tenant situation can be a costly problem and can lead to eviction. Knowing what to do as a landlord or as a tenant when issuing or issued with a lease default notice is essential and can be very useful and profitable to both parties involved.

• Make sure the tenant is in default: In as much as it may seem like a pretty straight forward issue, it is vital to ensure that a tenant is in default before taking any extreme measures against them. It is essential to go through the signed lease to check on the provisions set by the lease in the event of default by the tenant. For instance, the lease may provide that the tenant be allowed to correct the breach within a specified period before taking further actions against them.
• Failing to check the lease may set the landlord in a potentially expensive and embarrassing counterclaim, which they may not be well prepared to handle.
• Commence self-help only if it is clear that acting alone is appropriate: A landlord may assume that a tenant is in default, thereby evicting them without resorting to a process of law. Most jurisdictions permit self-help in such situations if it works, it works. Nevertheless, you should check with your attorney before resorting to self-help as many jurisdictions from upon landlords taking matters into their own hands.
• Without a court order authorizing evection of a tenant, the landlord may be liable for trespass along with liability under the tenants’ lease if the landlord takes steps to evict a tenant – in as much as the tenant may be in default of the lease and would have otherwise have been subject to eviction.
• Any “Abandoned” Personal Property carries its own risk: Landlords and property managers have to be very careful when recapturing any properties that may appear abandoned by the tenant. Some items left behind by the tenant may still be of value to the tenant. The landlord may be found liable for conversion or breach of the tenant’s lease for disposing-off any property that they had not been authorized to seize or dispose of.
• Comprehend any laws governing formal, court-administered eviction: All states have laws that govern how landlords may evict tenants from their premises. In some states, there are courts set aside to listen to matters revolving around tenancy and tenant evictions. Knowing whether your landlord has an obligation to store your property for a while after the eviction is very important. Some states also provide the tenant a statutory period of resolving the breach before which an eviction can occur.
• Consider prejudgment possession of premises in eviction proceedings: If there are no meaningful questions regarding the tenant’s default, most states permit the landlord/ property manager to reclaim possession of the property in eviction proceedings preceding entry of the final judgment to allow the landlord to re-let the premises. However, this option comes with a set of logical issues and concerns- a separate court hearing and the posting of a bond may often be required if this prejudgment relief is permitted. Prejudgment possession is an essential tool for landlords and tenants to understand as it can trigger a meaningful negotiation in trying to resolve the dispute.
• Be open to any form of resolution: Disputes are often tricky, risky, and expensive for both parties. The landlord and property managers must, therefore, be prepared for informal resolution whenever it is a viable option.

Lease defaults can have a negative impact on your credit report. It is, therefore, important to avoid a negative landlord report aimed at your credit and your reputation as a tenant. Below are some tips to help you avoid such situations:

• Work within a time frame: If you are planning to move out before the lease expires, you are still expected to pay the remaining rent. Nonetheless, the landlord in as much as they have a duty of mitigation, they are also tasked with looking for new tenants for your apartment rather than just waiting until your lease expires. Some leases provide that you may decide to buy out the lease, i.e., pay a fee to exit the lease. If your lease does not offer such provisions, you may want to negotiate with your landlord.
• Examine other considerations: If your lease does not have the provision for a buyout, you may still have other options available. In some cases, the lease may allow the tenant to sublease or assign the property to another tenant temporarily. However, in as much as you may be allowed to sublease or assign the property to another tenant, this will now exonerate you from the duties and responsibilities of your original lease.
• Assessing your credit: Breaking or breaching your lease may lead to severe damages in your credit rating. The landlord may decide to take you to a small claims court, a process that may be expensive and an inconvenience to you at the same time. If taken to court, the court may rule in favor of the landlord. In which case, you will have to repay your debt to the landlord – the judgment will appear on your credit report and shall remain in the report for up to seven years.
• Finding a solution: The last option for when you need to break an apartment lease – is offering to work with your landlord. You can offer to do the leg work to find a new tenant for the unit; this way, the landlord may decide to allow you to break your lease.

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About This Article

Authored by:

David Waterman

Legal Writing, Tax Law, Real Estate, Technology Start-ups | Graduate in Tax Law BA in History

David Waterman, an accomplished legal writer and expert in tax law, real estate, and technology start-ups, hails from Rutland, Vermont. He completed his undergraduate studies with a BA in History in 2010 before graduating from Georgetown University Law Center in 2014. During his time at Georgetown, David actively contributed to the Tax Journal and dedicated his efforts to the immigration clinic as a volunteer. Since graduating, he has honed his expertise in tax law, showcasing his passion for the subject matter. Alongside tax law, David's professional interests also extend to the realms of real estate and technology start-ups, reflecting his diverse and dynamic approach to the legal field.