What Is a Reletting Fee and When Can Landlords Charge It?
Understand how reletting fees work, when landlords can charge them, and what factors influence their calculation and enforceability.
Renters who break their lease early often face unexpected costs, one of which is the “reletting fee.” This charge can surprise tenants who might assume ending a lease prematurely only involves forfeiting a security deposit or covering rent until a new occupant is found. Understanding this fee is crucial as it can significantly impact the amount owed when leaving before the lease term ends.
Legal Basis Under Lease Agreements
A landlord’s right to charge a reletting fee depends almost entirely on the written lease agreement signed by both parties. If the lease includes a specific clause detailing the fee and the conditions under which it applies, the tenant’s signature signifies agreement, forming the contractual basis for the charge. Without such a provision, landlords generally cannot impose this specific fee merely because a tenant vacates early.
These clauses are often framed as “liquidated damages.” This legal term applies when the potential costs a landlord might incur from a tenant leaving early—such as finding a replacement—are difficult to estimate accurately when the lease is signed. For a reletting fee structured as liquidated damages to be enforceable, the amount specified must be a reasonable forecast of the landlord’s likely expenses and losses resulting from the early termination.
Courts evaluate whether the fee is a fair pre-estimate of the landlord’s potential costs or an excessive penalty intended to punish the tenant. A fee significantly higher than the landlord’s probable actual damages may be deemed an unenforceable penalty. The lease must clearly state the fee covers these specific re-letting costs. Enforceability hinges on this reasonableness standard and the clarity of the lease language.
While the lease is central, state or local landlord-tenant laws also influence the validity of such fees. These laws might set limits or conditions, ensuring lease provisions align with tenant protection principles. The lease clause, therefore, operates within the framework of applicable statutes and legal interpretations.
How Landlords Typically Impose the Fee
The process usually starts when a tenant informs the landlord they intend to leave before the lease ends, or when they move out without notice. The landlord then typically reviews the lease to confirm the reletting fee clause exists and specifies the terms.
The landlord will then communicate the fee obligation to the tenant, often through written notice or as part of move-out instructions. Some may require payment before starting the search for a new tenant. This communication reminds the tenant of their contractual agreement.
Assessment of the fee usually occurs after the tenant departs and the landlord begins incurring costs to find a replacement. Landlords might deduct the fee from the security deposit, if allowed by local law and the lease. If the deposit doesn’t cover the fee and other potential charges like damages or unpaid rent, the landlord will typically bill the former tenant for the remaining balance.
If the tenant fails to pay, the landlord may pursue collection through standard debt collection methods or legal action, similar to other lease-related debts. The reletting fee is treated as a distinct charge specifically for the costs of finding a new tenant, separate from any ongoing rent obligation the tenant might have until the unit is re-rented or the original lease expires.
Calculating the Payment
The method for calculating a reletting fee varies and depends on the lease terms and legal standards regarding liquidated damages. A common approach is a predetermined flat fee stated in the lease, representing an agreed-upon estimate of the landlord’s re-renting costs. This offers certainty to both parties.
Alternatively, the fee might be a percentage of the total remaining rent or equivalent to a set number of months’ rent, often one or two. Some leases use a pro-rated formula, reducing the fee based on how much time remains on the lease when the tenant leaves. This attempts to align the fee more closely with the landlord’s expected effort and expense.
Regardless of the method, the calculation must align with the concept of reasonable liquidated damages. The fee should represent a genuine pre-estimate of the landlord’s anticipated costs directly tied to the early termination, such as advertising the vacancy, screening applicants, and administrative tasks for processing a new lease. The goal is compensation for these specific efforts, not penalizing the tenant.
Courts review these amounts for reasonableness compared to the landlord’s likely or actual harm from the breach. A fee disproportionate to the probable re-letting expenses might be considered an unenforceable penalty. The calculation method must reflect a fair estimate of costs that were hard to determine precisely when the lease was signed.
Documentation Requirements
Enforcing a reletting fee requires landlords to maintain specific documentation. The most critical document is the signed lease agreement containing a clear clause outlining the fee, its calculation, and the tenant’s acceptance. Without this provision, the landlord’s claim lacks a contractual foundation.
Thorough records of the re-letting process are also important, especially if the fee is disputed. Landlords should keep documentation of actual expenses, such as advertising invoices, receipts for background checks, and logs of time spent showing the property or processing applications. This evidence helps demonstrate the fee aligns with the landlord’s costs and efforts, supporting its reasonableness.
Communication records between the landlord and tenant regarding the early termination and the fee are valuable. This includes the tenant’s notice to vacate and any correspondence from the landlord about the fee obligation. Maintaining copies of emails, letters, and conversation notes establishes a clear timeline and confirms the tenant was informed per the lease terms.
If the fee is a pre-set liquidated damages amount, documentation should support its reasonableness as an estimate made when the lease was signed. Records of typical reletting costs for similar properties can help justify the amount if challenged. Consistent record-keeping is essential for landlords seeking to properly apply and defend a reletting fee.
Exemptions in Certain Agreements
Certain circumstances can exempt tenants from paying a reletting fee, even if it’s included in the lease. These exemptions often stem from legal protections under federal or state law, or specific lease conditions.
Federal and state laws protect certain groups. The Servicemembers Civil Relief Act (SCRA), found in Title 50 of the United States Code, Section 3955, allows active-duty military personnel to terminate leases without penalty under specific conditions, like receiving deployment or permanent change of station orders.1Military OneSource. SCRA: Military Terminating a Lease The service member must provide written notice and orders to the landlord. The lease typically terminates 30 days after the next rent payment is due, and the SCRA prohibits landlords from imposing early termination charges, including reletting fees, in these cases.
Many states also have laws protecting tenants who are victims of domestic violence, sexual assault, or stalking. These laws often allow early lease termination without penalty if the tenant meets criteria like obtaining a protective order or providing documentation from a qualified source. While specifics vary by state, the goal is to allow victims to relocate safely without financial penalty for breaking the lease.
The legal concept of “constructive eviction” can also provide an exemption. This occurs if the landlord’s actions or failures make the property uninhabitable or significantly impair the tenant’s use of it, such as failing to provide essential utilities or make critical repairs. If a tenant must move out due to such conditions after notifying the landlord and allowing a reasonable time for correction, a court might find a constructive eviction occurred, potentially nullifying the tenant’s obligation for future rent and associated reletting fees.
The nature of the housing agreement itself might preclude reletting fees. Leases for some government-subsidized housing programs may follow specific regulations limiting or prohibiting such charges. Tenants in these situations should review their lease and relevant program rules. Less commonly, a lease might include an addendum specifically waiving the reletting fee under certain negotiated circumstances, like a job transfer requiring a distant move.
