What Is a Relet Fee and How Is It Calculated?
Demystify relet fees. Learn how this landlord charge helps cover costs when a lease ends early and how it's determined.
A relet fee is a financial charge a tenant may encounter when seeking to end a lease agreement before its predetermined expiration date. This fee serves to compensate the landlord for the expenses incurred in finding a new tenant to occupy the property.
Understanding the Relet Fee
A relet fee is fundamentally a charge designed to cover a landlord’s administrative and marketing costs when a tenant vacates a property before their lease term concludes. It is distinct from other potential charges, such as unpaid rent or penalties for property damages.
This fee typically applies in situations where a tenant initiates an early departure from the rental property. Common scenarios include a tenant breaking the lease, exercising an early termination clause within the lease agreement, or moving out without obtaining prior written approval from the landlord. A relet fee might also be assessed if a tenant fails to move into a property after signing a lease or is judicially evicted.
A relet fee is not intended as a punitive measure or a lease-break penalty. Instead, it is considered a form of liquidated damages, representing a pre-agreed amount to compensate the landlord for the time, effort, and expense involved in securing a replacement tenant. This fee helps ensure the landlord does not bear the entire financial burden of an early vacancy.
How Relet Fees are Determined
Relet fees are calculated in various ways, with the specific method usually outlined within the lease agreement. Some landlords may charge a fixed flat fee, which could range from a few hundred dollars to over a thousand, such as $500 or $750. Other agreements might stipulate a percentage of the remaining lease term’s rent, often falling between 85% to 100% of one month’s rent.
These costs can include the expenses associated with advertising the vacant unit to attract new prospective tenants. It may also cover commissions paid to real estate agents or brokers involved in securing a new lease for the property.
Additional costs typically encompassed by a relet fee include the administrative time spent on processing new applications, conducting background checks, and obtaining credit reports for potential tenants. Furthermore, the fee can account for the time and resources invested in showing the property to interested parties and the general administrative overhead involved in preparing new lease documentation.
Legal and Contractual Aspects
The enforceability and specific terms of a relet fee are primarily governed by the lease agreement, which should clearly specify the conditions under which such a fee applies. Lease agreements often contain clauses detailing the reletting fee, ensuring transparency for both parties.
Even when a relet fee is stipulated, it is generally subject to legal principles emphasizing “reasonableness.” This means the fee should genuinely reflect the landlord’s actual, provable costs incurred in finding a new tenant, rather than being an excessive or punitive charge. Landlords are typically expected to maintain records to justify the amount of the fee if challenged.
A common legal principle applicable in many jurisdictions is the landlord’s duty to mitigate damages. This means that even if a tenant breaks a lease and a relet fee is charged, the landlord is still obligated to make reasonable efforts to re-rent the property. Their aim is to minimize the financial losses for both themselves and the departing tenant, rather than allowing the property to sit vacant indefinitely.