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As a new tenant, you're no doubt aware that when you sign a lease, you agree to pay a certain amount of rent for the duration of that lease agreement, whether it's six months, one year, or longer. But what happens if your circumstances change over the course of your rental property’s lease term? What if you lose your job and can't afford your rent? What if you get a new job in another part of the country and are required to relocate? Or what if you get married and need a larger rental unit to accommodate your spouse and their belongings?
In situations like these, you may be tempted to break the residential lease you signed. But how do you go about doing that, and what are the consequences involved? Here, we'll review what breaking a lease entails so you'll know what to expect if you're inclined to go that route.
How to break a lease
If you're looking into lease termination, there's a process you can follow to minimize your financial losses along the way:
- See if you have the right to an early lease termination.
- Assess the consequences of early termination.
- Determine whether you have a legal reason for your lease break.
- Negotiate with your landlord.
- Find a subletter.
See if you have the right to early lease termination
Many leases have an early termination clause that outline the procedures for breaking the lease early. You may be entitled to break your lease without penalty, or with minimal penalty, under certain circumstances as dictated by your lease. For example, if you get divorced, or your spouse passes away, breaking your lease may be acceptable, depending on your specific contract.
Your early termination clause may also include a buyout fee where you pay your landlord a certain sum in exchange for breaking that lease without further repercussion. For example, you may be entitled to break a lease prematurely if you're willing to fork over the equivalent of two months' rent. Read your lease agreement thoroughly to see what rights you have.
Assess the consequences of early termination
If your lease contains an early termination clause with a fee description, you'll know what financial implications you'll be facing if you break your lease before it ends. But if such a clause doesn't exist, and you're not legally entitled to break your lease, then terminating it early could result in some costly penalties, including:
- A lawsuit against you. Your landlord could sue you for damages, including any unpaid rent that is due under your lease agreement.
- Credit score damage. Breaking a lease early could result in a reduced credit score. The lower that score, the harder it will be for you to borrow affordably when you need to.
- Difficulty renting again. Breaking a lease could make it difficult to rent again when you're ready to do so, for two reasons. First, the lower your credit, the less appealing a tenant you are. Secondly, many landlords require references from previous landlords before agreeing to a lease agreement. If you break your lease and anger your landlord, you can kiss that reference goodbye.
Clearly, these consequences aren't good, so you may decide that breaking the lease on a house or apartment early just isn't worth it or that you'd rather explore alternatives to breaking your lease so you're not slapped with the penalties above.
Determine whether you have a legal reason to break your lease
In some cases, you may be entitled to break your lease without suffering legal or financial consequences. Here are some circumstances under which you can break a lease without penalty:
- Your home is illegal. Landlords must follow zoning laws when renting out homes. If you discover that your rental is illegal -- say, you're living in the finished basement of a home that's not zoned for tenant occupancy -- then you have the right to break your lease.
- Your home is not in habitable condition. Your landlord is required to provide you with a safe, habitable home. If that hasn't been happening -- say, your landlord has failed to make repairs for months -- you may be entitled to break your lease without penalty.
- Your landlord violates your privacy. Generally, landlords have the right to enter tenants' rental units, but they must provide written notice at least 24 hours in advance. If your landlord keeps violating this rule, even to make repairs, then you may have the right to terminate your lease before it ends.
- You're called to active military duty. If you're deployed to another part of the country or world as part of a U.S. military order, you'll generally have the right to break your lease without consequence.
- You're trying to escape a domestic violence situation. Generally, tenants who are victims of domestic violence can break a lease early without penalty.
Keep in mind that the rules of breaking a lease can vary from state to state. These are general guidelines, but it pays to check your state's landlord-tenant laws to see what protections you're entitled to.
Negotiate with your landlord
Maybe you don't have the legal right to break your lease without penalty or termination fee, and there's either no early termination clause in your lease or an unfavorable one. In that case, it pays to try negotiating with your landlord or property manager to see if you can break that original lease without too much financial harm.
First of all, know this: If your neighborhood has improved since you first signed your lease (say, more shops have opened), your landlord may be happy to let you out of your lease agreement. That way, he or she can then turn around and rent the property at a higher price to a replacement tenant.
Additionally, if you're a tenant in good standing, your landlord or property manager may agree to let you off the hook early even if they don't stand to gain much from a broken lease. Generally, you'll need to provide at least 30 days' notice to give your landlord time to find a replacement tenant. But if you're someone who's always paid rent on time and you ask to get out early because you're relocating for work or getting married, your landlord may agree to terminate the lease in 30 days.
Finally, you can try offering your landlord compensation to get out of your lease. If you have four months left on that agreement, your landlord may agree to settle for two months of rent. Or, your landlord may let you off the hook as long as you agree to let him or her keep your security deposit.
Find a subletter
If subletting is permissible under your lease, you may not have to suffer financial consequences by moving out of your home early. Rather, you can find someone to rent your home from you for the duration of your lease. During that time, your subletter will be responsible for paying you rent, and you'll need to get that rent over to your landlord.
How to avoid a scenario where you need to break a lease
Sometimes, breaking a lease is unavoidable. But a good way to avoid having to go that route is to sign a month-to-month rental agreement rather than a longer-term lease. With a month-to-month agreement, you generally need to give your landlord just 30 days' notice before terminating that contract and vacating your home. It's a good option if your career is in flux or you simply aren't sure you want to commit to staying in the same place for an extended period of time.
Keep in mind that your landlord may not agree to a month-to-month lease right away. But if you've already lived in your home for a year, your landlord may then get on board with going month to month.
Breaking a lease can have financial consequences you'd probably rather avoid. In some cases, you may have no choice but to break a lease, and you may be legally entitled to do so without penalty. It never hurts to consult with an attorney experienced in landlord-tenant issues if you're concerned about breaking your lease and there aren't alternatives, like negotiating or subletting, to explore. A lawyer may be able to help you navigate the process so you come out as financially unscathed as possible.
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