How to Break a Lease Without a Penalty or with Minimal Losses
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As almost every renter knows, a lease agreement is a legally binding contract between a landlord and a tenant. The agreement outlines the main terms of the lease, including the lease end date and an early termination clause. When you sign a lease, you most likely have good intentions and plan to occupy the property until the end of the term directed by the lease. However, life happens and there are times when you need to break a lease. Maybe you get a new job, have to move home to take care of a family member, or join the military. Perhaps the rental just doesn't meet your expectations. There are many reasons you may find yourself in a situation where you have to move out sooner than intended and break your lease. Since your lease agreement is a legally binding written contract, breaking it is not easy and you may face some undesirable consequences. We put together a step-by-step guide to help you mitigate potential losses:
Step 1. Check your lease agreement for an early termination clause.
Before you start the process of breaking your lease, you have to know your rights. Most rental agreements will outline valid reasons and procedures for breaking a lease in a separate clause. Contracts might allow you to get out of the lease under special circumstances and life-changing events, such as divorce or the death of a significant other. Certain contracts might contain a so-called “rent-responsible clause” that implies that you are responsible for paying rent until your landlord finds a new tenant. Some state laws require landlords to make reasonable efforts to re-rent your unit, so you will have to make sure that your landlord is actually making the effort as defined by your local legislation. Another potential stipulation is a “buy-out clause” that requires you to pay a certain fee or an extra month of rent. In any case, you will still have to give a proper notice of intent to vacate the property.
Step 2. Evaluate the consequences of early termination and decide whether it's worth it.
Before we dive into specifics of terminating a lease, we have to forewarn you that breaking it can have its consequences if you don't have legal justification to do so. Some of the potential ramifications include:
A lawsuit. If you break a lease and stop paying rent, your landlord might decide to take legal action against you. Your landlord can file a civil lawsuit to make you pay off the lease balance. If the judge rules against you, you will have to pay out your debt.
Lowered credit score. If judge rules that you are in the wrong for breaking your lease, they could issue a credit judgment against you. This is an order for you to pay out your debt. This judgment shows up as a public record on your credit report separately from your credit score. You might be able to avoid the judgment by immediately repaying your debt or agreeing on a payment plan with your landlord. If you are found guilty of breaking your lease without legal cause, it can negatively affect your credit score as well. Such a credit ding can stay on your report for up to seven years. You may be able to avoid negative impact on your credit score if you immediately pay your landlord the debt you owe them, but we can't guarantee it.
Difficulty renting a new place or getting a loan. The decrease in credit score for breaking a lease can be up to 50 points! This may affect your ability to secure a new rental apartment or to get a loan for a down payment if you decide to purchase a house in the future. On top of it, most properties ask for references from previous landlords. If you broke a lease, you may not receive a stellar recommendation.
Step 3. Determine if you have a legal reason to break a lease.
Usually, a lease will outline the process and consequences of breaking it in an early termination clause. However, there are certain cases when you can get out of your lease without any repercussions:
Illegal rental unit. Some landlords illegally convert garages, basements or commercial structures into rentals units. In many states, you can break a lease if you had no prior knowledge of the illegality of the rental. You might also be able to get back the rent you’ve paid or a portion of it. Make sure to check your local legislation.
Noncompliance with local health and safety codes, inability to maintain habitable housing, substantial destruction of the property or constructive eviction. Here, at Apartment List, we always say that everyone deserves a home they love. And most state laws confirm it! As a renter, you are entitled to a safe habitable home, and your landlord is responsible for the habitability of your apartment. So what does that mean? States have health codes that all rental properties have to comply with to be considered habitable. The property should have running water, heat, plumbing, trash bins, a roof over your head and stable walls. Keep in mind, a small roof leak is not a valid reason to break a lease early. There must be a major issue that can potentially threaten your health and safety. For example, a roof leak that results in mold and mildew may be grounds to break a lease. To act on this, you’ll first have to inform your landlord of the problem. Then you should wait for a reasonable amount of time for them to fix it. If your landlord fails to solve the issue, then you must contact the appropriate local housing authorities.
Violation of tenants’ privacy rights. Not everyone knows that a landlord usually has to give at least a 24-hour notice before visiting their property. And they better have a good reason for it! It doesn’t matter that the building technically belongs to them. As long as you are both bound by a rental agreement, you are entitled to privacy. The reasons for landlords or property managers to enter rental units include repairs and inspection of potential issues. They also may enter to show the unit to prospective tenants. In case your landlord continues to make unannounced visits, you should go to small claims court. Once you obtain a court order, you can start the process of early lease termination.
Military service. Tenants who enter active military duty after signing a lease have a right to get out of their legal obligations as tenants. If you are a full-time active duty member of the military (Army, Air Force, Navy, Marine Corps or Coast Guard), a member of the National Guard on federal orders for a period exceeding 30 days, a reservist on federal active duty or a commissioned officer of the Public Health Service or the National Oceanic and Atmospheric Administration administration, you are protected under The Servicemembers Civil Relief Act (SCRA). The SCRA also covers the family. A spouse of the service member is not responsible for the lease despite their name being on the contract. To execute your rights, you would have to give a notice of intent to vacate to your landlord. You should personally deliver the letter or send it with certified mail. Don’t forget to attach a copy of your orders. Depending on the nature of your contract (month-to-month rental agreement or a fixed-time lease), your tenancy will be terminated either 30 days after the next day the rent is due or on the last day of the month following the month in which the notice was delivered. Note that a security deposit cannot be withheld as a punitive action for the early termination.
Domestic violence, harassment, stalking or sexual assault. In many states, victims of domestic violence, sexual harassment and/or stalking can terminate their lease early. The victim must inform the landlord that there is a real threat of future violence happening on the premises. It must be done in writing. The premises in this case are defined widely and may include inside the apartment, hallways, parking lot, laundry room, gym, yard, the front and the back of the property etc. There is a certain time period after the incident when the victim may send the notice of intent to vacate. It will vary from state to state. In some places, it has to be sent within 90 days after the actions. The notice should also be accompanied by documents proving the tenant’s allegations. Those documents can be police reports, court orders, medical records etc. The victim is only liable for the rent owed through the termination date and any other outstanding obligations. If a landlord faces monetary damages due to the termination, they may sue the “adverse party”. This party would be the alleged perpetrator of the assault, harassment or stalking. The landlord or the property manager also cannot withhold the deposit as a form of punishment. To get more guidance for your particular situation, please refer to your state legislation.
Step 4. If you cannot legally break your lease, determine how to get out of your lease with minimal losses.
Offer your security deposit as a compensation. You have to understand that when you break a lease your landlord might be facing significant financial loses. The best way to approach this situation and avoid a credit judgment, a public record on your credit report, is to reach a compromise. Offer to forfeit your security deposit as compensation for inconveniences and potential losses caused by breaking your lease early. In case there is damage to the property, the deposit would be kept anyway. So it would be a good idea to offer taking care of all the repairs and painting.
Try subletting. First of all, check if your lease allows subletting. If not, talk to your landlord. In many cases, you will be responsible for advertising costs to find new tenants. Might as well do it yourself! You will have to make a case for yourself and might have to pay for a potential sublessee's background check out of your own pocket. You will be responsible for collecting rent payments from a new renter and delivering them to your landlord.
Appeal to your landlord’s better nature. Talk to your landlord and explain your situation. Landlords are humans too. If you are really in a difficult situation, they might be able to make an exception for you.
While we compiled a list of common ways to break a lease without a penalty, every case is different and details matter. Finally, we always encourage you to carefully read your lease and check out your local landlord-tenant laws.
If you have any other questions related to landlord-tenant issues or renting in general that you’d like us to cover in one of our articles, tweet us @ApartmentList.