6 Situations When Breaking Your Lease Makes Sense
While breaking a lease is generally a big no-no, sometimes there’s no way around it. Life happens, and certain circumstances might warrant getting out of your rental situation.
“Breaking a lease can be complicated, and it can be costly,” says Dylan Lenz, CEO of Naborly, a modern-day property management software for landlords. “The lease agreement from your landlord and local regulations will have specific details around how to break your lease, what penalties you’ll be tied to, and which situations allow for it.”
Each state and city has its own set of regulations for terminating a lease, so do some research before moving forward. You should also read your rental agreement to see what it says about breaking your lease. Doing so will help you avoid a slew of issues, including a lawsuit by your landlord to recover outstanding rent, debt collectors, damaged credit, and problems finding new housing.
Is it really time to break your lease? Here are six situations where it may make sense to do so.
Yes, relocating for a job is a fully legit reason to break a lease. But tenants should be well-prepared before they talk to their landlord.
Since you’re still legally on the hook for rent payments lasting the duration of your lease, broker Bill Kowalczuk of Warburg Realty in New York says to minimize the chance of losing too much money, tenants should try to find a new tenant on their own. And they should do so before telling their landlord they need to break the lease.
“I just had this happen with a property I represent,” says Kowalczuk. “The existing tenant found someone new to move in, who would pay $150 less than what they were paying. So the tenant who was leaving made up the difference for the amount of time left on her lease. Everyone was happy.”
A significant change in your financial situation is reason enough to break a lease. The hope is that your landlord will take your circumstances into account and won’t charge you a penalty for breaking the lease—so documenting evidence of your hardship is important.
“The pandemic has rocked our economy, and we’re seeing a surge of layoffs and furloughs,” says Lenz. “People are in difficult financial situations right now and are making big decisions because of it, like moving back home or opting for a small, cheaper apartment.”
If you’ve experienced financial difficulties from unexpected job loss, you can always try to negotiate a deferred rent payment plan with your landlord instead of breaking your lease.
Bad landlord or unit
Several states have constructive eviction laws that allow renters to move out without penalty when a landlord does not provide habitable housing.
One example: “A tenant is entitled to break a lease where a unit is unwarranted (illegal) and does not have a certificate of occupancy on file with the city,” says Joseph Tobener, a tenant rights lawyer at Tobener Ravenscroft in San Jose, CA.
Tobener says another justified reason to break a lease is the landlord hasn’t provided repairs and the broken amenities are substantially interfering with the tenancy.
“To break a lease for substantial interference, the issues have to be serious, like no heat, sewage overflows, constant late-night noise issues, or cockroaches and rodents,” says Tobener.
Buying a new house
You’ve dreamed of owning a house since forever, but you’re stuck in a lease. Still, the promise of homeownership may be too good to pass up (hello, low interest mortgage rates!) and you have to break your lease. So what penalties would you face?
If you are thinking of buying a home, keep the lines of communication open with your landlord. You may be able to work out a cash payment to buy your way out of a lease. Some leases have “home-buying” clauses, which allow tenants to jump ship early for a small fee.
Divorce can get sticky, especially when it comes to working out all the details, including living arrangements.
If living together to ride out the lease isn’t an option, experts suggest working with a legal representative to draft and sign a lease transfer agreement that places all the tenant obligations, such as full payment of outstanding rent, to the spouse still residing in the unit.
You just moved into a sweet pad, but three weeks later you receive orders for a new military assignment. Fortunately, a federal law called the Servicemembers Civil Relief Act is on your side and allows active-duty members to break their lease for official military orders.
Active-duty members must provide their landlord with a written notice of their plans to vacate and a copy of their official military orders for a change of station for more than 90 days. They will typically have to continue to pay rent for the remainder of the month and the next month.
“The most important steps to take are to be aware of what’s in your lease agreement and spark an open line of communication with your landlord early to get the best result for both parties,” says Lenz.
By Anayat Durrani – realtor.com