What Happens When You Break a Lease?
Breaking a lease is not as uncommon as you might think. Unfortunately, terminating a lease before it expires comes with financial and future rental implications that many don't consider prior to ending their contracts.
If you are a renter who wants to end your lease but you’re unsure of the processes involved or what it will cost, our guide investigates the consequences of breaking a lease and the steps you can take to avoid harsh penalties.
*For the purposes of this guide, we look at breaking a lease early owing to personal circumstances and not due to uninhabitable conditions or apartment safety and security issues.
What Does Breaking a Lease Mean?
The lease is the contract you sign when you are approved to rent an apartment. It is a legally binding contract between the tenant and the landlord. You can rent for six months but a lease is typically a year.
When you break a lease, you are ending the agreement or the contract you signed with the landlord before it is meant to expire. This means that you are requesting release from the contract before being legally able to do so. It places the landlord in a difficult position because tenants are meant to fulfill their side of the contract. When you prematurely terminate the contract, it allows landlords to pursue remediation for the financial losses that are suffered.
What Happens When You Decide to Break a Lease Early?
If you decide to break your lease early, you will face penalties that are determined by your landlord and according to the rental laws within your state. This can include the loss of your security deposit with additional financial and even legal implications.
When you sign a lease, you will find a section concerning early lease termination and the consequences thereof. While this usually involves losing the deposit and a charge of one to two months' rent, it also depends on the penalties issued by the individual landlord.
Remember that even the most lenient of landlords will be in the legal position to penalize you for terminating your contract early.
Let’s take a closer look at the consequences of terminating your rental agreement…
The Consequences of Ending a Lease
In most cases of lease termination, you can expect to lose the security deposit and have to pay extra rent as a penalty. This will differ depending on the landlord and the terms stipulated in your rental agreement.
The best way to determine the consequences of ending a lease is to read the contract and if you feel that the penalty is too harsh or unfair, you can speak to your local housing authority or a real estate lawyer about it.
Can Lease Termination Affect Credit Ratings?
The only time that terminating the lease will affect your credit rating is when your landlord issues additional charges that may be pursued in court. Failing to pay the fines as per the court judgment will have a negative impact on your credit.
Will Breaking a Lease Affect Your Rental History?
Ending your rental contract before it expires may go on your rental history record. The good news is that it isn’t always viewed negatively by future landlords especially when you discuss your rental history with them.
Reasons for Breaking a Lease
There are some general reasons or circumstances under which you may break a lease without major penalties, but this will differ between states. For example, some states allow you to end rental agreements owing to health issues or if the landlord violates the terms of the lease; however, these situations are not accepted in the state of Texas.
The legal circumstances under which a lease can be broken include the following:
You are being actively discharged as a military member.
You are renting an illegal unit nulling the contract.
The apartment has not been maintained by the landlord and is deemed uninhabitable.
You have suffered an incident of domestic violence in the past 6 months.
Landlords enter your premises without providing at least 24 hours' notice and do not act in accordance with the lease terms.
We look at some of the laws surrounding breaking a lease depending on the state you live in…
In California, month-to-month leases require that tenants give the landlord at least 30 days' written notice before moving out.
You can terminate a lease by providing the appropriate notice and paying the penalty fee as stipulated in your contract. This includes a written notice issued 30 days prior to moving out and the payment of any penalties as determined by the lease.
In Texas, there are circumstances in which tenants are not freed from their obligations to maintain the lease and pay monthly rent. These include:
Moving because of a new job
Moving into a new house
Moving to be closer to family
In New York, your landlord must be provided at least 30 days' written notice and you’ll be required to pay the penalty fee of between one and two months’ rent.
In Tennessee, tenants can request early termination of the lease in exchange for paying the penalty. Penalties could include one or two months’ rent payment.
What if I Can’t Pay Rent?
Whether you have been placed on short time or you’ve lost your job, the reality for many people is that they still have to pay rent. So, what happens when you live in an apartment, but cannot cover your monthly rent?
The first step is to speak to your landlord about making up the payments or whether there are financial options available to you. Rent assistance programs may be one option you can pursue and are offered by the government, through private organizations, and charitable organizations.
If you have exhausted your options, and you simply cannot afford the rent, your landlord may evict you from the apartment.
You can visit our Guide On Clarifying Eviction Doubts to learn more.
How to Break an Apartment Lease
No one can predict the future and as a tenant, you might find yourself in a difficult position and want to break your lease. Whether you have lost your job and can no longer afford the rent or you’re in conflict with the neighbors, moving before the end of the lease could prove problematic no matter which state you live in.
Remember that your landlord expects rent to be paid every month for the duration of your tenancy. When you leave prior to the legal agreement, it places them in a challenging position.
If you’ve considered your options and you're left with breaking your lease, here are a few steps to help you plan and prepare…
Understand Your Lease
The first step you can take to protect your pocket and minimize the possibility of a lawsuit is to thoroughly read your lease. You should find a section concerning breaking a lease or early termination. It should cover what it will cost, how much notice you should provide the landlord and the circumstances under which termination of the lease is considered.
Some leases may have a clause on early lease termination. Here you can learn about the steps you would need to take to end the contract without penalties. In certain cases, landlords might be willing to come to an agreement, but this is not a given and you should always be prepared for the financial and legal implications of your decision.
If You Want to End Your Lease Early, Speak to Your Landlord
It is best to make an appointment to see and speak to your landlord in person. Always remain professional and courteous and explain your circumstances as to why you wish to terminate the lease. Show the landlord that you are willing to work with them by asking if you can come to a solution, such as paying a penalty fee or finding a reliable tenant to take over the remainder of the lease.
If you and your landlord cannot come to an agreement surrounding the lease, then you may have to accept penalties such as the loss of your security deposit, paying the early termination fee, and possible legal consequences for breaking your part of the agreement.
Offer to Help with Subletting
Because your landlord is ultimately losing money when you end your tenancy, the best way to try to ease the situation is by proposing to sublet. If you can find a new tenant to rent in your place, it may provide a positive outcome. To help you determine whether this is a route you can take, read your lease. In some instances, a lease may prevent you from subletting, but this might change in light of your situation.
The Risks of Subletting
If the landlord agrees to sublet, many renters don’t realize that the responsibility of the new tenant or sublessee falls on them. If the sublessee damages the apartment, you will be liable for the costs in repairs.
Can You Break a Lease without Penalty?
Landlords and tenants can both agree to end the lease early, but this is seldom without penalty. The costs to end the lease when it is unanimously decided may be less than if you were to spring the news on your landlord or property manager; however, you will still be legally required to cover the losses suffered by the landlord because you are breaking the original agreement.
At the end of the day, landlords have to run their business, and when it comes to ending your lease, it is important to abide by the appropriate legal procedures.
Remember that signing a contract legally binds you to those terms so trying to negotiate with landlords not to pay a penalty should you break your lease, may not be accepted.
Some tenants continue to pay the rent rather than break the lease and based on an agreement with the landlord, will vacate the property prior to the expiration of the contract. Some landlords may also agree to end a lease if they can replace you with another tenant. While this seems like a favorable option, sometimes, it can take weeks to months before a new tenant is approved and ready to move in.
When you decide to break a lease, you must consider the financial loss. You will forfeit your security deposit no matter how well you’ve maintained the apartment. On top of that, you will have to pay at least one- or two months’ rent before you can move.
Prior to renting, it is important to consider the implications of ending your lease and whether it is worth it? Maintain a good relationship with your landlord, pay your rent on time, and if it comes to ending the rental agreement, hopefully, you and your landlord will be able to come to a solution that works for all parties involved.