Curve

What happens if you break a lease?

Peter Miller
The Mortgage Reports contributor

In this article:

What happens if you break a lease? Does it mean financial ruin? Not necessarily. It can be tough to break a lease, but it can be done. In fact, in the right circumstances, the landlord might be elated to have you leave. Here’s how to increase your chance of a good outcome:

  1. Give as much notice as possible
  2. Offer to pay a certain amount for advertising so the landlord can get a replacement tenant
  3. Make sure the property is clean and looks appealing

Many landlords will meet you halfway if you take some initiative and are in good standing.

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How does a lease work?

A lease is a contract between a landlord and one or more tenants. Since the agreement is provided by the landlord, you can bet that every paragraph and clause favors the owner’s interests. From the tenant’s perspective, you want to have the use of a specific property at a given monthly rental. You also want the property to be in good shape and kept that way if something goes wrong.

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Don’t even consider breaking a lease without first reading this agreement. In particular, look for information concerning termination, penalties, and deposits.

Leases commonly run month-to-month or for several months or even years. In many cases, tenants start off with a lease for a year or two, and then the agreement automatically moves forward on a month-to-month holdover basis.

Month-to-month

Typically, a month-to-month tenant must give a 30-day notice before vacating. However, be careful. You can’t usually give notice for a partial month. Fort Benning explains in a handbook for new soldiers:

“Servicemember Sam pays rent on the first of each month. Servicemember Sam hand delivers his termination notice and a copy of his orders to the landlord on 5 January. The next payment of rent is 1 February. The effective day of the termination is 1 March.”

The same general concept applies to those outside the military.

Rent-to-own homes: the lease option

For a year-to-year arrangement, you may have to give 30- or 60-days notice, depending on local rules and what the lease says.

If you give notice, get a signed and dated receipt indicating when the landlord received it.

In practice, it makes sense to give as much notice as possible. The reason is that this will help the landlord, and that’s something you want to do.  What happens if you break a lease may depend on how much damage the landlord incurs because of your decision to leave. The more notice you give, the greater the opportunity for the landlord to find a replacement tenant.

Your deposit: What happens if you break a lease

With a lease, it’s expected that both sides will perform. If you break the lease, you may owe damages to the landlord.

Some tenants mistakenly believe that the deposit can be used in place of the last month’s lease. Read the lease. It likely says the deposit cannot be used for the final month’s rent. Instead, the deposit covers unpaid rent or property damage.

The military clause

It happens that members of the military can be assigned to distant locations on short notice. Military personnel under state and federal rules can have special rights to terminate a lease. The best way to assure that you are protected in case of a relocation is to have a “military clause” included in the lease. Copies are available from housing and legal offices.

Break a lease the right way

There are steps tenants can take which can make breaking a lease acceptable to a landlord.

First, give as much notice as possible.

Second, offer to pay a certain amount for advertising so the landlord can get a replacement tenant.

Third, make sure the property is clean and showable.

Fourth, find a replacement tenant. The landlord is dependent on rent to pay the mortgage and other costs. Especially for small landlords, the loss of a month’s rent can be a serious problem.

Fifth, speak with the landlord. Explain the situation. In one case, a landlord returned a deposit as a wedding gift to an exiting tenant. It happens.

Why your landlord may want you to break your lease

A lease creates obligations for both landlords and tenants. While it sometimes happens that tenants want to break a lease the same is also true with landlords. Tenants may find that landlords are elated to have a lease program.

Why would a landlord want you to break a lease? It can be that the landlord wants to sell the property. He or she may reason that the home will move more quickly and for a better price if it can be fixed up. Obviously, it’s easier to refurbish an unoccupied property.

Guide to becoming a landlord in 2018

In areas with rent control, a broken lease can resolve a lot of potential problems for the landlord. It’s perfectly fair for the landlord to throw you out if you break your lease.

A landlord may be happy to trade one tenant for another, especially if monthly rentals can increase.

Lastly, it may be that the landlord wants to rent the property in a different way. In some market,s landlords do better without monthly tenants. Instead, they rent to short-term visitors through Airbnb or a similar service and generate more income.

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