Money Matters » Breaking a Lease – the Ins and Outs you Need to Know

Breaking a Lease – the Ins and Outs you Need to Know

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Breaking a Lease – the Ins and Outs you Need to Know
Leases are legally binding contracts, and the expectation is that both you and your landlord will fulfill your obligations until the end of the term. However, there are often changes in life circumstances, such as taking a new job or marrying, that lead you to want to get out of a lease. Before deciding whether to break a lease, you need to carefully consider the future costs and indirect consequences.


Why can’t you just walk away?

Even if you plan to move across the country and never come back, you can’t just walk away from a lease. If you do, the landlord has the right to take you to court for the unpaid rent. If you show up to defend the lawsuit, you will almost always lose. If you fail to show up, you will lose by default. Either way, you will be presented with two options. You can either make immediate arrangements to pay — something that is impossible if you aren’t there — or a judgment will be entered against you. If a judgement is entered, it will go on your credit report for seven years, and you can expect your score to plummet and to have great difficult obtaining any kind of new credit.

Most landlords now report late or unpaid rent to the credit bureaus. While not quite as bad as a court judgment, late payments will also drop your credit score and make future creditors wary. This doesn’t prevent your landlord from taking you to court as well, and most eventually will.

Finally, landlords use tenant screening companies that maintain database of evictions, landlord-tenant court cases, broken leases, and other information about tenants’ rental histories. If you end up in one of these databases — and the likelihood is that you will — you will be barred from most apartments in the country.

When can you walk away?

Military exception: Service members who are relocated at least 35 miles away from their current apartment for 60 days or longer can break their lease without penalty with a minimum of 30 day’s notice. The landlord is prohibited from imposing any kind of fee other than the usual rent through the vacate date. To qualify, the service member most provide a copy of their orders requiring the move. Note that while landlords commonly question this, service members who join the military after signing a lease or who have voluntarily requested a transfer may still break a lease.

Unit is unsafe or unfit for habitation: If a fire, flood, or other natural disaster destroys a unit, a tenant can immediately break their lease. Other conditions such as leaky roofs, lack of running water, or major electrical problems may also justify breaking a lease. Always discuss the issues with the landlord before making any decisions. If they agree the unit is inhabitable, get their consent to your breaking the lease in writing. Otherwise, contact an attorney. Breaking a lease is an extreme remedy, and courts are reluctant to allow a tenant to do so unless all other attempts to have the unit made fit for habitation have been exhausted.

Constructive eviction: Constructive eviction is when a landlord takes actions that prevent the tenant from reasonably enjoying their unit. Common conditions include repeatedly entering the apartment unannounced, excessive noise, or shutting off utilities except when making necessary repairs. To successfully make a constructive eviction claim, you need to carefully document the who, what, where, and when of each incident. Never take action without consulting an attorney unless the situation is so bad that you are willing to take the chance of being forced to pay the full rent by a court.

Does your landlord have to re-rent?

In some states, when a tenant breaks a lease, the landlord is required to make reasonably attempts to rerent the apartment. In legal terms, this is called the duty to mitigate. In these states, the amount owed by the tenant is reduced by any rent the landlord receives from the new tenant during the remaining term of the original tenant’s lease.

In other states, there is no duty to mitigate, and the landlord has a choice of how to proceed.

First, they can do nothing and continue to collect rent for the remainder of the lease term (or sue for that amount if the tenant fails to pay).

Second, they can choose to retake possession of the apartment and release the tenant from future liabilities. This will rarely happen unless the landlord is certain that they can rerent the apartment at a higher rent.

Third, the landlord can retake possession of the apartment and apply rent received towards the tenant’s account. This operates essentially the same way as the duty to mitigate found in other states. A landlord exercising this option must make reasonable efforts to rerent the apartment. The tenant remains liable for rent until it is rerented and for any difference in rent if the new tenant’s rent is lower. Many landlords will exercise this option as a goodwill gesture if a tenant has been problem free, gives adequate notice, and provides good reason for needing to move.

Finally, the landlord may include a lease provision allowing for early termination subject to a fee. If this option is included in a lease, the fee must not exceed more than two month’s rent after the tenant leaves. The landlord may also require that the tenant give notice of their intent to exercise this option, but the notice required cannot exceed 60 days.

What about subletting?

If you haven’t had problems with an apartment, but simply need a change in size or to move to a different area, subletting may be a viable option. However, it’s important to note that there is no right to sublet an apartment in some states, and the landlord’s permission may be required. The only way a tenant in those states can take action against a landlord is when the lease specifically allows for subletting but the landlord unreasonably refuses to allow a sublet. A reasonable refusal of a sublet would include situations where the proposed subtenant doesn’t meet the landlord’s qualification requirements or the landlord’s established procedures weren’t followed.

So what to do?

Breaking a lease will almost always place thousands of dollars at issue. If you only have a few weeks or months remaining on a lease, it’s often easier to just eat the remaining rent.

If everything has gone well, talk to your landlord first. Their only concern usually is only that they don’t lose money by you moving out, and most will be happy to work with you to find a mutually beneficial solution. If you can’t come to an agreement, consult an attorney to see if you have any options beyond paying the remainder of your rent in full.

If you’ve had problems with the apartment that have gone unresolved, document everything that’s happen and send a certified letter to your landlord asking that the issues be taken care of. Then talk to an attorney. In many cases, they’ll be able to negotiate a resolution, and if not, you’ll have a better understanding of what your chances are in court if you chose to walk away. Of course, if your health and safety truly are at risk, you can leave immediately, but get an attorney involved as soon as possible. Your landlord will almost certainly sue or threaten to sue you, and the best defense is a good offense.


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