Evaluating the Consequences of Breaking a Lease

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When you signed a contract with your landlord, you likely thought you’d live with minimal issues. Unfortunately, things don’t always work out perfectly and you may wonder, “What are the consequences of breaking a lease?”

According to the National Multifamily Housing Council, about 43 million U.S. households rent, and 37% of those live in apartments. While there are advantages to renting, there are also some disadvantages that might lead to someone wanting to leave early.

In some instances, you don’t have a choice because of a job move or family emergency forcing you out. At other times, you should carefully weigh the consequences of breaking a lease and make sure it’s the right choice for you.

Reasons to Break a Lease

There are many different reasons people break their rental agreements early. They can include:

• Dangerous living conditions. If you have mold, radon, pests or other irritants in the rental and the landlord hasn’t or won’t rectify the issue, it may be time to move to protect your health. HUD lists one of tenant rights as being able to live in a safe location.
• Buying a home. When renters are ready to buy their first home, it isn’t always easy to time everything perfectly to coincide with the end of a lease term.
• Lack of resources. If you’ve lost your job and won’t be able to pay the rent, you may have no choice but to break the lease.
• Irritating neighbors. In multifamily units, there are sometimes issues with noise, another tenant disrespecting the property or rights of others or threats. You have a right to feel safe in your home.
• Extraordinary circumstances. You get a divorce, your parent is ill and you must move three states away to care for them or you get unexpected military orders to transfer.

Landlords often consider each contract on a case-by-case basis. If you’ve been a good tenant and have a valid reason, they may work with you on breaking your lease early.

Keep in mind, however, that you did sign a legal contract. You could be responsible for the rent payments remaining in your lease. Get all verbal agreements in writing.

Early Buyout Clause

Check your rental agreement for an early buyout clause. Most have some very specific requirements to enact this clause. Pay attention to what the lease says about:

• Notification periods. Do you have to inform your landlord within 30 or 60 days of moving out?
• Lease expiration. Even if your lease was for one year, there is typically notification required prior to moving out, so the landlord can prepare for a loss of income and finding a new renter.
• Fees. There may be a list of very specific fees you must pay if moving out early. Pay careful attention to what the lease says.
• New tenancy. While there is no guarantee the place rents out quickly, many early lease ending clauses state if the owner rents the property, you no longer owe for the months remaining in your contract from that time forward.

Every lease is different, so read through yours to see what the requirements are. You can always consult a lawyer if you think something is unwarranted or you don’t understand.

Consequences of Breaking Your Lease

In 2020, the Census Bureau reports national residential rental vacancy rate at a low 6.6%. When landlords can easily re-rent a place, they may be alright with a request to terminate the remaining months in a lease.

However, there can be consequences to breaking your lease early, including having to pay rent or a mortgage on two places at once, a mark against your rental history, going to court for unpaid fees and getting a poor recommendation when trying to rent in the future. In some cases, authorities can garnish your wages for the amount you didn’t pay on your lease.

Communicate With Your Landlord Before Breaking a Lease

Your first step if you need to break your lease is to read your contract. Next, talk to your landlord about the situation and why you need to break the lease early.

You may find the owner of the property is willing to work with you if you’ve been fair, given them notice and kept their investment in good shape. Get any agreements in writing and do your best to be fair without hurting your own financial standing.