How to Break Lease Agreements for Rental Houses

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Breaking a rental lease is rarely easy. It is, after all, a contract. But you stand more of a chance of getting out of your lease without significant penalty if you rent from a private owner versus a large apartment complex or an American Homes 4 Rent early termination. If you need out of your lease early, you should first consult your rental agreement, then speak to your landlord as soon as possible. You may lose your security deposit and have to pay rent on the home until it can be re-rented.

Leaving Homes for Rent FAQ

When you sign a lease, you generally have every intention of staying for the full time period listed on it. Unfortunately, sometimes life happens. You may no longer be able to afford the rent, or your circumstances may have changed. In those instances, it’s important to look carefully at the lease and, if possible, follow the instructions on it.

If you’re lucky, your landlord isn’t as strict as what you’d find if you lived in a large apartment complex managed by a bigger entity. You may have a shorter lease agreement that simply asks that you provide notice before moving out. Even if your lease lays out exactly what the penalties for early termination will be, you might be able to negotiate with your landlord, especially if the home will be easy to rent after you move out.

Consequences of Breaking a Lease

From your landlord’s viewpoint, your early move-out presents a problem. He doesn’t want an empty home, so he’s most concerned about losing that monthly income. You’ll likely see that reflected in any early termination fees listed in your lease. At the very least, you’ll lose your security deposit, but some landlords will charge you rent for every month remaining on your lease unless the rental can be occupied by a new tenant.

This is where the law can protect you. Your landlord can’t just sit and wait for the lease to run out without at least making a reasonable effort to re-rent the place. If you are saddled with penalties, you could reach out to your own networks to see if you can help with the tenant search, possibly lining someone up to take your place.

With a home rental, though, the truth is that you may just lose your security deposit and a month or two of rent. If you’re presented with fees, pay them quickly and do as much as you can to make the transition a positive one. Otherwise, your landlord could take you to court.

Valid Reasons for Breaking Lease

Getting out of a lease with homes for rent may seem like it’s always bad for the tenant, but the truth is, you do have rights. Although laws can vary from one jurisdiction to the next, there are legal reasons a tenant can break a lease:

  • Lack of habitability – If your landlord is not maintaining the property in a way that makes it livable, you may have a legal out.
  • Lack of quiet enjoyment – Quiet enjoyment sounds like it relates specifically to your right to have silence. Actually, it refers to situations where a landlord enters your property without advance notice. It can also include situations where a landlord allows illegal activity on the property or fails to respond to your complaints about tenant behavior.
  • Military service – When you get a notice that you’re being called to active military service, you can leave your rental without penalty. If you have a lease, your tenancy will terminate at the end of the month following the month in which you received the notice.
  • Domestic violence – If you are a victim of domestic violence, check local laws. In some areas, landlords are required to allow you to leave the situation without penalty.
  • Job relocation – Some states let tenants break a lease if that person is relocated for a job.

Whatever the circumstances, it can’t hurt to explain them to your landlord. Even if local laws don’t necessarily protect you in your situation, some landlords will take pity and work with you.

Duty to Mitigate Damages

Although your landlord does have the right to charge an early termination fee and even require rent until your lease runs out, tenants have protections, too. In many states, your landlord has the duty to mitigate damages when a tenant leaves early. In fact, this law applies in most states, including California, Illinois and Texas. If you live in New York, Vermont or Georgia, however, your landlord has no duty to try to re-rent your unit if you leave early.

In some states, laws vary from one jurisdiction to the next. In Tennessee, a landlord only has a duty to mitigate in counties with populations of more than 75,000. In Washington, D.C., landlords aren’t required by law to mitigate damages, but if it goes to court, whether or not the landlord tried to re-rent the unit will be taken into consideration when calculating damages.

Buying Home After Breaking Lease

There are a couple of ways breaking a lease can affect your future home buying ability. One is the lease break itself. This likely won’t show up on your credit report, but your landlord may put it on something called a tenant screening report. This won’t show up when you buy a home, but it will affect your ability to rent. When you try to get a mortgage, the lender may contact previous landlords, at which point your broken lease will come back to haunt you.

Under many homes for rent FAQ, people ask if breaking a lease can affect credit. It won’t directly impact it, but there is a way it can hurt your score. If you don’t pay the fees that come with breaking your lease in a timely manner, your former landlord could turn the bill over to a collections agency, at which point it may be reported to the various credit bureaus.

Buying a House

Ideally, you’ll wait until your lease ends to move from your rental house to one you’ve purchased. But it’s very difficult to time a home purchase to the exact end of your lease. A better option, if you know that you’ll be moving in the near future, is to wait until your current lease runs out and ask your landlord to move to a month-to-month lease during your home search.

A home purchase does not get you out of your lease any more than simply deciding to move to another rental would. However, the best course of action is to let your landlord know that you’ve put a contract on a house and the offer’s been accepted and see what you can negotiate. In the end, you’ll have quite a few costs associated with closing on the house and moving, so you may just decide to consider any penalties part of your moving costs.

House Being Sold

Unfortunately, rental house tenants are more likely to eventually see a “For Sale” sign in their front yard than those renting from an apartment complex. Chances are, your landlord will wait until your lease is coming to an end to do this, but it can still be disconcerting, especially if you plan on renewing. Suddenly, you have to move, but if you find a place before your lease is up, will you have to pay?

While normally getting out of a lease with homes for rent can be tough, you should definitely not assume your landlord won’t be happy to see you go early. She can, after all, be more flexible about when the new owner can take possession of the property. You should also make sure your landlord doesn’t simply plan to sell the house to a new owner who will allow you to continue to rent.

American Homes 4 Rent Rules

One way to get a nice rental home in your area is to go through a company called American Homes 4 Rent. This company specializes in finding homes in nice neighborhoods, renovating them and turning them around as rental properties. Landlords apply to participate in the program and comply with the company’s policies.

Tenants of their homes will have to follow American Homes 4 Rent early termination rules. If you abandon the property, you’re responsible for paying rent, fees and costs for the remainder of your lease. Unfortunately, since American Homes 4 Rent is a corporation, you may not have the flexibility you’d have as you would with a private renter, making it more likely you’ll be forced to pay any American Homes 4 Rent early termination fees required.

Early Termination Clauses

Often when searching homes for rent FAQ, tenants haven’t yet consulted the most important source: the lease agreement they signed at move-in. The truth is, most of the answers to your questions are found there. In some instances, leases actually have early termination clauses that allow you to exit your lease early, as long as you give sufficient notice.

These early termination clauses may require notice of as much as 60 days, highlighting the importance of conducting this research as early as possible. Some of these termination clauses will also require that you provide documentation of the reason you’re vacating early, such as a marriage license or divorce decree.

Backing Out Before Moving In

Sometimes getting out of a lease with homes for rent doesn’t happen after you’ve lived there for a while. You may sign the documents, only to change your mind the next day. Perhaps another home became available or your roommate backed out of the deal. Technically, you’ve signed a binding contract and, if the landlord wants to be difficult, he could insist on enforcing it, but ideally, he’ll let you out of it and find someone else.

Despite common misconceptions, though, there is no cooling off period for lease contracts in the vast majority of the U.S. The ability to back out of a contract in the days following signing it in some states only applies to situations like contracts with door-to-door salespeople and gyms. If your landlord chooses to enforce the contract, you’ll face the same penalties you would if you’d broken the lease six or nine months after moving in.

The Subletting Option

If you can’t get out of your lease, one option may be subletting. You’ll have to check your lease to see if subletting is expressly prohibited, but even if it isn’t, you’ll need to let your landlord know someone else will be living there. With subletting, your name remains on the lease, making you responsible for ensuring rent gets paid each month. You’ll also be on the hook for any damages caused during the lease term.

It's important to carefully screen tenants and even loop your landlord in on choosing the right person. You should also have your new tenant sign a sublease agreement that states rent will be paid to you each month by a certain date. Your sublease agreement should uphold the same strict standards as the lease you signed.

References

About the Author

Stephanie Faris has written about finance for entrepreneurs and marketing firms since 2013. She spent nearly a year as a ghostwriter for a credit card processing service and has ghostwritten about finance for numerous marketing firms and entrepreneurs. Her work has appeared on The Motley Fool, MoneyGeek, Ecommerce Insiders, GoBankingRates, and ThriveBy30.