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karina 
Updated on March 4, 2024 
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While most of our resources are geared toward landlords and property managers, we also get a lot of people seeking information from the tenant’s perspective. In that spirit, from time to time, we offer worthwhile information that concerns that segment of the population. This is one of those moments.
What you should know about early lease termination
Life always throws the unexpected at us, and more often than not, we are not prepared for it. So what happens when you are forced into breaking a legally binding contract, like your rental agreement on a lease?
Let’s say you moved in and signed your lease agreement just barely three months ago. Everything is fantastic, rent is sensibly priced, and the property is located in an exceptional area. Then you get the surprise, either the loss or sickness of a loved one or a promotion or relocation in your employment. Now, what becomes of that legal contract you signed?
While early lease termination may offer an immediate solution to your dilemma, it is important to understand the potential consequences involved. Lets look into the various ramifications when you terminate a lease before its designated end date.
Financial Implications
One of the most immediate consequences of terminating a lease early is the financial burden it places on the tenant. Typically, lease agreements include specific provisions that outline penalties for early termination. These penalties can range from a forfeiture of the security deposit to paying several months’ worth of rent as a penalty.
Additionally, the landlord may have the right to seek compensation for any costs incurred in finding a new tenant. These financial obligations can significantly impact the tenant’s budget and financial stability.
Legal Complications
Early lease termination can also result in legal complications for both parties involved. Lease agreements are legally binding contracts, and terminating the agreement prematurely may breach the terms outlined within. Consequently, the landlord may take legal action to enforce the lease or seek compensation for damages resulting from the early termination.
This legal process can be time-consuming, costly, and may negatively impact the tenant’s credit history. On the other hand, tenants may also face legal consequences if they decide to leave without fulfilling their contractual obligations.
Reputational Risks
Another significant consequence of early lease termination is the potential damage to the tenant’s reputation. In many rental markets, landlords and property management companies maintain records of tenant behavior and history. If a tenant abruptly terminates a lease, it can create a negative impression and affect their future ability to secure rental housing.
Landlords may also be less inclined to rent to individuals who have a history of early lease terminations, fearing that they might repeat this behavior in the future. This tarnished reputation could hinder a tenant’s housing options and make it more challenging to secure desirable accommodation.
Impact on Future Rental Applications
Early lease termination can have lasting effects on a tenant’s ability to secure future rental properties. Rental applications often include questions about previous tenancies and lease terminations.
If a potential tenant has a record of early lease terminations, it may raise concerns among landlords, leading to increased scrutiny and potential rejection of future applications. This creates a challenging cycle for individuals who have terminated leases prematurely, as it becomes increasingly difficult to find suitable accommodation.
All rental agreements—whether the lease is a month-to-month or one-year contract—are legally binding. This means that you can, and most likely will be still held financially responsible for the loss of rent for the duration of the contract. However, as gritty as that sounds, it doesn’t always have to end costing you an arm and a leg or having to obtain legal representation.
Helpful tips when you need to break a lease
Breaking a lease can result in negative implications on future tenant screening reports or even your credit standing. If you need to leave a rental property earlier than you anticipated, there are things you can do to break a lease without upsetting the landlord or property manager.
1. Check your lease agreement
The first best thing you can do is to go over your rental agreement with your landlord or property manager and read through the terms of the lease. More often than not, it should include an early termination clause that outlines the conditions under which a tenant can break the lease before its designated end date.
These clauses typically specify the penalties or fees associated with early termination. Understanding the terms of the early termination clause is crucial, as it provides guidance on the steps to follow and the financial obligations that may arise. If the lease includes such a clause, tenants should adhere to its requirements to minimize potential disputes or legal complications.
2. Negotiate with your landlord
No property manager or landlord wants to have a tenant break their lease. It can be costly and a hassle. However, it happens, and it’s generally better for managers to try and be accommodating to some degree rather than taking the chances of a tenant deciding not to pay and ending up in an eviction process.
One option when faced with the need to break a rental lease is to engage in open communication and negotiation with the landlord. While landlords are not obligated to accommodate early termination requests, they may be willing to work out a mutually beneficial solution. This could involve finding a new tenant to take over the lease or allowing the tenant to terminate the lease with minimal penalties.
Clear and honest communication about the reasons for breaking the lease can help foster understanding and increase the chances of reaching a favorable agreement.
3. Consider subletting
Offering to help find another tenant to take over the lease for the remaining months may be a good idea as well. Subletting is another option available to tenants who wish to break their rental lease.
In a subletting arrangement, the tenant finds another individual to temporarily occupy the rental unit and fulfill the terms of the lease for the remaining duration. They enter a separate rental agreement, but the original tenant collects the rent from the sub-tenant and turns it over to the landlord. The original tenant also takes care of the other responsibilities toward the sub-tenant.
A sublet allows the original tenant to fulfill their obligations while reducing or eliminating financial burdens associated with breaking the lease. However, it is crucial to review the lease agreement and seek the landlord’s consent before proceeding with subletting, as some leases may have specific provisions regarding subletting.
4. Have someone takeover your lease
In certain circumstances, a lease takeover can be a viable solution. A lease takeover involves finding a new tenant who is willing to assume the responsibilities of the lease agreement, including rent payments and adherence to the lease terms.
This is entirely different from a subletting arrangement wherein the primary lease contract still remains in force between you and the landlord. In a lease takeover, your relationship with the landlord ends, provided that your landlord signs a lease release agreement.
A lease takeover requires collaboration with the landlord to ensure a smooth transition and the necessary legal documentation. Lease takeovers are often subject to the landlord’s approval and may involve a screening process to ensure the new tenant meets the necessary requirements.
Go for a Win-Win Situation
While there are some occasions where you honestly just can’t get out of paying large amounts for breaking your lease agreement, there are still some things you can attempt to do to lessen the stress of it all.
Negotiation plays a key role in finding a win-win situation when ending a residential lease early. Tenants and landlords should approach the negotiation process with a mindset of seeking a mutually beneficial resolution. This may involve discussing possible alternatives such as finding a new tenant, subletting, or lease modification.
Tenants may offer to help with advertising or even cover the costs associated with finding a replacement tenant. Landlords, on the other hand, could consider adjusting penalties or offering a partial refund of the security deposit. A willingness to compromise and explore creative solutions can lead to outcomes that satisfy both parties’ interests.
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