Breaking a Lease Early: Risks and Consequences

Learn the legal process and consequences of terminating a rental agreement before the lease ends on its agreed-upon date.

By
Nichole Stohler
|
Last Updated
October 19, 2023
Breaking a Lease Early: Risks and Consequences

Are you contemplating ending your lease before the agreed-upon term is up? If so, you'll need to understand the legal process and potential consequences. In this comprehensive guide, we'll walk you through the steps of breaking a lease early in a legal way and explore the consequences of not adhering to the rules.

This article provides insights into key elements in your lease agreement that tenants often overlook, helping you make decisions and avoid negatively impacting your rental history and finances.

Understanding your lease agreement

Your lease agreement is the cornerstone of your rental experience as a tenant. It's a legally binding contract between you and your landlord outlining the terms and conditions for renting the property. Details include the lease duration, rent payments, and maintenance responsibilities.

The key to a smooth tenancy lies in understanding the finer details, particularly when it comes to ending the lease prematurely. Before signing the dotted line, here are some key areas to consider in your lease agreement:

  • Early termination clause: Search for the early termination clause in your lease agreement. This section specifies the notice period required, the process for ending the lease early, and if there are valid reasons for early termination.
  • Penalties and fees: Investigate penalties or fees for breaking the lease early. Look for details on how the landlord calculates these fees and whether you'll be expected to pay a flat fee or a percentage of the remaining rent.
  • Notice period: Your lease agreement should state the notice period needed for early termination. Find out how you should communicate your intent to the landlord and the preferred method of notice, whether that's through written letter, email, or another medium.
  • Responsibilities for finding a new tenant: Determine whether your lease agreement obligates you to find a replacement tenant and if you're responsible for any costs related to advertising the property or tenant screening.
  • Security deposit handling: Find out how the landlord handles the security deposit if you break the lease early. Understand what the lease specifies regarding deductions for damages or unpaid rent and when to expect to receive the remaining deposit amount.
  • Lease assignment or subletting: Check if your lease agreement allows for lease assignment or subletting. Determine the conditions and procedures for these options and if the landlord's approval is required.
  • Valid reasons for early termination: Consider valid reasons to break the lease early in your lease agreement. Common causes may include military service, domestic violence, or health and safety concerns.
  • Renewal and extension clauses: Examine your lease for automatic renewal or extension clauses. Understand their terms and how they may impact your ability to break the lease early.
  • Consequences of violation: Be aware of any impacts specified in your lease for violating the terms of the early termination clause, such as additional penalties or legal action.
  • Responsibilities for repairs and cleaning: Review your responsibilities for leaving the rental unit in a specific condition. Understand what constitutes "normal wear and tear" and what repairs to the unit might need to be done to meet the lease requirements.
  • Utilities and remaining payments: Check the lease for any clauses that address utilities and remaining payments. Find out if you are responsible for paying utilities until the landlord finds a new tenant.

What happens if I break a lease early?

Terminating your lease before its expiration carries various consequences, which are typically outlined in your lease agreement. Below are possible repercussions to be aware of:

  •  Financial penalties: You may be required to pay a penalty, forfeit your security deposit, or continue paying rent until a new tenant is secured.
  • Legal actions: Landlords can initiate legal proceedings, potentially resulting in lawsuits for unpaid rent or property damages. It could lead to additional court fees and potentially unfavorable judgments.
  • Rental history: Breaking a lease can negatively impact your rental history, potentially complicating your search for a new rental. Landlords frequently scrutinize past rental records, and a history of lease violations may raise concerns.
  • Credit score: Early lease termination can also affect your credit score if your landlord reports unpaid rent or legal judgments to credit bureaus. It may make it more challenging to obtain future loans or financial opportunities.

Breaking your lease can lead to unwanted consequences. Be aware of these potential outcomes before considering early lease termination.

How much does it cost to break a lease?

The cost of breaking a lease varies based on the agreement terms and property location. Typically, tenants can expect an early termination fee of one to two months' full rent payment or more. This fee may encompass the remaining lease balance or ongoing rent payments until the lease term concludes.

Legal reasons for breaking a lease early

There can be valid reasons a tenant needs to legally break a lease early. Here are the typical legal reasons for breaking a lease early, each with its own specific set of circumstances and requirements:

Military service: The Servicemembers Civil Relief Act (SCRA) legally protects active-duty military personnel if they need to break a lease. The SCRA states that military members can usually end a lease prematurely without any charges if they receive orders for a permanent change of station (PCS) or deployment.

Domestic violence: Some states have laws allowing individuals who have experienced domestic violence to break a lease early without penalties. Appropriate documents, such as a restraining order or a police report, will need to be provided in these circumstances.

Landlord's failure to maintain the property: In certain states, if the landlord fails to fulfill their duty of property maintenance, you may have the right to legally terminate the lease, referred to as constructive eviction. Be sure to consult your local housing laws for verification.

Health and safety concerns: If the property has significant health or safety risks due to mold, lead paint, or other hazardous conditions, you may be allowed to break the lease early.

Illegal lease terms: If any parts of your lease agreement go against your local laws, you might be able to get out of your lease.

Relocation for work: You may be able to end your apartment lease if you need to move for a job, whether that's for a job transfer or an entirely new position. Check your rules and requirements to see if you're qualified.

Uninhabitable conditions: If the property becomes unlivable due to situations outside of your control, like natural disasters, you might have the option to end your lease.

Death of a tenant: If a co-tenant passes away and the remaining tenant cannot afford the rent, the landlord may allow early termination.

Buyout agreement: If you and your landlord decide to end the lease early, you can make a buyout agreement. It involves working out a payment or arrangement to stop the lease.

Exploring legal consequences

The potential legal consequences of breaking a lease early range from civil lawsuits to financial penalties. Some of the actions that can unfold if you break your lease early include:

Civil lawsuit

Suppose the landlord incurs financial losses due to your lease violation. In that case, they may take legal action to recover a larger sum than the security deposit and penalty.

Negative rental history

Ending a lease before it expires can negatively impact your rental record, making it harder to find future housing. Landlords usually examine the rental histories of prospective tenants, and violating lease terms can raise red flags.

Financial penalties

If you end your lease before it's over, you may have to pay a penalty. The penalty can be a few months' rent or the rest of the rent owed for the time left on your lease. You might also have to cover the cost of finding a new tenant for the landlord.

Loss of security deposit

Landlords can use the security deposit to cover unpaid rent or damages caused by the tenant. They must document and provide any deductions following state laws.

Collection efforts

If you break a lease and the landlord cannot collect the money owed, they may enlist the help of a collection agency.

Garnishment of wages

In some situations, when you owe your landlord money because you broke the lease, they might pursue legal action to get permission to take money directly from your wages to cover the debt.

Lawsuit defense

Suppose you have a valid legal reason for breaking the lease, such as the property becoming uninhabitable, the landlord violating the lease terms, or needing to exercise your right to protective laws like the Servicemembers Civil Relief Act. In these cases, you can defend yourself in court if the landlord takes legal action against you.

Protecting yourself and steps to end a lease early

If you need to terminate your lease early and want to safeguard your interests, follow these steps:

Step 1: Review the lease agreement

Review the terms of your agreement before terminating your lease. Take note of provisions regarding early termination, including notice periods and potential penalties. Make sure you understand the outlined process in the agreement to avoid confusion.

Step 2: Communicate with your landlord

Let your landlord know that you want to end the lease. Give a valid reason for your decision.

Step 3: Understand your rights and obligations 

Research the laws and regulations applicable to your area. Understand your rights and obligations to guide you through the process effectively.

Step 4: Mitigate damages

Find another person who can take over your lease. It can help reduce your financial impact and meet the landlord's concerns.

Step 5: Document everything

Document all communication with your landlord. Keep records of emails, letters, and any relevant documents. You can use these if any issues come up in the future.

Step 6: Consult an attorney

Consult a specialized landlord-tenant lawyer for clarity on your rights, advice, and protection of your interests. If you face problems or disputes with your landlord, seek legal guidance.

Step 7: Request a written agreement

When you and your landlord agree about ending the lease early, prepare a written agreement. It will help avoid confusion or issues later on.

Each lease agreement and situation is unique, so approach early lease termination cautiously and follow the guidelines in your lease agreement and local laws.

Breaking a lease agreement

Terminating before the lease expires requires consideration and following the rental contract terms.

Understand your lease agreement, follow proper procedures, and seek legal advice to handle this situation effectively and minimize any adverse outcomes.

Maintain open communication with your landlord and aim for a friendly resolution. Prioritize honesty, transparency, and adhering to the lease terms to protect your rights as a tenant.

Breaking a lease early FAQs

Can I sublet or assign my lease to someone else?

Your rental agreement provides guidelines regarding subletting or assigning your lease to someone else. Subletting is when you find someone, known as a subtenant, to live in your rental unit and pay rent while you're still responsible for the lease. Assigning a lease means transferring the entire lease to a new tenant, who takes over all the responsibilities and rights.

What are my responsibilities for cleaning and repairs when breaking a lease early?

Leave the rental property clean and tidy when you move out. You should clean the unit, remove your personal belongings, and clean any excessive dirt during your time there.

You are typically in charge of fixing any damage caused by you or your guests to the rental property. Your responsibility includes:

  • Repairing broken fixtures.
  • Fixing holes in the walls.
  • Replacing items damaged beyond normal wear and tear.

Can I break my lease early due to financial hardship?

The lease agreement typically does not allow for early termination because of money problems. Check your contract to verify guidelines. If not declared on your lease agreement, you might have to pay the remaining rent or find someone else to take over.

Nichole Stohler

Nichole co-founded Gateway Private Equity Group, with a history of investments in single-family and multi-family properties, and now a specialization in hotel real estate investments. She is also the creator of NicsGuide.com, a blog dedicated to real estate investing.

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