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How to Break a Lease with Minimum Penalty

Breaking a lease is never optimal for any of the parties involved. Additionally, it can have significant financial and personal implications, if you decide to go through with it.

Unfortunately, breaking a lease is sometimes unavoidable. Because of this, it’s essential to learn how to break a lease the right way. If you are in this position, are you aware of what you can do to ensure it doesn’t hurt your credit, your pocketbook, or your relationships?

Here’s your guide to breaking a lease without breaking the bank. Read on for more, or if you’re a visual learner, check out our infographic. 

The Most Common Reasons for Breaking a Lease

While there are dozens of reasons people break their contracts, these are some of the most common:

  • Change in circumstances (such as a breakup or divorce)
  • Imminent moving (common when people take new jobs or suffer unexpected situations)
  • Problems with the housing arrangement
  • The desire to have a pet
  • Financial hardship
  • Moving in with a partner
  • Purchasing a home

Of those reasons, the most common is a job relocation.

Break a Lease - Breaking a Lease - How to Break a Lease - Breaking Your Lease - Tips to Break a Lease

Fact: about 40% of people who break their leases do so because of “job relocation,” according to a poll from Leasebreak.com.

How to Break a Lease Without Penalty

Found yourself in any of the above situations? Here’s how to break your lease without suffering financial consequences that could impact your housing future:

1. Look for Breaches of Contract

In some cases when you’re breaking a lease, you may be able to get out of the contract with no blame. This is common in instances where there has been a breach of contract on behalf of a landlord. According to law, landlords are obligated to maintain the property and ensure it is safe and habitable for renters. Unfortunately, lots of landlords don’t live up to this expectation.

If you’re breaking a lease because of non-working appliances, faulty plumbing, broken heating, or numerous other unsafe or inconvenient factors, you may be entitled to break your lease without penalty.

If you think you may be in this boat, take another look at your lease agreement and be sure to maintain paper copies of all your correspondences with your landlord.

Break a Lease - Breaking a Lease - How to Break a Lease - Breaking Your Lease - Tips to Break a Lease
Break a Lease - Breaking a Lease - How to Break a Lease - Breaking Your Lease - Tips to Break a Lease

2. Check for Early Termination Clauses

Even if you’re not dealing with a breach of contract, there may be an early termination clause in your lease agreement.

In contracts with this clause, there may be an “out” for renters if they find themselves in a handful of situations, such as financial hardship, job loss, divorce, or job transfer. Double-check your lease agreement to see if your circumstances are covered by a clause like this.

3. Have an Upfront Discussion

If you have a relationship with your landlord, have an honest conversation about your circumstances and your desires.

Maybe you weren’t planning to buy a house right now, but the perfect one came along. Perhaps you and your significant other split, and you can’t afford the place on your own. Whatever the case may be, you’ll find that many landlords are willing to work with tenants to find a solution. In fact, most would prefer you to approach them when you’re wondering how to break a lease.

Break a Lease - Breaking a Lease - How to Break a Lease - Breaking Your Lease - Tips to Break a Lease

As a general rule, you should go to your landlord the moment you realize you have to break your lease. This warning gives everyone maximum time to prepare and put another solution in place. In fact, you’re likely required by law to provide 30 days’ notice (in writing) of your lease termination. It’s important that you document the notice you have given to your landlord. There are laws in place to protect you, the tenant, from financial responsibility if proper notice is given.  Meaning that the landlord must prove an effort was made on his or her part to rent the vacant property before he/she can retain your deposit or charge you for rent after you vacated the premises.

4.Propose Payment Installments

If there’s no early termination clause, breach of contract, or understanding from your landlord, you’re going to have to start thinking about other options to break a lease. In a case where you are being held financially responsible for the remaining rent balance, you can propose a payment installment arrangement.

Pay off the lease balance over time can assist you in staying afloat financially while taking responsibility for the breach of contract at the same time.

Break a Lease - Breaking a Lease - How to Break a Lease - Breaking Your Lease - Tips to Break a Lease

No matter what the case may be, you’ll have to work with your landlord to find a solution. It’s possible that if your landlord has time to find a new tenant, you could be released of your financial obligation a few payments early.

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5. Sublet the Home

If you’re wondering how to break a lease but your landlord won’t let you out, consider the option of subletting the home to a new renter. This is, of course, something you’ll have to speak with your landlord about, but it can be a good option.

In a sublet, your name remains on the lease, but you find someone to live there for the duration of the contract. The sub-tenant writes you a check each month, you write a check to the landlord, and so it goes.

It’s a good idea to advertise your property for sublet as soon as possible. You’ll need time to screen applicants and conduct a background check since you’ll still be held responsible for damages…etc.

6. Give up the Deposit

None of the above options will work? You can expect to give up your security deposit, more than likely. If you’d like to fast-forward through the process, you can even offer this option to your landlord. It’s not ideal, but it may be your only way out.

In some cases, you may be able to negotiate a setting in which you do some repairs on the property in exchange for keeping your security deposit, but this will vary from lease to lease.

Break a Lease - Breaking a Lease - How to Break a Lease - Breaking Your Lease - Tips to Break a Lease
After Breaking a Lease: Looking Forward

Once you’ve figured out how to break a lease, it’s time to start thinking about your next steps. Namely, how do you get from your current place to your new one? Here are a few tips to guide you through the process:

  • Budget for expenses. If you’re sacrificing your security deposit, you’ll want to take an honest look at your finances and budget for your upcoming costs. Things like movers and new deposits are expensive, and now is the time to plan for them.
  • Consider professional movers. If you’re facing a last-minute move, investing in professional movers could be a great idea. Even if you’ve got time to spare, professional movers are an excellent way to streamline the moving process and make it as simple as possible for yourself. Bonus points for having a moving checklist before they arrive!
  • Get storage if you need it. If you’re downsizing or moving a long-distance, now is a great time to invest in storage to keep your belongings safe. Ask your movers what they recommend – the moving company you hire may also offer storage options.

Breaking a lease is never fun, but these tips can help you learn how to break a lease gracefully, quickly, and with minimal damage to your credit and pocketbook.