One of the advantages of renting versus owning a home is that you’re not burdened with the task of trying to sell the property if you decide to move on. That doesn’t mean, however, that you can just walk away from a lease agreement before it’s set to expire without facing some kind of penalty. While you may have a valid excuse for moving out early, such as a job offer or a roommate from hell, it won’t change the fact that you signed a contract with your landlord. If you’re thinking about breaking your lease, here are some tips for doing it the right way.
Find out now: Is it better to buy or rent?
Check out Your Rental Agreement
Before you hand in your notice, you need to look over your lease to see what you’re responsible for if you leave ahead of schedule. For instance, your landlord may require you to pay the remaining rent for the rest of the lease term in full or at least hand over a certain percentage of what’s owed. You also risk automatic forfeit of your security deposit, so you’ll want to see if your contract specifies what happens to it if you bail.
The other thing you want to keep an out eye for are clauses that mention early release or subletting. If your landlord has included that in the lease as an option, it may give you a little more wiggle room when it’s time to negotiate the terms of your departure.
Keep Your Landlord in the Loop
Unless you’ve got a great relationship with your landlord, telling them you need to move may not be the most pleasant conversation, but it’s one you still need to have. If you’ve got a solid reason for having to relocate, don’t hesitate to clue them in.
In situations where someone’s breaking a lease because they have to move home to take care of a sick parent or they’re being deployed on military duty, the landlord may not be so quick to impose harsh penalties.
Once you’ve set a date on when you need to move, you should give your landlord the heads up as soon as possible. The more notice you can give, the more time they have to try to find someone to take your place. In some states, landlords are required to make a reasonable effort to re-rent the property, so it’s to your benefit to show that you’re doing everything you can to make that as easy on them as possible.
Scope out a Replacement
One of the reasons landlords require renters to pay a penalty for breaking their lease is because it disrupts the cash flow the property is generating. For every month an apartment sits empty, that’s essentially money they’re losing, and they’re also out the cost of advertising the rental, running credit checks and getting all the paperwork drawn up when they do find someone new.
If you’re looking to soften the blow, finding someone who’s interested in renting the property or subletting takes some of the pressure off your landlord. If they agree to allowing someone to sublet, you need to do your homework when choosing a new renter. That means doing the same things a landlord would do, like running a credit check and getting references. If you don’t and the person who’s subletting skips out on the rent, you could still be on the hook for what’s owed.
Know Your Rights
When your landlord is a total nightmare or the place where you’ve living is bordering on uninhabitable, you may be able to break your lease without penalty. The landlord-tenant laws vary from one state to another, but generally, your landlord is required to keep the property in good repair, respond to complaints in a timely manner and respect your privacy.
If you’ve made repeated calls about getting that leaky toilet fixed and nothing’s been done, or your landlord just barges into your apartment uninvited, you may have grounds for getting out of the lease without any major problems.
Be Aware of the Consequences
Packing up and leaving in the middle of the night without letting your landlord in on what’s going on is bad for several reasons. First, you open up the door to a civil lawsuit if they decide to sue you for the outstanding rent balance owed on the lease. If they win, you could face a wage garnishment or seizure of your bank accounts, which can put a chokehold on your finances.
Not only that, but your landlord could report you to the credit bureaus. Once that negative information hits your report, it can stay there for up to seven years and your credit score will spiral downward in the meantime. When you try to rent a new place or buy a home down the line, that one bad decision could mean you’ll pay more in interest or be denied a new lease or mortgage loan altogether.
Update: Have more financial questions? SmartAsset can help. So many people reached out to us looking for tax and long-term financial planning help, we started our own matching service to help you find a financial advisor. The SmartAdvisor matching tool can help you find a person to work with to meet your needs. First you’ll answer a series of questions about your situation and goals. Then the program will narrow down your options from thousands of advisors to three fiduciaries who suit your needs. You can then read their profiles to learn more about them, interview them on the phone or in person and choose who to work with in the future. This allows you to find a good fit while the program does much of the hard work for you.
Photo credit: ©iStock.com/kokouu, ©iStock.com/JackF, ©iStock.com/andresr