Breaking a Lease Early to Buy a Home

An elderly couple smiling at the camera as they hold hands and stand in front of their home.

If you want to break your lease early to get into a new home, it's best to discuss your options with your landlord.

With rents rising and mortgage rates falling, more and more renters are looking to get out of their leases early and take the plunge into home- ownership.

The good news: Landlords these days are often accommodating when letting folks move out before their leases expire. But even if a landlord plays hardball, tenants can usually walk without too much of a penalty.

Usually, the desire to break a lease on a home or apartment is triggered by a sudden event — such as a job transfer or some other circumstance — over which you have you have little or no control. But even if you simply have your heart set on buying your first-ever house, much of your ability to end a lease depends on your particular landlord’s early termination policy.

If your landlord has several properties but no hard and fast rules, then it is probably up to your property manager to make the decision. Keep in mind that the rules that apply will vary from state to state. Breaking a lease in Florida can have different rules than terminating a lease in California. And it can vary by landlord, as well.

Breaking a lease is “an individual process” at Princeton Properties, a Lowell, Mass.-based company with some 5,000 units throughout New England, says Chief Marketing Officer Sarah Greenough. Decisions are made “on a case-by-case basis, depending on how many months are left” on the lease.

But at 
Crescent Communities, a Charlotte, N.C., owner-developer with 23 apartment properties across several southern states, the rules are pretty cut and dried. Even though the company uses third-party property managers, its industry-standard leases set guidelines for both the tenant and the landlord, says Director of Asset Management Darren Pierce.

“We want to make sure the tenant’s rights are fully respected,” he says. “At the same time, we want to protect our rights as well.”

There are several ways to approach vacating your property early. But moving out in the middle of the night without notice isn’t one of them.Just how sympathetic your landlord might be to your desire to step onto the housing ladder depends in large measure on the nature of the apartment market in your area. If vacancies are high, your landlord is probably going to be less compassionate than if your local market is tight and there’s a waiting list of people wanting to take your place.

But even the most hard-hearted landlord will probably be willing to accept an upfront cash payment from tenants who wants to buy their way out of their lease. Indeed, many leases these days contain “home-buying clauses,” which enable tenants to opt out early for a relatively small fee. It’s all spelled out in the lease you signed, so all the more reason to read it.

“Anybody can get out of their lease anytime” as long as they pay a termination fee, according to Crescent Communities’ Pierce. The opt-out fee can range from as little as one month’s rent to “a few months” rent, depending on local market conditions, he says. “If we know we can fill the unit,” Pierce added, “we will work within the requirements of the lease.”

Even if the local market is less than fully occupied and no one is standing in line to move into your apartment, there are several ways to approach vacating your property early. But moving out in the middle of the night without notice isn’t one of them.

Landlords are usually more than reasonable if you’re up front with them. Tenants who lose out are the ones who sneak out.

Most landlords don’t go after tenants who move out unannounced. They’re more concerned with filling empty apartments then they are with chasing down those who skipped out on their lease for lost income. But under the law, landlords can come after those who break their lease for the outstanding months’ rent plus the cost to clean up and repaint the apartment. And that includes the 
security deposit.

At the same time, though, a person’s liability typically ends when the apartment is rented to someone else. So if a tenant skips with six months to go and the place is rented again in a month, that person is on the hook for just 30 days. If it takes 60 days to lease the unit, than only two months’ rent is owed.

In most states, according to 
Nolo.com, a website which provides plain-English legal information and products for consumers and businesses, landlords cannot simply sit back and wait for the lease term to end, and then sue the tenants for the months they weren’t there. Rather, landlords have a “duty to mitigate damages.” That is, they must take reasonable steps to re-rent the place and credit that rent to the former tenants’ debt.

According to Nolo, many property managers are unaware of their duty to re-rent for the benefit of the departing tenant. Rather than make an effort to minimize the financial hit to someone who broke a lease, the typical response is to keep the security deposit and send letters demanding the balance of the rent.

People who break their leases should expect to lose a month or two’s worth of rent, even if state law requires their landlords to mitigate, Nolo advises. But that should come out of their security deposits. If you are asked to ante up the remainder of the rent due under the lease, a return letter citing the state law requiring their duty to mitigate is in order. (A sample letter can be found at 
Nolo.com.)

Even if the landlord doesn’t go after a tenant who breaks a lease, leaving without notice could make it difficult for that person to obtain a mortgage.

That’s why it’s better to be honest with your landlord. Explain you want to buy a house, and ask how you can best get out of your lease.

Some landlords will allow you to pay a relet fee, a charge that covers the cost of cleaning, repainting and repairing the apartment, as well as whatever advertising and marketing costs it takes to rent the place to someone else. The amount may be based on the number of months left on your lease — the more time, the higher the fee — but once it’s paid, you are relieved of any and all obligations.

Of course, you can clean the carpets and oven, wash the windows, fill in the holes in the wall and paint the place yourself. But some landlords would rather have their own crews do the work. It’s usually cheaper, there’s less liability and they know it’s done right. If your efforts aren’t up to professional standards, the work will have to be done over.

Reletting is entirely different from subletting, which most leases do not allow — at least not without the landlord’s prior approval. With a sublet, you are responsible for finding a replacement, but the lease remains in your name. And, the substitute usually must be just as qualified as you.

Even if your proxy passes muster, though, you are responsible if he fails to pay the rent or tears the place up. Which is why it’s almost always a mistake to sublet the place on your own. Or to do so without telling the landlord.
Lew Sichelman is a nationally syndicated housing and real estate columnist. He has covered the real estate beat for more than 40 years.

Comments from users do not reflect the opinions of The BDX and carry no endorsement. All comments are subject to review before they're publicly available. Contact us to report inappropriate comments for review.

Related Articles

Sign up for the Home of the Week

New Home 101
New eBook Available

Expert Advice on Buying & Building a New Home

The eBook will be delivered to your inbox. We will not share your email address.