Look, man. Leases suck. Before you start on your homebuying journey, it’s crucial to know the intricacies of how to get out of your lease. Most real estate agents will chalk this up to, “oh yeah, just pay a small fee and you’ll be fine.” While that may be true, that small fee can make or break you. The fee to break your lease - and there almost ALWAYS is a fee - is to be paid in addition to your down payment, closing costs, and other out of pocket fees when you purchase property.
Understanding these concepts is especially important if you are leasing from a MASSIVE commercial apartment company like AMLI or MMA.
Breaking your apartment or rental lease before buying a new home can be a complex and costly affair if not handled properly. Navigating this process requires careful planning and a good understanding of potential pitfalls. In this blog, we’ll explore common mistakes people make when breaking their lease early and provide practical advice on how to avoid these missteps.
1. Not Understanding Your Lease Terms
One of the biggest mistakes tenants make is not fully understanding the terms of their lease. Leases can be long and filled with legal jargon, making it easy to overlook critical details. Before you decide to break your lease, take the time to read through it carefully.
What to Look For:
- Termination Clause: This will outline the conditions under which you can legally break your lease.
- Notice Period: The required time frame to inform your landlord of your intent to move out.
- Penalties: Any fees or financial penalties associated with early termination.
Avoid This Mistake: Set aside time to thoroughly review your lease. If you find the language confusing, consider seeking advice from a real estate professional or a legal expert. Understanding your obligations will help you avoid unexpected costs and legal troubles.
2. Failing to Communicate with Your Landlord
Many tenants dread the idea of informing their landlord about breaking the lease, but open communication can often lead to more favorable outcomes. Your landlord may be more understanding than you think.
What to Discuss:
- Reasons for Leaving: Explain why you need to break the lease early.
- Possible Solutions: Suggest alternatives such as finding a new tenant to take over your lease.
Avoid This Mistake: Approach your landlord with honesty and transparency. A well-crafted letter or a face-to-face meeting can go a long way. Landlords appreciate tenants who communicate their intentions clearly and respectfully.
3. Ignoring the Financial Implications
Breaking a lease usually comes with financial consequences. These can range from forfeiting your security deposit to paying rent until a new tenant is found.
Common Financial Penalties:
- Remaining Rent Payments: You might be liable for the rent until the lease term ends or a new tenant is found.
- Paying back any “bonuses” or special offers: Did you get “one month of rent” for free? You may have to pay that back if you break the lease early.
- Lease Termination Fee: A set fee outlined in your lease for breaking it early.
- Repair Costs: Any damages that need to be fixed before a new tenant moves in.
Avoid This Mistake: Budget for potential costs and explore ways to mitigate them. For example, offering to help find a replacement tenant can expedite the process and reduce your financial burden.
4. Not Documenting Your Move-Out Process
When leaving a rental property, thorough documentation is crucial to avoid disputes over damages or cleanliness. Failing to document can lead to unfair charges against your security deposit.
Documentation Tips:
- Take Photos: Capture the condition of every room before you leave.
- Conduct a Walkthrough: If possible, do a walkthrough with your landlord to discuss any potential issues.
Avoid This Mistake: Keep a detailed record of the property’s condition. This documentation will serve as evidence if any disputes arise regarding damages or cleanliness.
5. Overlooking the Importance of a Clean Break
A “clean break” means leaving the property in good condition and settling all accounts. This not only helps you get your security deposit back but also maintains a positive rental history.
Clean Break Checklist:
- Clean Thoroughly: Ensure the property is as clean as when you moved in.
- Return All Keys: Don’t forget to hand over all keys and access cards.
- Settle Bills: Pay all outstanding utility bills and any remaining rent.
Avoid This Mistake: Treat the property with respect and ensure all loose ends are tied up. A clean break leaves a good impression and can serve as a positive reference for future rental or real estate opportunities.
6. As much notice as possible
While the number of days you legally have to notify your landlord you are leaving varies from state to state, the more notice you can give the landlord, the better. 60 days is considered the “norm” in most cases; meaning you need to tell your landlord you are leaving your apartment on December 1 on or before October 2. Often, I have found that if you tell your landlord you are moving our within 60 days, there are additional fees.
And look, sometimes the best strategy is to time your new home purchase before your lease ends. For example, if your lease ends on December 1, here is an example home purchasing timeline:
- Begin pre-approval process: September
- Start shopping for new homes: October-November
- Notify landlord you are leaving/no renewal: October 2
- Make an offer, go under contract: October
- Close on new home: November
- Pay last rent bill: December 1
- Pay new mortgage: January 1
If, for whatever reason, we cannot locate a suitable home, your landlord may allow you to renew even after you’ve given the notice - but probably for a fee. After all, they know you and they dont have to find a new tenant.
Conclusion
Breaking your apartment or rental lease before buying a new home requires careful consideration and strategic planning. By understanding your lease terms, communicating with your landlord, budgeting for financial implications, documenting your move-out process, and ensuring a clean break, you can avoid common mistakes and make your transition smoother. Remember, being proactive and informed is key to a successful lease termination.
FAQs
1. Can I break my lease if I buy a house? Yes, but you need to review your lease agreement for specific terms regarding early termination and communicate with your landlord to understand potential penalties.
2. What is a lease termination fee? A lease termination fee is a predefined amount you agree to pay if you decide to break your lease before the end of the term. This is usually outlined in your lease agreement.
3. How can I find a replacement tenant? You can advertise the vacancy on rental websites, social media, or ask friends and family for referrals. Ensure the new tenant meets your landlord’s approval.
4. Will breaking my lease affect my credit score? Breaking a lease does not directly impact your credit score. However, if you owe money and it goes to collections, it can negatively affect your credit.
5. What should I do if my landlord refuses to negotiate? If your landlord is unwilling to negotiate, you may need to adhere to the lease terms or seek legal advice to explore other options. Understanding your rights as a tenant is crucial.
By addressing these common mistakes and taking proactive steps, you can navigate the process of breaking your lease with greater confidence and ease. Happy house hunting!