It is possible to break a lease without penalty under special circumstances, including if the apartment is uninhabitable and your landlord refuses to make repairs (you’ll need evidence of this), if you become seriously ill, or if you are deployed or relocated by the military.
Depending on your reasons for breaking your lease, your landlord may choose not to penalize you, but breaking a rental agreement can come with serious consequences.
How to break your lease without incurring fees or legal repercussions
If you are breaking your lease for a reason other than a special circumstance protected by law, you’re likely to incur some fees. The good news is you can take steps to minimize the financial and legal damage when you leave.
Read your lease
The first step in considering breaking your lease is to thoroughly read through your rental agreement to understand what the penalties are if you break the lease. Look specifically for the early termination clause.
The lease agreement may give you an option to terminate the lease if you give advance notice and find a replacement tenant. The agreement may even give you an option to terminate the lease immediately, but you will likely incur high fees and lose your security deposit.
Keep all your paperwork related to the rental agreement, including the rental agreement and other written agreements. Document verbal and text/email discussions, and any evidence relevant to the condition of the rental.
State tenants’ rights laws offer tenants protections which may allow them to break their lease in certain cases, such as if the apartment becomes inhabitable, if the landlord refuses to complete repairs, or if you can find a loophole within the lease that makes it legally invalid.
If you made an agreement to sub-let the rental to another tenant and you are missing documentation proving the agreement, you may still be responsible for the lease.
Talk with your landlord
Most landlords prefer to forgo the hassle of suing a tenant. They just want someone living in and paying for their property. If you’re honest about your situation, your landlord may agree to re-negotiate the terms of the lease.
Give your landlord as much notice as possible, and make your best attempt to find another tenant.
Find a new tenant
Finding a new tenant is an excellent way to stay in good graces with your landlord. Many landlords will release their tenant from a lease agreement if the renter finds a suitable replacement tenant.
Some landlords may require the new tenant to assume your lease, and the landlord may be able to hold you responsible if the new tenant moves out early or doesn’t pay the rent. Start looking for a new tenant to take your place, but conduct credit and background checks to ensure you find a suitable replacement.
Use a “lease-breaking” service
While not a well-known option, a lease-breaking service may work well as a last resort—that is if you live in New York City. Leasebreak, launched in 2013, helps tenants renegotiate rental contracts and connects renters with other renters wanting to sign a short-term lease.
“Landlords are realizing that sometimes breaking a lease is in everyone’s best interest,” says Leasebreak founder and former real estate agent Phil Horrigan. “They really don’t want unhappy tenants in their units, so they’ll try to work with them as long as the burden is on the tenant.”
Maybe the rest of the country will catch on to this concept, and we’ll see more lease-breaking services. In the meantime, your options are limited if you don’t live in NYC.
4 reasons not to break your lease
Sometimes breaking a lease can’t be avoided; however, you should carefully consider the consequences when thinking about breaking your lease. We’ll list a few reasons you should try to stick it out through the end of your lease’s term if you can.
Early termination fees
Every lease agreement has different early termination clauses (the small print that determines what happens if you terminate the lease), and the fees vary widely. When signing a lease you are legally agreeing to stay in the apartment for the term of the lease.
If you break the lease you incur fees as outlined in the early termination clause. The clause may require you to pay one to two months’ rent, or to pay the rent for as long as it takes to find another tenant to sign a lease on the apartment, leaving you with a hefty bill to pay.
Your credit score could be affected
Most landlords won’t be able to report the terminated lease directly to a credit reporting agency, but they can sue you in small claims court for breaking the contract. This could result in a civil judgment which is considered a debt and appears as a negative strike on your credit report.
Civil judgments stay on your credit report for seven years from the filing date and will affect your credit history for quite some time. A landlord may also choose to hire a collection agency to recoup the debt, and this collection amount will also show on your credit history and remain there for seven years from the date the account was turned over to collections.
You may have to defend yourself in court
Leases are legally binding agreements, and your landlord has the right to take legal action against you to recover rent payments. In many cases, the landlord wins. And while you may think giving what you consider sufficient notice (e.g., 30–60 days) should allow you to break the lease, you are still responsible for paying the rent until the term ends or until the landlord finds a tenant.
It may be harder to rent a new place
Once you’ve broken a lease agreement, don’t expect to easily rent a new place. Your new landlord may require rental references or may review your credit report. Any negative information—including a breach of contract—could cause future landlords to deny your rental application.
Even if you lie or attempt to rent before the terminated lease shows up on your credit report, the landlord may find out the truth later on, and it could affect your ability to remain in the rental.
If you’re going to break a lease, understand your rights and your risks
No landlord or tenant wants to deal with the hassles that come with breaking a lease. If you think you have a legally valid reason to break your lease, contact your local renters’ rights organization, or a lawyer to find out the laws pertinent to breaking your lease in your state.
With an understanding of your options and your rights, and a willingness to work with (not against) your landlord, you can come away satisfied with the outcome, and you’ll keep your credit and rental history clean.