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How to Break an Apartment Lease Agreement Without Penalty

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Leases are legally binding contracts, and vacating a rental property before your lease expires can have serious consequences. But what are you supposed to do if you can’t make rent? You can skip the payment and dodge your landlord until you’re able to drum up the cash. However, this method rarely works and some landlords begin the eviction process once payments are 15 days past due.

In this situation your choices are few – either break your lease early, or risk having your belongings tossed out on the street. There are a number of consequences you may face by breaking a lease, but there are still ways to handle the situation tactfully and avoid major penalties.

Potential Consequences of Breaking a Lease

As hard as you try to avoid breaking your lease, sometimes, this is your only alternative. Unfortunately, breaking a lease can have major consequences, creating a domino effect that can impact your personal finances for years, as well as your credit score.

1. Civil Lawsuits
Because leases are legally binding agreements, your landlord can take legal action to recover back rent payments. In most cases, your landlord will win the lawsuit and a judge will order you to pay off the lease balance. Job loss, illness, or divorce can negatively impact your finances and hinder your ability to make your rent payments. But unfortunately, these excuses don’t legally excuse you to break a lease early.

2. Credit Judgment
A credit judgment is an order to pay a debt, and after hearing your case, a judge can issue a judgment against you. You can initiate a debt repayment plan in court or immediately pay the debt to avoid a judgment. Judgments are derogatory, and this information stays on your credit report for seven years. Since your landlord will most likely report the breach of contract to the bureaus – which will cause your score to drop – avoiding a judgment is key to lessening credit damage after breaking a lease.

3. Difficulty Renting a New Place
Renting a new home or apartment after breaking a lease can be challenging. Your new landlord can ask for rental references or review your credit report, and any negative information on your reports – such as an eviction, breach of contract, or poor payment habits – can cause future landlords to deny your rental application.

You can attempt to rent a new place before the breach of contract hits your credit report, but on the off-chance that your landlord inquires as to whether you’ve ever broken a lease early, be honest and open. Your new landlord will likely uncover your past in due time, and lying on an application or withholding information can cost you the rental.

Difficulty Renting New Home

Breaking a Lease With Minimal or No Damage

You want to avoid a lawsuit and keep a good credit score. Besides, negative information reported to the credit bureaus can delay any plans of buying a house in the future. For this reason, you’ll need to break your lease without damaging your credit.

1. Check for Breach of Contract
As part of the lease, landlords agree to maintain the property and provide a safe, healthy environment. But regrettably, some landlords do not live up to their end of the bargain. They can ignore requests to replace nonworking appliances, or refuse to fix faulty plumbing and broken heating systems. Other issues with the unit can include mold or an insect infestation. Failure to keep rentals in good condition is called breach of contract, and if your landlord breaches the contract, you can break the lease without penalty.

You may need to prove that you tried to get the landlord to work with you, so keep copies of all correspondences sent to your landlord regarding issues with the unit and take pictures. If your landlord decides to sue, you can present these letters and pictures to the judge as evidence.

2. Look for an Early Termination Clause
Some landlords do not include this clause in the rental agreement, and if they do, they don’t always tell applicants. An early termination clause is a statement within some lease agreements that gives renters an “out” if they stumble upon hardship or encounter other situations. These clauses allow tenants to break a lease in the event of job loss, family/personal medical issues, divorce, or job transfer.

3. Beg for Mercy
If your landlord is a jerk and only cares about money, begging for mercy won’t get you far. But if your landlord is understanding, appeal to his or her emotions in order to get out of your lease early.

Speak with your landlord the moment you realize that you have to break your lease. The sooner you have the talk, the sooner you can move on with your life. Don’t hold back, but rather explain your situation in detail. This isn’t the time to be embarrassed. This conversation determines whether you can break your lease without penalty.

4. Pay Off the Lease Balance Over Time
Paying off the lease balance is one way to get on your landlord’s good side and break your lease without penalty. However, if you can’t afford to pay several thousands of dollars to clear the balance, ask about paying off the lease over several months. For example, if there are two months left on your agreement and you owe $2,000 on the lease, offer to pay off the remaining balance over 12 months and give your landlord $166 a month.

5. Forfeit Your Security Deposit
Most renters look forward to getting back their security deposit after moving out of a rented living space. But if you’re looking to break your lease and avoid credit damage, be ready to lose your security deposit. As a matter of fact, propose this option when negotiating with your landlord. This money can help your landlord maintain the property until a new tenant moves in. You can take it a step further and offer to clean and paint the apartment yourself, which can save your landlord time and money.

6. Find a Short-Term Renter
Subletting isn’t an option in many cases. But if your landlord doesn’t speak against subletting in your lease agreement, it’s worth a shot. This approach is very simple. Find someone who needs short-term accommodations and have this person take over your lease on a temporary basis. Subletting works best if you’re near the beginning of your lease term. Your name remains on the lease and you remain responsible for the rental. However, the sub-tenant writes the check for the unit each month. They send you a check, and you in turn send a check to your landlord.

Final Word

Maintaining a good rental history scores points with your landlord. If you were to break your lease in the future, your landlord can recall your good rental history and empathize with your situation. But in the event that you can’t avoid credit damage, rest assured that you can rebuild your credit score and perhaps qualify for a mortgage in the future. Keep up with your other payments, keep debt to a minimum, and work to pay off any judgments.

What creative measures have you taken to get out of a rental lease early?

Valencia Higuera
Valencia Higuera is a personal finance junkie who enjoys reading articles on budgeting, saving money, and credit cards. She has written personal finance articles and blogs for several online publications. She holds a B.A in English from Old Dominion University and currently lives in Chesapeake, Virginia.

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