You may face penalties and even end up in court if you break a lease before moving in.
It’s exciting to find an affordable apartment located in your ideal neighborhood. But, because life is unpredictable, situations arise that can alter even the most solid plans. You’ll want to know, “Can I cancel a lease before it starts and how long after signing a lease can I back out?”
Breaking a lease
When you sign a lease agreement, you have entered into a binding contract. That means that as a tenant, you have agreed to fulfill certain duties and obligations. Among them is to pay rent on time.
By signing the lease, the landlord also agrees to specific responsibilities. For example, the landlord must make the rented space habitable and furnished with heat.
Not occupying a rental after signing the lease is not, in and of itself, considered a breach of contract. However, not paying rent because you did not move in is.
Early termination
When a landlord or tenant fails to fulfill the responsibilities and obligations they accepted by signing the lease agreement, early termination of the contract occurs. Any scenario that leads to the terms of the lease going unfulfilled can escalate to an early termination situation.
As soon as you learn you can’t move into your apartment, review your lease to check your options.
What is an early termination letter?
An early termination letter is a written request from a tenant to end the lease sooner than agreed. A landlord does not have to OK the request. However, they do have to make reasonable efforts to get the apartment re-rented as soon as possible.
If the landlord accepts the reason you’re seeking an early end to your lease, they may agree.
If nothing else, sending such a document proves you gave the landlord notice of your intention not to occupy the premises. It’s important to keep a paper trail of your attempts to help the landlord mitigate the losses they may incur due to your early termination.
Contents of an early termination letter
A letter to terminate a lease early should contain specific information, including details as to why you’re seeking the unexpected termination of the rental contract:
- The tenant’s name
- Updated contact information
- The address the tenant is vacating
- The date you’ll terminate the lease
- The reason for ending the lease early
- A summary of the penalties and fees you acknowledge caused by ending the lease earlier than originally agreed
- Information as to how to return the apartment’s keys, garage opener, etc.
- The tenant’s forwarding address
- The current date
- The tenant’s signature
The date of the letter is important. If, for example, a would-be tenant signed an apartment lease in January with a move-in date of June but then sent a letter of early termination to the landlord in February, it could be argued they had plenty of time to find a replacement tenant. That could reduce the fees or other penalties the would-be resident might be required to pay for not fulfilling the lease terms.
Potential penalties
A person can’t just walk away from a signed and legally binding rental agreement without expecting to incur fees or penalties.
For example, if the signed lease contained an early termination provision requiring a tenant breaking the agreement early to pay a penalty of two months’ rent, that must occur to cancel it.
Impact on your credit score
Negative information on your credit report stemming from ending your lease early could impact your credit score. The good news is that not every landlord reports early terminations to Equifax, Experian and TransUnion, the three major credit reporting agencies in the U.S.
If you secured utility services for the abode, it’s your responsibility to notify them of your change in circumstances. If not, you could be facing hefty bills for utilities you never used.
Meanwhile, many utility companies report late or missed payments to credit reporting agencies. That hurts a credit score.
Exceptions to every rule
Laws governing the landlord-tenant relationship vary by state. But many jurisdictions permit early termination in specific situations, including:
- If the landlord did not maintain the property in a habitable condition, as defined state-by-state
- Your inability to experience the quiet enjoyment of your home due to the unreasonable behavior of the landlord, other tenants, their guests or some other reason. The interferences must occur over a period of time, not just once.
- Being called up for active military duty after signing the lease but before entering the military. If you signed the agreement after joining the service, the lease might be ended early if the deployment orders are for 90 days or longer or permanently alter your station.
- You experience harassment or are in danger by remaining in the rental. In many states, victims of domestic violence, stalking or sexual assault, among other crimes, allow you to terminate a lease early.
- When a lease includes an early termination provision, you must meet its conditions for the agreement to end early
See you in court?
Unless the tenant has a legally justifiable reason for ending a lease early, a landlord can sue for past due rent and other losses caused by the improper termination. If the landlord receives a judgment, they can garnish your wages or bank accounts to get paid. The judgment would also be noted on your credit report, and that’s a huge ding.
Moving on
Sometimes, life’s unpredictability causes situations that can cost people dearly, financially and otherwise. Reading and understanding your lease before signing it can go a long way towards mitigating any damages that result from an early end to a lease agreement.
Source: rent.com