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If you rent, you probably signed a lease that commits you to pay rent for a specific period of time. It's always possible to break a lease commitment, but you may face negative consequences for doing so. After all, leases are contracts between you and the property owner. When you sign, you promise to uphold your end of the bargain.
Here's what you need to know about breaking a lease.
Legally Justifiable Reasons for Breaking a Lease Early
Though a lease is a legal document, you may be able to break it without facing penalties. However, it still isn't something you should do lightly, or without fully understanding the drawbacks—it's often wise to consult a lawyer or get help from local experts. Depending on the state you live in, you may be able to turn in your keys before the lease expires with few (if any) ramifications for the following reasons:
- The home is not habitable. It's the landlord's responsibility to maintain the property to a certain standard and according to the terms of the agreement. In most jurisdictions, residential leases include an implied warranty of habitability. That means your home should be functional, with things like working gas, heating, electricity, plumbing and intact roofs.
- The landlord invades your privacy. Your landlord is not permitted to enter (whether you're present or not) without proper notice, good reason or your permission. You may obtain a court order to stop the landlord, and if that person violates it with continued unlawful entries, you can give notice that you will terminate the lease.
- Your home is not as peaceful as it should be. If you moved into the home with the expectation that it would be safe and quiet, you may have the right to leave prematurely if it isn't. In fact, this clause may be embedded in your lease. A breach of peace can include excessive phone calls and visits from your landlord, constant dog barking, excessively loud neighbors, and unnecessary remodeling or maintenance work that takes longer than the landlord proposed.
- You're entering active military service. The Servicemembers Civil Relief Act grants you the right to terminate the lease at any time if you signed the lease before entering military service. If you signed the lease after entering the military, you're bound by the same rules as a civilian—unless you receive military orders for a permanent change of station or to deploy for 90 days or more.
- You're being harassed or are otherwise in danger. In many states, you can break a lease early if you are a victim of domestic violence. States may also permit people experiencing sexual assault, stalking or harassment to break a lease and leave. The grounds for which you're able to do this vary, so make sure you understand the local laws before proceeding.
- There's a built-in termination clause. Check the paperwork that you signed. It's possible that the lease included the ability to leave early under conditions specified by the landlord. For example, you may be able to pay an early termination fee (usually two months' rent) and get out of the deal.
Laws regarding tenancy differ depending on your jurisdiction, so be sure to research your state and local government's codes to find specific information on rules where you live.
Potential Consequences for Breaking a Lease Early
If you break your lease for a reason that isn't legally protected, the consequences can be severe. Be prepared for potential fallout if you're reneging on your agreement. Ramifications include:
- Being taken to court: Your landlord could pursue what is owed in a court of law. If you lose the case, a judgment may be awarded to the landlord, which can include the money for the rent you didn't pay as well as associated court costs. It's possible that the money you owe will be taken out of your paycheck with a wage garnishment order.
- Debt collection action: Instead of suing you, your landlord may choose to simply turn the debt over to a third-party collector, which will pursue you for the amount owed. If you still don't pay, a debt collector can also take you to court and sue you for the money.
- Losing your security deposit: The amount you put down as a security deposit can be substantial, usually equaling one month's rent. Even if you kept the place immaculate, the landlord may claim the deposit and apply the funds to the amount you owe.
- Damaged reputation: Most landlords ask for a letter of recommendation from your most recent landlord, and that person will have no reason to give you a glowing review if you walked out on the lease. That can jeopardize not just your future tenancy, but if you have people depending on you such as children or a partner, it puts them at risk too.
Does Breaking a Lease Affect Your Credit?
Most landlords do not report rent payments to the credit reporting bureaus because rent is not a debt or a type of credit. Therefore, breaking your lease won't automatically affect your credit report.
However, if the landlord does turn over a balance due to a debt collection agency, that company can—and usually will—send the account to the credit reporting bureaus and it will end up on your consumer credit reports and negatively affect your scores. It will remain on your reports for up to seven years, and anyone who views your reports will see the derogatory account.
A collection account is a clear indication that you did not fulfill your end of a financial bargain, so it will be factored into your credit scores too. Because payment history is the most important credit scoring factor, your credit scores could decline when the debt collection account appears.
Additionally, a broken lease can appear on a document called a tenant screening report. These reports are overviews of your tenancy history. Landlords can furnish information to tenant screening reports, listing your payment pattern and any other relevant information for future landlords to review. If you broke your lease without just cause, it can show up as a major red flag. When it does, you can have trouble securing a new place to live.
Tips for Responsibly Breaking a Lease Agreement
It's very important to read your initial agreement before walking out on your lease. If you can't find it, ask your landlord for a copy. You might find a clause that allows you to leave without facing collections, owing too much of a fee or facing legal consequences.
Also check local laws for information about circumstances where you can prematurely break the lease without repercussions. Look for a rent board or tenants rights organizations in your area that can help you navigate the process.
Don't be afraid to talk with your landlord. They may agree to let out of the lease early without much persuasion. To sweeten the deal, you may try to help the landlord find an acceptable new tenant who can move in as soon as you move out. The landlord would still screen the applicant, but it can help to smooth things over.
Another idea is to sublet your home to someone else who will pay the rent for the months which you're obligated. Not all landlords accept this arrangement and it isn't legal everywhere, however, so proceed with caution. Ask first and get the acceptance in writing.
If your landlord doesn't budge and you have no legal recourse, get ready to pay what you may owe. The landlord is usually allowed to continue charging you rent until the lease expires or a new tenant is secured.
Along the way, make sure to keep detailed records of all agreements and financial arrangements.
As a tenant you'll want to keep your credit report clean. A collection agency debt that's derived from breaking a lease will not just be a problem when seeking a new home to rent, but it will affect your ability to obtain a loan or credit card with excellent terms. Check your credit report from Experian often. It's free and a great way to keep track of what is being reported about you. The next landlord will almost certainly read it and you'll want all the data to shine.