What Happens When a Tenant Breaks a Lease?

Friday, October 17, 2014
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Breaking a lease should be the last option considered by a tenant.  A lease is a legally binding contract and there are often serious consequences involved in breaking it. So what exactly happens if a tenant breaks the lease?

Before actually breaking the lease, a renter should review their rental agreement to determine if there is a section discussing the terms and conditions of ending a lease prematurely. In certain cases, a lease may contain what is known as an opt-out clause.   

 

An opt-out clause explains exactly what will happen if a tenant chooses to end their lease before the fixed-term is over. It typically contains information about how much notice must be provided before vacating the rental, whether or not there will be a penalty (there almost always is), whether or not a replacement tenant must be found and any other terms that must be met before terminating the lease early. If an opt-out clause is not within the lease, a tenant should consult with the landlord to determine the best course of action to take.

Options for Breaking a Lease:

 

If all else has failed and the lease must be broken, the first step is to notify the landlord or property manager. This should be done as soon as possible, as most leases will require a certain amount of notice. Most landlords expect to be provided at least 30-60 days’ notice (1-2 months). Notice should always be provided in writing, and it’s wise to retain a copy for the tenant’s own records. After providing notice, the landlord or property manager will indicate what is required of the tenant(s).

 

While the laws vary according to each province or state in North America, a tenant will have a few options when breaking a lease. In some instances, a landlord or property manager will allow subletting, where a subtenant can essentially takeover the lease. In this case, the original tenant is still responsible for paying the monthly rent, so another agreement is usually signed with the subtenant. This is usually the best option, as it can minimize the cost for the tenant who is breaking the lease.

 

If subletting is not permitted, the tenant breaking the lease will often have to pay a penalty(s). For example, the tenant may lose their security deposit, last month’s rent, and/or possibly pay an additional fee, depending on how many months remain in the lease. This can easily amount to hundreds, or maybe even thousands of dollars in lost money. This is commonly what deters renters from breaking their lease, as it can be quite expensive.

 

There are a few specific situations in which a tenant can break a lease without paying a fee or facing consequences (this varies according to each province or state’s legislation). In most circumstances, a renter can legally break a lease early, if the landlord isn’t obeying their legal responsibilities. For example, a landlord constantly ignores or fails to make repairs to the rental unit, which interferes with a tenant’s ability to live comfortably or causes safety issues. In such situations, the tenant would be required to provide proof, if the matter was presented in a court of law.

 

It is important that tenants follow the rules, if breaking the lease is unavoidable. They should never just stop paying the rent, move out without notice, or do anything that violates their lease. This will likely lead to legal repercussions and can cause severe damage to an individual’s credit score. Landlords will most often be willing to work with a renter to resolve the problem, if the tenant explains the situation of why the lease needs to be broken with honesty and transparency.

 

It is recommended that all measures be taken first, before ending a lease early.

SEE ALSO: Your Lease Isn't Like a Software Licensing Agreement - Read It! 



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