How to break an apt lease?

[Foos6LA]

With the mortgage interest rates moving up and our market getting hotter, DH and I have decided to actively pursue buying a house. The catch is, we still have until July 2006 left on our lease. We lease from a big corporation in TX (this is no mom-and-pop investment building or anything).

Both my father and my FIL have said getting out of the apartment should be the last thing on our minds - we have to strike while the rates are still good and the market is still a buyer's market. So we jumped on a house we saw, made an offer and are waiting for a response tonight. Even if we don't get this house, we're going to find one soon.

So my question is: How do we get out of the lease? Has anyone dealt with this? Do we just leave and hope they don't come after us? Go talk to them? How reasonable would they be, given they are a corporation? I know they could re-lease the apartment if there are people interested (good faith and all that) but how can I find out if the apartment might go soon? If I could find that out without tipping my hand and letting them know we're thinking about leaving, please let us know how!

TIA for your help!

[diam124]

I used to work in property management for a small company. Some leases have clauses in them stating a penalty to get out of the lease. Our standard policy was to owe 3 months rent from the time you move out (or less if less than 3 months is left on your lease). However, I believe it is illegal to collect rent from more than 1 tenant for the same apartment, so if we had re-rented the apartment before the 3 month clause was up, they didn't have to pay (some places get around that by calling the penalty a "re-letting fee"..)

It's a big penalty, but a lot better than paying the rest of the lease. Also, if people found renters for their place we would let them out of the lease provided the new renters' applications were approved and they signed a lease through at least the end of the original lease.

I would not recommend just abandoning the place. It's almost a guarantee that they will come after you for the money and it's not a fun process.

Just go talk to the manager and see what your options are - it's also wise to tell them in case they get someone who is interested in your place. You signed a legal document, so hiding the fact that you're leaving accomplishes nothing.

[udsweetpea]

Usually your lease will outline the terms for breaking your lease. If you up and leave, that will look really bad to mortgage lenders. There's usually a penalty (one month's rent) along with a 60 day notice.

[sublime311]

They will not be flexible at all with you. You will need to check your rental agreement to find out what happens when you break your lease. Usually, there will be a set "lease break fee" (I've seen this as much as $1500). Also, if you received a "special" when you first signed your lease (like a free month of rent) you will have to pay that back, too. They will not be very forgiving during your final inspection - you may not get your security deposit back either.

[KarenS]

I think it depends on how you approach them. We got out of our lease with a 'big corporate agency' by simply going to them and being honest - we had a chance to buy a great place, even tho we still had 5 months left on our lease. We asked them what the penalty would be, asked them if the penalty would be less if someone else rented the unit, and told them we were prepared to forefit our security deposit (one months rent plus a pet fee). We wound up paying an additional month's rent while the unit stood vacant, but because we were up front with them, they gave a good reference to our mortgage company and we never had a problem.

I'd say not going into it with hostility - or expecting them to be hostile - is key. Be polite, friendly, and honest.

Karen

[Asha]

it depends on the contract. sometimes you just have to fork over the security deposit. other times you will be legally binded to paying the rent until the lease is up unless they rent it to someone else.

[Foos6LA]

Thanks for all the feedback!

We've reviewed the terms of breaking our lease and it's fierce - we owe all outstanding rent (7 months) plus pay back the specials we have that are pro-rated so we'll have to pay market price (about 30% higher), plus a breaking fee of $1000 and forfeit our deposit! We didn't think it would be an issue when we signed the lease - we didn't think we'd find a house. Things happened and now we're in the position we're in.

I feel like - what's their incentive to help us? You all are right - they can't collect rent from two parties but I'm not sure how the market is for 3-bedroom apartments right now. It could sit vacant for 6 months for all I know.

Also, we have excellent credit and are already in the process of putting the paperwork together. We have also been excellent tenants so far so if our mortgage lender called about us now, we'd be fine. It's after this period we're worried about.

We just found out we got the house (!!) btw so now we have to do something about this lease...

[Kimberland30]

ITA with Karen. Although your lease states specifically what it will cost to break the lease, they may be willing to work with you.

I had to break the lease at my townhouse when my parents decided to move out of the country. They wanted me to rent out their house while they were gone, and possibly buy it from them. I called the rental company right away and told them what was going on, and that I may need to break my lease if my parents were to move. Once my parents got the go-ahead for their plans, I went through the process. I helped them find another tenant by holding open houses and showing the place myself instead of having the realty firm do it. For my "hard work", I got my full deposit back - with interest since I'd been there for 6 years. I got everything in writing just in case there was an issue later, but there wasn't.

Congrats on your new home, and I hope things with the lease work out!

[Kari331]

Another option you have is to continue paying the monthly rent on your apartment as if you lived there. It may be less money to just continue making the monthly payments- if you can afford two house payments. Let's say you don't close for 2 months and your 1st month on the house mortgage is covered. That brings you through February. You would then have 5 months left on your apartment rent.

However, be careful as your mortgage company may not like this!

[Hello Kitty]

We didn't rent from a corporation, but to break our lease, we had to pay out the remaining months.

We were, however, allowed to sublease our apartment, and that may be an option for you - I would ask your apt. management. We had to do all the legwork, which was a lot of work and actually kind of nerve-wracking, but it saved us $3k in rent, so it was well worth it.

[kam]

Another option you have is to continue paying the monthly rent on your apartment as if you lived there. It may be less money to just continue making the monthly payments- if you can afford two house payments. Let's say you don't close for 2 months and your 1st month on the house mortgage is covered. That brings you through February. You would then have 5 months left on your apartment rent.

That's what I was going to suggest. It's better than paying all the months in addition to the penalties (which seems ridiculous, especially since they're getting their money). You might not be able to sublet according to your lease. I would go to the home office and see what your options are - I'm sure you're not the first ones to buy a house but they would know more than anyone how difficult their company is (of course, be prepared for them to lie that their company are hardasses when they're not, but they may tell you "Oh, that's fine, just fill out xyz").

[Asha]

if you are going to have to pay all those penalties, i would just continue to rent it out as normal. i don't see how the mortgage company would know she was paying a rent in addition to the mortgage. our mortgage company never contacted our landlords. also, another option would be to wait until your lease is almost up to buy a home. i know it might be disappointing, but it would save you a lot of money, and there are other homes out there. we did this, and we didn't get a house before our lease was up so they let us pay month to month rent after our lease ended.

[Amuse Bouche]

I'd talk to the management company too, and see if they'd be willing to waive any fees or penalties if you find someone else to rent the apartment (they're not out anything). Get it in writing if they agree, and advertise on Craig's List. That's how we found new tenants for our apartment in NYC when we broke our lease.