Breaking Your Lease When You Can No Longer Afford the Rent
UPDATED: February 5, 2020
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You have been laid off for over a year, you've gone through your savings, and simply can't afford your rent payment anymore. Breaking your lease seems like the best options. However, before you break your lease, review your lease agreement, visit with your landlord, and consult with an attorney that specializing in landlord-tenant law. How and when you terminate your lease will usually have more long-term consequences than why you are terminating your lease.
A lease is a contract between a landlord and tenant. Unless there is a provision in the lease which would allow you to terminate the tenancy due to financial hardship, you would not be able to break the lease because you lost your job. It is unlikely that such a provision would be included in a lease. However, if you are on good terms with the landlord, you may be able to negotiate an early end to the lease or perhaps you could negotiate a payment plan that fits your new financial situation. It may be in your landlord's interest to allow you to make installment payments and/or to terminate the tenancy earlier than the original terms of the lease.
Prior to entering into negotiations with your landlord, consider the length of time remaining in your tenancy and how much notice is required to end the tenancy. If your tenancy is month to month, only thirty days written notice is required to terminate the tenancy. If your rent was paid on the first of the month, and if it is now the 15th of the month, giving your thirty days notice today would mean you would only owe rent until the 15th of next month; in other words you would only owe one-half the rent for next month. Depending on your financial situation, this may make it easier for you to terminate the tenancy without having to discuss your financial situation or negotiate with your landlord.
If your lease is for a year, then negotiating with the landlord an early end to the tenancy may be your best option under the circumstances. It may also be in the best interest of your landlord to allow an early termination so they can find another tenant who would be able to afford the rent. Your landlord is not obligated to allow you to terminate the tenancy earlier than set forth in the lease.
If you successfully negotiate any new terms or agreements, make sure that the agreement is reduced to writing. These new terms or amendment should also be signed by you and your landlord. Most contracts require any changes to be in writing to be binding. Written amendments will also help you avoid a potential future dispute as to what was or was not agreed to.
If negotiations with your landlord do not succeed and you break the lease, you will be liable for the rent for the balance of the term. For example, if your lease was for one year and you had already completed seven months of the lease term, you would still be liable and obligated to pay rent for the remaining five months, even if you moved. This is considered contractual damages for your landlord.
Even though your landlord may be entitled to damages, he/she still has a duty to mitigate, or reduce, their damages. Your landlord cannot allow your former apartment to remain vacant for the balance of the term. Your landlord must make reasonable efforts to re-rent the apartment. Once the apartment has been rented to another tenant, your obligation to pay rent for the balance of the term of your lease ends. For example, you had a one year lease, but after six months were unable to continue paying rent and moved out. Two months later, a new tenant rents your apartment. Instead of being liable for the rent for the remaining six months of your lease, you would only be liable for the two months the apartment was actually vacant. However, if the new tenant is paying less rent than you paid, you would be liable for the difference in rent for the remaining six months of your term. Because your landlord has a duty to mitigate damages, they cannot simply charge less to the new tenant knowing that you have an obligation to pay the difference in rent for the balance of the term. They must establish a legitimate reason, such as market conditions during the recession, which resulted in the new tenant paying less than you did for the same apartment. If your landlord fails to mitigate, their damages (monetary compensation to be recovered) will be reduced accordingly.
Even though terminating your lease seems like the easiest was to get financial relief during financial hardship, how and when you break your lease can lead to more expenses and headaches. Contact a qualified landlord-tenant attorney before you jump out of the lease and into a worse situation.