When it finally comes time to many things have to fall into place. You must be financially and emotionally ready. You have to find the right home, in the right neighborhood, at the right price. You need to make an offer and, of course, have it accepted. The point is, when all of the stars align, you need to be ready to make a move — which may not please your landlord.
If you live in a rental property, chances are you signed a lease. Whether that lease will end at the right time for you to buy a home is never guaranteed — which begs the question, should I break my lease to buy a house, if it comes to that? The answer depends on your unique rental agreement, your housing needs, and your financial situation.
There are plenty of perfectly valid reasons to want to break a lease, some of which provide you with legal protections in the event your landlord chooses to sue you for doing so. You may want to move because the landlord does not maintain proper living conditions on the property, get away from a potentially violent situation, or relocate for a new job. None of us can predict the future, and while we generally sign leases in good faith, you may want to move before your lease ends.
Another reason renters may choose to break a lease is that they want to buy a house. Many apartments require tenants to sign a year lease to move in, and even if you know you want to buy a home in the next few months, you need somewhere to live while you search for the right home to buy.
Learn more about renting vs buying a house.
It can be a challenge to break a lease without the permission of your landlord. Legally, if your landlord doesn’t support you breaking the lease, you don’t have many options unless you have a reason for breaking the lease backed by an extreme circumstance. If you need to move for military purposes, your apartment becomes inhabitable, or you’re a victim of domestic violence, you should be able to break your lease.
It’s crucial to pay attention to your specific state’s laws around lease-breaking, so you understand what your options are and what the consequences of breaking a lease may be.
Even if you have to pay penalties, you may find that breaking your lease is more than worth it. Here are some pros and cons to consider when you make this critical decision.
If you decide to break your lease, you need to carefully consider all of the options you have to get out of your current lease. To start, consider letting your property manager or landlord know your plans. It’s a good idea to read through your lease agreement carefully to better understand the rules in place about your lease. Your landlord may allow this in certain circumstances (for example, if you are able to find a suitable replacement tenant) or they may be firmly against it, so review your lease agreement first so you have an idea of what to expect when you broach this conversation.
A few common clauses and potential paths forward can help you get out of a lease.
Some leases include a home buying clause in the agreement that allows you to terminate your lease early after you buy a home, as long as you provide the landlord or property manager with the agreed-upon amount of notice. It isn’t guaranteed that your lease will have this clause, but if you’re breaking your lease because you bought a home, it’s worth doing some research.
You may be able to buy your way out of a lease agreement if you pay an early termination fee. Typically, this fee costs about a month or two’s worth of rent alongside a penalty fee for breaking the lease.
If you know far in advance that you may not be able to ride out your entire lease agreement (which is likely if you know you want to start house hunting), you should warn your landlord and request they switch your lease agreement to be monthly instead of annually. When you have a month-to-month lease, you only have to stay in your lease for a month at a time instead of a full year. You may have to pay a bit more each month in rent when you are month-to-month, but that cost may be worth the flexibility you’ll gain.
If you give them enough of a heads-up about your plans to move before your lease ends, your landlord may work with you to help find a solution that works for both parties. For example, if rentals are in high demand in your area, they may be able to find a new tenant.
While it may be tempting to hide your plans from your landlord or property manager, being upfront sooner rather than later if you plan to break a lease is the way to go.
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