The ripple effect of the economic decline, caused by COVID-19, is affecting people’s ability to afford rent. Despite the immediate assumption that breaking a lease should be avoided, this move can help someone struggling to maintain financial security. Read on to learn if and how you can break your lease.
Before breaking a lease, check your renter’s policy
Understanding your lease terms is essential — since some contracts offer provisions that can help you opt-out of payments due to housing issues. If you have renters insurance, it may include additional living expense coverage.
[ Read: The Cheapest Renters Insurance Companies of 2020 ]
According to Mary Garcia, a Sacramento-area realtor, “An ALE is better known as loss of use. If you’re not able to live in your rental because of smoke damage after a fire or mold, for example, you may be able to receive reimbursement from your insurer for your living expenses to move elsewhere.” While this may not help you break the lease, it can provide you with financial help.
Garcia suggests, “Look for a provision in the lease that allows early termination for a fee.” The fee varies. “It may range anywhere from a few hundred dollars to forfeiting the last month’s rent deposit,” she says. Make sure you know how much it would cost you to go this route before you decide.
5 Questions to ask if you have to leave your rental unit early
Ask yourselves the following five questions for the best plan of action:
1. Is there an early lease termination clause?
Rental contracts rarely include any allowances to get out of a lease agreement early, but it’s worth a try. If you don’t understand the wording used, you could consult with an attorney, your local tenant advocacy or renter’s rights office — if none of these work, you could ask your tenant for advice.
2. What does the lease say about subletting?
Does your lease allow you to rent or sublet the dwelling? If you can’t get out of the lease, you may be able to rent it to someone until the term is up. Some leases have provisions in which subletting is allowed — but only with the approval of the landlord.
3. Can you find a subtenant to take over the lease and pay the rent yourself until then?
If you’re allowed to sublet the home or apartment, you’ll need to find a suitable tenant to take over the rental. Proceed with caution — you’ll still be responsible for the payments if the tenant is late or fails to pay the rent. Also, your security deposit is at risk if the tenant causes damages while living in the property.
[ Read: How to Negotiate Rent With Your Landlord ]
4. Can you buy out your lease?
Will your landlord agree to a buyout of the lease, meaning will they agree to terminate the lease for some extra lump sum payment of rent? You may be able to negotiate to pay a fee, such as one month’s rent, to leave without any further penalties or a hit to your credit. It may be worth buying out the lease and leaving.
5. Will my unit be shown to others while I am there?
If your landlord agrees to let you out of the lease, if they find a replacement, you’ll need to think about how many people will visit the rental to view it. You may put yourself at risk of exposing yourself and your family to anyone who may visit your home who has COVID-19. Make sure there are safety guidelines. For example, all visitors should wear masks and apply hand sanitizer before entering the premises. Visits should be limited to just a couple of people for a few minutes.
Best practices for breaking your lease
Follow these steps to avoid falling behind on your rent and any other hiccups during the termination process:
It’s important to document the whole process of terminating your rental contract early, from start to finish. Garcia advises tenants in the process of breaking their lease to, “Document all steps carefully. Take notes of phone calls and make copies of correspondence for your records.” In addition, try to keep communications to written forms such as letters, texts or emails. If there’s a dispute, it’s hard to prove whether there was a verbal agreement.
When speaking with your landlord, be upfront about your situation. Remember that your landlord is human, too. If you’ve been laid off and can’t afford the rent, your college or work has gone virtual or you simply want to move back home and be closer to family during these challenging times, being open can make it easier for your landlord to empathize with you and work out a reasonable agreement.
[ Read: How To Avoid An Eviction If You Can’t Pay Rent ]
If your landlord won’t let you out of your lease early, try for a middle ground both parties can be happy with. Your landlord would probably prefer to let you out your lease than deal with unpaid rent for several months.
If your lease has an early termination buy-out, try to negotiate a lower amount for early termination than the lease calls for. Or, if you’re struggling financially, ask if you could forfeit the security deposit in exchange for early termination. The landlord may agree to it after inspecting the rental to make sure there are no damages the security deposit would need to cover.
Transfer your renters insurance
Once you succeed at moving out, you’ll probably feel a huge weight off your shoulders. But you’re not done yet — you’ll need to update your renters insurance. You can transfer your renter’s insurance to your new home by calling your insurance company and changing addresses.
Even if you don’t pay rent, it’s worth keeping your renter’s insurance active. If there’s a burglary or damage at your new home location, the other tenants’ rental insurance won’t cover your property losses and damages.
Relief options for renters
If breaking your lease and moving out is not logistically or financially feasible, there are still some relief options you can consider.
The federal government passed the CARES Act to provide tenants in federally subsidized housing with certain protections. Evictions are limited, and so are any late fees if you’re unable to make your monthly rent payment. In addition, states also received funding to provide rental relief to struggling tenants. Contact your local housing authority for more information on whether you qualify for CARES assistance.
Eviction ban until December
The president has banned evictions for non-payment until December 2020. While this measure will take some of the pressure off of making ends meet, the ban doesn’t erase the money you’ll owe in back rent. If you don’t pay your rent and remain in the home until the ban is lifted, you’ll still owe months of back rent. You may forfeit your security deposit, which could be used to cover your unpaid rent. Or your landlord could take you to court for the remaining balance.
We welcome your feedback on this article. Contact us at firstname.lastname@example.org with comments or questions.
Image Credit: nadia_bormotova/Getty Images