What Are the Rules for Breaking a Lease to Buy a House?

July 11, 2022

Real Estate

What Are the Rules for Breaking a Lease to Buy a House?
Suppose you’ve recently become convinced that buying a house is better than renting. Or perhaps a new job, a relationship breakup, and other life changes might necessitate the need to break your apartment lease to buy a house. Making a career shift is a major life decision. Add a work transfer to another city or state, and you’ve got a recipe for even more anxiety, particularly as a renter needing to carefully navigate the immediate end of your one-year lease term. 
As someone in this situation, you might find yourself wondering if the law protects you in any way – if you can break your lease to buy a house. Unfortunately, there are no laws that enable you to immediately terminate your current lease when you need to buy a home or relocate for work. Relocation packages are something that you should be able to negotiate with your new job and you can consider subleasing or paying a lease break fee.
To be clear, there aren’t many circumstances in which you may lawfully terminate your lease term without your landlord’s permission. Although the regulations vary widely from state-to-state, they only apply to freshly deployed or reassigned military personnel and victims of domestic violence.
However, the notion that tenants may terminate their lease early because they are buying a house persists, even suggesting that it applies explicitly to first-time homeowners. Both are false, regardless of where you live.
When a person becomes a homeowner in the United States, no real estate laws allow them to end their lease agreement instantly.

Consult Your Lease

Can you break your lease if you buy a house? Your lease may have a home-buying clause that permits you to break your lease early, provided that you provide a specific notice (usually 60 days) and produce evidence of the acquisition. If you’ve read your lease agreement and found nothing to suggest this, you are in the same predicament as everyone else who needs to end their lease early for no reason sanctioned by the law.
In spite of the fact that you can’t immediately terminate your lease, this does not indicate that you are unable to do so. You’ll have to go through the same steps as everyone else who wants to get out of their lease early. Assigning, subletting to a new tenant, paying a lease break fee, or deciding to leave and depend on your landlord or property manager to offset damages are some of your alternatives.

Speak With Your Landlord or Leasing Office

The home buying process is difficult, particularly predicting when you, the hopeful homebuyer, are able to finalize the purchase of a home. Talk to your landlord about flipping to a month-to-month rental agreement if your lease is coming up for renewal and you’re still looking for your dream home.
Depending on the landlord, they may raise the outstanding rent a little since month-to-month tenancy provides them with less financial stability. In a situation like breaking an apartment lease to buy a house, you may find that the extra cost of rent is less expensive than the cost of an early termination charge. 

Options to Consider With Your Landlord/leasing Office

  • Month-To-Month Leasing – The sooner you tell your landlord that you won’t be able to stay in your current apartment for the whole length of your lease agreement, the better. You’ll be able to move to your new place sooner. When renting month-to-month, you may have to spend a little more on the remaining months’ rent, but it may be worth the freedom you’ll enjoy.
  • Pay An Early Termination Fee – A landlord may cancel a lease and place the apartment back on the market if they choose. This almost usually entails you paying a buyout or early termination fee. These may cost as much as two or three months’ rent. In certain cases, you may be able to negotiate a cheaper amount. If you’re a military personnel and transferring to another place, or if your rental property has fallen into such disrepair that it’s unsafe to live in, you may be entitled to breaking a lease to buy a house without any penalty fees. To learn whether you may get out of your lease without incurring a charge, check the legislation in your state.
  • Sublet Your Lease – The quickest and least expensive method to break a lease to buy a home is to sublet the space, especially if there’s a high demand for rentals in your local market. You’re still legally accountable for the rental property even if you can find a new tenant and they agree to pay the rent. A sublease is less likely to incur additional charges from the landlord. A review of your proposed sublease agreement and your replacement tenant’s credit, history, and employment information are generally required as part of the approval process. 

Seriously Consider the Pros and Cons Before Breaking Your Lease

Subletting, month-to-month leasing, or breaking a lease early are all options if you need to get out of your contract before the lease expires. As with every trade-off, each alternative has advantages and disadvantages, as described above.
Does breaking a lease affect buying a home? There is always the choice of buying a home and honoring the terms of your apartment contract, even if you end up paying for two residences.
For the vast majority of individuals, buying a house while renting an apartment would be financially untenable, and they’d look for a way out of the contract early. The consequences on your credit and security deposit will depend on how you do it. Legally, landlords in several states must respond fairly to early termination notices from tenants.
Others move out of their homes without warning. Moving out early is certainly a possibility. However, Experian warns that your credit score might take a big hit if you do. If you fail to settle your rent on time, your landlord may hire a collection agency or file a lawsuit in court.
What happens if you break a lease? Even while this won’t negatively impact your current mortgage, it might make it more challenging to get credit in the near future.

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