CAN I BREAK MY LEASE IF I BUY A HOUSE?
I have heard many times by tenants, who are misinformed, that if they buy a house, they can give notice to vacate the rental property they live in and move out without being held responsible for any balance of the lease agreement. The only time a tenant buys a house and is not help responsible for the balance of the lease is if you buy the property you are renting.
Buying a home is a great, exciting, and emotionally-charged event. When you are in the position to purchase a home, the last thing you want to worry about is your current lease agreement. The best way to have less stress with the lease agreement is to address the possibility of buying a home BEFORE you sign the one year lease.
There are 3 options available to you should you find yourself in this position.
The first option is to be upfront with the landlord/property manager during the application process. Let the landlord/property manager know you are looking to buy a home and your goal is to do that during the next year. The property manager would speak with the owner to get their authorization to have an addendum attached to the lease agreement. This addendum would spell out what you and the owner agree to about the steps to be taken when you purchase a home and are ready to move out of the rental property.
Some steps could include:
- 30 or 60 day written notice of vacating by you
- Present proof of purchase
- Will there be an early termination penalty? If so, how much?
- Refund of the security deposit would be subject to the lease agreement terms
The addendum is prepared and all parties would sign in agreement.
If you are already in a lease agreement and an addendum was not attached to the lease agreement, then you would look to Option 2.
At the time you signed the lease; did you sign an Early Termination Penalty Agreement? If you did, then you would abide by that agreement. You would give written notice to vacate either 30 or 60 days, as per your lease agreement, you would pay the penalty amount (not to exceed the amount of 2 months’ rent) and then vacate. The Early Termination Penalty Agreement must be agreed to and signed at the time of the lease signing. The owner agrees to not hold you responsible for any remaining rent past your vacating month. The refund of your security deposit would be subject to your lease terms.
If Option 1 and Option 2 are not available to you then we go to Option 3.
You contact the landlord/property manager to let them know you will be vacating in 30 or 60 days and you would like them to start showing the property as soon as possible. You need to turn in your written notice to vacate and work with the landlord/property manager when showings are scheduled. The reason for showing the property before you vacate is because the landlord can hold you financially responsible to each month’s rent until the property re-rents. So the faster a new tenant is located, the faster your financial obligation stops on the rental property. As in Option 1 and 2, the refund of your security deposit is subject to your lease terms.
The above options are standard procedures at Anchor Real Estate & Property Management. Not all companies use these options, but that doesn’t mean they wouldn’t or they may have other procedures available to you. The important thing to remember is to communicate with your landlord/property manager so agreeable arrangements can be made.
Congratulations on the purchase of your new home!