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Breaking a lease. How does it work?

Breaking a lease. How does it work?

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Sometimes life takes a sharp turn and a renter needs to move out of a property before the lease has ended. This is called breaking the lease.

Can someone just end theirlease?

It is helpful to remember a lease is a legal document or a contract that is binding on all parties. The owner, the renter and the agent.

A lease has a lot of legal stuff in it but in simple terms it says, for a period of time (term of the lease), the owner provides the renter the property, in return for the payment of rent. So that is the deal. The owner can not take the property away, and the renter can not move out or stop paying rent.

So if life takes a sharp turn and for some reason (during the term of the lease) the renter needs to move out, they can work through a process with the agent. The process helps reduce the cost to everyone rembering it is the renter who is breaking the deal. (Note: If the fixed term of the lease has expired and the lease is now “month to month” or periodic, the renter can move out at any time with 28 days’ notice.)

If the renter can find a new renter who is acceptable to the agent and the owner, they can transfer the lease to the new renter on the same terms and conditions.

How the agent finds a new renter.

These are the 5 steps to break a lease and find a new renter.

  1. The renter provides written notice to the agent that they will be moving out on a specific date which is before the end of the lease. Unfortunately, the renter can not stay on in the property without a fixed vacate date as this makes the new leasing process really hard.
  2. The agent tells the owner what is going on and then starts the leasing process. This includes advertising the property for lease, doing inspections, and processing any lease applications until the agent finds a suitable new renter.
  3. When the original renter moves out, they need to return the property as they found it (just like a normal when a renter end of lease vacate).
  4. The original renter is required to continue to pay rent (even after moving out) right up to the day the new renter starts paying rent. This is because the renter remains bound by the lease agreement.
  5. The original renter pays a percentage of the costs to find the new renter including advertising and the agent’s leasing fee. The actual percentage depends on how long is left on the lease.

The new renter then starts a new lease for what ever the agreed period is (usually 12 months) and the old lease is ended.

Sometimes it is hard to find a new renter which might be because the market has fallen. When this happens the owner needs to reduce the asking rent to find someone.

The agent is important in this process so listen to their advice and work with them to help minimise the costs for both the owner and the renter.

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Written by a 4th generation real estate agent Apartments Made Easy gives you the tools and tells you all you need to know about how to buy, sell, own, lease, and manage your apartment successfully.

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