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What is the Penalty for Breaking a Rental Lease?

Updated: Sep 7, 2023


Signing a lease agreement is a commitment that outlines the terms and conditions of renting a property. However, life is unpredictable, and circumstances can change, leading tenants to consider breaking their rental lease. But what are the consequences of breaking a lease, and how can both tenants and landlords navigate this situation fairly and legally? In this blog post, we will explore the penalties for breaking a rental lease, the circumstances under which it can occur, and the best practices for handling lease terminations.


Understanding Lease Agreements


A lease agreement is a legally binding contract that specifies the terms and conditions of a rental arrangement between a landlord and a tenant. According to this Chicago property management company, a lease outlines:

  • Duration: The length of the lease, such as 12 months.

  • Rent Amount: The monthly rent and due date.

  • Security Deposit: The amount and conditions for its return.

  • Responsibilities: The obligations of both the landlord and tenant.

  • Termination Clause: The terms under which the lease can be terminated.

Penalties for Breaking a Rental Lease

  1. Breaking a lease before its expiration can have financial and legal consequences. While the specific penalties can vary depending on the terms of the lease and local laws, here are some common penalties tenants may face:

  2. Early Termination Fee: Some leases include an early termination fee that tenants must pay if they break the lease before the agreed-upon end date. This fee is typically equivalent to one or two months' rent.

  3. Remaining Rent: Tenants are usually responsible for paying the remaining rent for the duration of the lease term or until the landlord finds a new tenant to replace them.

  4. Forfeiture of Security Deposit: In many cases, tenants who break the lease forfeit their security deposit, which the landlord may use to cover unpaid rent or damages.

  5. Legal Fees: Tenants may be required to cover the landlord's legal fees and expenses incurred in the eviction process or lease enforcement.

  6. Collection Actions: If tenants refuse to pay the penalties, landlords can send the debt to collections, which can negatively impact tenants' credit scores.

  7. Negative Rental History: Breaking a lease may result in a negative rental history, making it challenging to secure future rental properties.

Circumstances for Breaking a Lease

  1. While lease agreements are meant to be binding for the agreed-upon duration, there are certain circumstances where tenants may have valid reasons for breaking a lease without incurring penalties. These circumstances may include:

  2. Military Deployment: Federal law allows active-duty military personnel to terminate a lease without penalty if they receive deployment orders.

  3. Health and Safety Issues: If the rental unit becomes uninhabitable due to issues such as mold, pests, or safety hazards, tenants may have grounds to break the lease.

  4. Landlord Violations: Landlords who fail to uphold their responsibilities, such as providing essential services or making necessary repairs, may be in breach of the lease agreement, allowing tenants to terminate it.

  5. Job Relocation: If tenants need to relocate for work and can provide proper notice, they may be able to break the lease without significant penalties.

Best Practices for Handling Lease Terminations

  1. When tenants find themselves in a situation where they must break their lease, it's crucial to follow best practices to minimize the impact and maintain a positive relationship with the landlord:

  2. Provide Adequate Notice: Give your landlord as much notice as possible to allow them ample time to find a new tenant.

  3. Communicate Openly: Explain your reasons for breaking the lease to your landlord in a clear and honest manner.

  4. Assist in Finding a Replacement Tenant: Offer to help find a replacement tenant who meets the landlord's criteria.

  5. Follow Local Laws: Familiarize yourself with local tenant laws and regulations to ensure you are following the correct legal procedures.

  6. Document Everything: Keep records of all communication with your landlord, including emails, letters, and any agreements reached regarding the lease termination.

Conclusion


Breaking a rental lease is a decision that should not be taken lightly, as it can have financial and legal consequences. If you find yourself in a situation where breaking the lease is unavoidable, it's essential to follow the terms of your lease agreement and local laws while communicating openly and honestly with your landlord. If you have questions or need guidance on lease terminations, reach out to our team of experts.


We can help you navigate this challenging situation and ensure that both tenants and landlords are treated fairly and in accordance with the law. Remember that a well-informed and respectful approach can help mitigate the potential penalties associated with breaking a rental lease.


If you haven’t hired a property manager already, click here to learn more about our services and how an experienced property manager can share some of your burdens.

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