Working Around a Lease When You are Buying Your First Home

breaking lease to move into a home

Trying to buy a home when you are up against the clock is stressful. If you are renting and on a lease, it can feel like a ticking time bomb: Are you going to be able to find a house and get an accepted offer or should you re-up your lease for another year? For first-time home buyers, the pressure is on and you don’t want to end up on the streets. Sometimes a lease break is inevitable if you land your new home earlier than anticipated. But, how can you get yourself off the hook without losing your shirt?

First off, you should never take a lease-break lightly. Leases are binding documents and in many states they are very strictly enforced, meaning your landlord could take you to small claims court to collect missing payments. There are no guarantees that your landlord will let you off scot-free, but it’s worth a shot!

How to Break a Lease When You’re Ready to Buy

As a landlord myself, I have seen seen hundreds of tenants come and go. My advice to any renter is to first try and take the high road and be honest about your situation. Many tenants fret about breaking the lease and put off the dialogue. This wastes valuable time. It’s best to get the conversation started and focus on being solutions oriented with your landlord. You’ll want to gauge his or her reaction and stance on the situation so that you can come up with a plan. If you are able to give your landlord 60 to 90 days notice, you have a much better chance at figuring out a solution that works for both of you. The idea is to be cooperative not combative.

You may need to forfeit your deposit money to cover costs or come up with a payment plan to cover costs over time.

Think about the situation from your landlord's perspective. Whether you have a good relationship with that person or not, your landlord’s livelihood depends on rental income. You must be willing to help minimize the impact of lost cash flow. Here’s how:

  • Discuss the options of a subletter and assist in finding a suitable tenant to fill your place.
  • Keep your rental in tip-top condition and accommodate showings for potential tenants.
  • With your landlord’s permission, market through your own network to drum up attention for the listing (promote on social media, share the ad with coworkers, etc.).

Many landlords are reasonable people, who would rather cut their losses and stay out of court. But, at the end of the day, it really comes down to money. Be prepared to compromise and negotiate about missed rent. You may need to forfeit your deposit money to cover costs or come up with a payment plan to cover costs over time.

Some landlords are not as understanding. If your landlord is going to play hardball, so should you. Take a look at your lease and see if there are any "loop holes," like an early termination clause. Some leases are structured to have a "get out free card" if a tenant falls on some hardship like illness, divorce or job loss. Sometimes you may have the right to break a lease without penalty, for example, if you're active in the military and get called for duty.

If your landlord is in violation of health or safety laws, you may have a case. It's important to know your rights. Take a look at your local housing authority website to see if your landlord is abiding by regulations. If basic standards are not being met, you could have a leg to stand on.

Most people would agree that it's best not to drag lease issues through the legal system. However, sometimes you can't avoid it. Make sure that you have everything documented and time stamped in writing. If you have a conversation over the phone, be sure to follow up in an email that summarizes the points of the discussion. Keep in mind that laws vary greatly from state to state. You will want to seek local legal counsel — ideally someone who specializes in tenant/landlord disputes.

When You Need More Time: Renting Month to Month After Lease Expires

What if you find yourself on the opposite side of the equation? The house hunt is taking longer than expected and you need more time. In this scenario, you’re not asking for a lease break, but a lease extension!

Depending on the situation or time of year, your landlord may be agreeable to allowing you to stay longer. This could be negotiated in a few ways. A fixed-term (like an extra three months) guarantees a roof over your head while you continue your home search.

Being on a month-to-month lease is a two-way street. Your landlord could hand you a 30-day notice and ask you to vacate the premises before you close on your new home.

For ultra flexibility, you could opt for a month-to-month or tenant-at-will scenario. Any changes to the terms of your housing arrangement must be communicated with 30 days notice. So, if you are able to close on a property, you simply provide your landlord with notice that you will be terminating the agreement. Don’t forget: In terms of flexibility, being on a month-to-month lease is a two-way street. Your landlord could hand you a 30-day notice and ask you to vacate the premises before you close on your new home.

A tenant/landlord relationship is a business arrangement. Like any business arrangement, contracts (i.e. leases) can interfere when major life changes happen. Purchasing a home definitely falls into the category of a major life change. Whether you are trying to break a lease or get an extension, it’s important to communicate effectively and to understand any and all options.