breaking the lease

[Anonymous]

i plan to buy a house before june to avail of the tax credit. my apt lease is up til nov. i am currently paying $836 for my rent. if i move out by june, i will end up paying a total of $4052 for concession repayment. this was not clearly stated in the contract. a friend was telling me we are to pay 1 month penalty if we are breaking the lease to buy a house. half of my tax credit will go to my apartment, if ever. is this reasonable.

thanks.

san 

[Jazzzy]

Hi sg125 and welcome to the forums.

The answer to your question will depend upon your written contract with your landlord and the rental laws in your state.

If your landlord is offering you a "concession repayment" of $4082, that is substantially less than what you'd owe him for the remaining months of your lease. You ask if this is reasonable. Of course it is. You made a legal agreement. Your landlord rented his apartment to you based on that legal agreement. You wouldn't like it if your landlord knocked on your door today and told you that he rented your apartment to someone else and you have to leave. Rental leases are two-way agreements for the protection of both landlord and tenant.

I don't know where your friend is coming from with the information that you would only have to pay a 1 month penalty if you are buying a house. That's not a lease at all. That's a month-to-month agreement, and that's not what you've got with your landlord.

All that said...in our state, the landlord has the obligation to try to re-rent the unit if you break a lease. I don't know what your state's laws are. In my state, if the landlord starts collecting rent from someone else, the former tenant is off the hook. You need to check your laws. Can you sublet the unit yourself? You need to find out.

[Junejer]

I would certainly either try to sublet it or find a replacement tenant. I recently allowed a tenant to break a lease six months early with me, because she found a suitable replacement tenant.

Edited to unsplit the infinitive

Message Edited by ByrdMan on 02-20-2010 06:23 PM

[Anonymous]

hi lynette, 

thanks for replying, the thing is, if i move out by july, i will be paying $4082, if i finish my contract til nov, it will cost me $3344 paying my monthly rent til my lease is up. i find it ridiculous that i have to pay more if i break my lease rather than keep it. maybe it's their way of making the tenants keep the lease. 

[Jazzzy]

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@Anonymous wrote:

hi lynette, 

thanks for replying, the thing is, if i move out by july, i will be paying $4082, if i finish my contract til nov, it will cost me $3344 paying my monthly rent til my lease is up. i find it ridiculous that i have to pay more if i break my lease rather than keep it. maybe it's their way of making the tenants keep the lease. 

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Hi sg125...I'm sorry about my math. I thought the lease wasn't up until Nov, and I was counting the $800+ monthly rent. My numbers are off I guess. Your'e right. It is a way to keep a tenant from breaking a lease. You don't want to take the financial hit, but neither should the landlord have to.

Have you done any checking yet into your state's rental laws? Any friends who are attorneys? Are you in school? Any legal aid in the area? Or...Google and see what you can find. That's what it will all come down to.

Can I make a statement about trying to make the $8k tax credit deadline? Don't do it if you're not ready....decent credit scores, down payment $$$, etc. In these forums, I see too many people who are fighting to make that deadline, when it is apparent they will be in trouble when the hot water heater dies or the roof leaks. Also, at least in our area, the tax credit is artificially keeping house prices up. Buyers may get an immediate $8k return, but they are paying that much or more in extra house price...and they'll be paying much more in interest on that amount over the years. I believe it's the sellers who are coming out well with this tax credit. Homebuilders see it as a subsidy to the home building industry...and they're the sellers.

This may or may not be the right time for you, but explore all the legalities first. Good luck.

[MattH]

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@LynetteM wrote:

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@Anonymous wrote:

hi lynette, 

thanks for replying, the thing is, if i move out by july, i will be paying $4082, if i finish my contract til nov, it will cost me $3344 paying my monthly rent til my lease is up. i find it ridiculous that i have to pay more if i break my lease rather than keep it. maybe it's their way of making the tenants keep the lease. 

---

Hi sg125...I'm sorry about my math. I thought the lease wasn't up until Nov, and I was counting the $800+ monthly rent. My numbers are off I guess. Your'e right. It is a way to keep a tenant from breaking a lease. You don't want to take the financial hit, but neither should the landlord have to.

Have you done any checking yet into your state's rental laws? Any friends who are attorneys? Are you in school? Any legal aid in the area? Or...Google and see what you can find. That's what it will all come down to.

Can I make a statement about trying to make the $8k tax credit deadline? Don't do it if you're not ready....decent credit scores, down payment $$$, etc. In these forums, I see too many people who are fighting to make that deadline, when it is apparent they will be in trouble when the hot water heater dies or the roof leaks. Also, at least in our area, the tax credit is artificially keeping house prices up. Buyers may get an immediate $8k return, but they are paying that much or more in extra house price...and they'll be paying much more in interest on that amount over the years. I believe it's the sellers who are coming out well with this tax credit. Homebuilders see it as a subsidy to the home building industry...and they're the sellers.

This may or may not be the right time for you, but explore all the legalities first. Good luck.

---

I expect when the credit expires house prices in many areas will promptly drop by a substantial fraction of the credit.  In economics I learned about something called the "incidence" of a tax increase, which is who really pays it.  For example if taxes on a business are increased, they will ultimately get paid by some combination of shareholders, employees, vendors, and customers depending on their relative market power.  Similarly in this case the benefits from the tax credit will be divided among buyers, sellers, and other market participants (real estate agents, appraisers, etc., etc.) and until the credit goes away we're not gonna know for sure how the dollars actually are getting distributed.  Also unknown is how much the tax credit actually stimulated real estate transactions that might not have taken place without it, versus merely triggering people who would have bought houses in the near future anyway to move a little sooner.  If a substantial fraction of purchases merely represent people buying a little sooner then we may see a major dip in activity when the credit expires.

[ShowCredit]

sg125

Take a look at your lease contract.  In my lease I just need to give 2 months notice and pay 1 months rent if I want to move.  You may not need to find a replacement or pay the entire rent until the end of your lease.