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What if I break an apartment lease?


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I'm looking for an apartment and worry about getting a 12 month lease (which always seems to be ALOT cheaper.) In this economy who knows what could happen in the next 12 months.

How does a broken lease report on your credit report if the company reports it. Is it the same type of hit as say a medical collection or worse?

Also lets say: my lease is $1000 a month for 12 months.

After 6 months I can't afford it and have to move out.

Is there going to be a $6000 collection on my CR?

I don't want to just ask the apartment complex about their policy yet because it might make me look bad so I figured I'd get any answers here first. Thank You!

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The penalties for breaking the lease will be in the lease paperwork. Just read it carefully before you sign.

I think the standard is that you'll be on the hook for a termination fee, and then rent for each month the apartment stays vacant up to the end of your lease period (but they have to actually be trying to rent it out). You will generally also forfeit all deposit money.

If you break the lease and pay the money, it won't report to your credit reports. It's only going to report if you break the lease and then refuse to pay the money you owe them.

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It also depends on where you rent and who you rent from. My father owns and manages several apartment buildings. If a tenant who always paid their rent on time and never had complaints leveled against them needed to break the lease for legitimate reasons, he'd be cool about it. The only condition would be that they left the place in spic-and-span condition when vacated.

Most landlords have no interest in keeping people who can't afford the place. If that happens, make sure you inform him/her ASAP though and don't wait to the last minute to move out. Also don't try to break the lease under pretense of loss of income when you're instead buying a house or want to move to a different school district. Your landlord will likely find out and rescind the deal.

If you rent from a larger property management company though, they're less likely to be flexible.

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Breaking a lease with an apartment complex is no different then breaking any other contract. If you fail to pay they will come after you, If you still fail to pay, they will file suit against you, and it will go on your credit report. I suggest that if you have concerns of not being able to pay the rent, then stay wherever you are right now.

BTW, the little guy with a rental house or 2 is starting to run credit checks on perspective tenants. I have run complete background checks on perspective tenants. In regards to what Shortbus said, I have had excellent tenants that took good care of my property, have been on the 2nd or 3rd year of their lease and have needed to move for whatever reason, and I have let them out of their lease. From a small time landlord like me, I would rather have the house empty than to force someone to live in the property and give them time to destroy my investment.

Again, if you are concerned, stay at home.

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I think what is posted is generally correct. I am a "small-time" landlord and I can say that if one of my tenants approached me and told they could no longer afford to rent from me, then I'd advertise the place for rent immediately and see if I could replace the tenant. No sense in not avoiding a slowpay or nopay. I would, of course, withhold their security plus last month's rent to mitigate any losses I should have attributable to the tenant breach, with any remaining security funds released after the old tenant vacated, any repairs were made, and the new tenant was in the unit.

I'm not sure large scale apartment complexes work that way though. The major reason is that they always have at least some unrented inventory- so the "one tenant out and another tenant in" mitigation of damages theory doesn't apply. If you breach on your lease obligation, ten more tenants could move into the complex and you are still on the hook unless all units are fully rented- highly unlikely.

They may sue you and report to the CRAs as well. Additionally, you will be a persona nongrata for landlords everywhere with a collection from a previous landlord on your reports.

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Thanks for the prompt answers.

I will most likely be renting from a complex that is probably owned by some bigger entity which seems to be the norm around here. If they did sue me would it be a public judgement (or whatever it's called) on my credit report or would it more be a collection? or both?

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I rather think you are asking the wrong question.

You need to plan, as best you can, based on what you know now...no one can predict exactly what will happen 3 or 6 or 8 months after signing a lease but that doesn't mean you should be afraid to sign.

You need to evaluate your position - if you think loosing a job and/or becoming unable to pay (necessitating breaking the lease) is a significant possibility then you should probably consider going month to month or signing a shorter lease...if you are just "worried" but don't have any significant basis for it then there signing a standard is probably Ok and if something happens, you deal with it.

Don't let unreasonable fears rule your life.

There is an old saying that goes something like this...

90% of what people worry about NEVER happens.

Of the remaining 10%; 8% of it is totally outside of your control.

In other words, 98% of the things people worry about are a complete waste of time.

The moral of the story is to try and confine your worrying to the 2%...you'll be a lot happier.

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If you are renting from a large company, this is what you can expect;

In most cases, you will be required to provide 30-60 days notice.

If you fail to give notice, they can charge you the "insufficient notice fee" of 30-60 days rent in addition to the termination fee.

You will also pay a "lease termination fee", typically equal to 1-2 months rent.

If you were given any free rent when you move in, you will have to pay that back.

All charges that remain at move out will then be sent to collections.

The WORST thing about any money going to collection with an apartment community is that if you apply with another large company for an apartment down the road, you will automatically be denied, regardless of other credit, income, etc...

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  • 3 months later...
If you are renting from a large company, this is what you can expect;

In most cases, you will be required to provide 30-60 days notice.

If you fail to give notice, they can charge you the "insufficient notice fee" of 30-60 days rent in addition to the termination fee.

You will also pay a "lease termination fee", typically equal to 1-2 months rent.

If you were given any free rent when you move in, you will have to pay that back.

All charges that remain at move out will then be sent to collections.

The WORST thing about any money going to collection with an apartment community is that if you apply with another large company for an apartment down the road, you will automatically be denied, regardless of other credit, income, etc...

Don't forget that you'll have to pay back any monthly discounts that you may be getting. Apartments have what they refer to as "Market Rate." Your rate may only be $1000 a month, but if your lease states the market rate for that unit is $1500 per mont and you cut out a month early, you may owe everything listed above PLUS the $500 discount you received for the 12 months. So you think you're getting away with only $1000 that you owe, when it's all said and done, you'll receive notice that you owe more than $7000 in that situation.

READ YOUR LEASE THOUROUGHLY. Keep in mind, that you should always be able to negotiate any terms in your lease as well. ESPECIALLY depending on the occupancy of the complex. If they aren't over 92-93% occupied, chances are they will be willing to make some deals.

Just from my experience.

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  • 2 weeks later...
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