You’ve fallen in love with a home, but there’s one little problem. You’re stuck in a rental lease agreement. What should you do?
Having a rental contract can put a wrench in your homebuying plans. But don’t fret! Sometimes landlords are open to negotiating a solution.
The first thing to do is pull out your lease to see what the terms are for contract cancelation. Your lease may give you conditions for buying out of the lease or other penalties for breaking your lease early. Have a clear understanding of terms before making an appointment to negotiate with your landlord.
Schedule a meeting with your landlord to talk about your lease agreement. Some landlords or property management companies will give you some leeway if they know the details of your situation.
Explain that you’ve found a home that you want to purchase, and you’re willing to come up with a mutually beneficial agreement. You could elect to pay a portion of the lease termination penalty, or you could suggest breaking the lease termination penalty into smaller manageable payments.
If you’re nervous about negotiating with the landlord, think about it from their perspective. It may be easier to come up with an agreement from a renter than collecting payments from a disgruntled ex-resident (or suing for non-payment). When you strike up an agreement, both parties can win.
Another option that could get you out of paying lease termination penalties altogether is electing to find a new tenant. Lease termination penalties are usually in place to dissuade you from leaving and to cover the landlord from rental loss and marketing expenses.
Offering to help find a tenant can ease this concern. Agree to show the apartment or find tenants on your own. Subletting the place is an option as well. Subletting is when another person is added to your lease and takes over the payment until its expiration.
Be careful with sublets because your name will remain on the contract. You can be on the hook if the person subletting does damage or doesn’t keep up with rental payments.
Finally, the agreement that you and your landlord come up with needs to be in writing. Both parties need to have a clear understanding of the terms. This can cover you in case the conditions of your termination agreement are changed. The last thing you want is to think you’re free of a rent payment only to find out you’re still financially responsible for the rental while you make payments on a new mortgage.
Being in a lease shouldn’t dissuade you from looking for a home. It can take months or even years to find the perfect home. If you find one while on a lease, it’s worth considering ways to terminate your lease instead of giving up on your dream home.
