Your Landlord Says “Yes”. Now what?
Congratulations! Your landlord gave you permission to break your lease! (Maybe you even followed some of our advice in our recent post). Now what? While you may want to jump right in and market your apartment on leasebreak.com or other websites, you should have a very clear understanding of the process you’ll need to follow in order to keep yourself and your landlord happy. Some landlords—particularly the more experienced ones who deal with this all the time—may provide very specific instructions on the “lease break” process. For example, they may require that you assign the remaining months of your lease (appropriately known as a “lease assignment”) to the new tenant. Or, they may prefer that you “sublet” your apartment, which means the incoming tenant will pay YOU rent while you are still responsible for the remaining terms of the lease. Other landlords may only allow you to break your lease obligation if you can find a new 12-month renter, who would start a brand new lease. (HINT: if you go this route, make sure you are not legally on the hook for your lease anymore.) Your landlord may even be okay with a combination of these scenarios. However, some landlords may NOT provide you with much guidance at all, especially those with less experience or fewer properties. They may just tell you it is fine to find a replacement tenant for your lease, not even considering all of the alternatives as described above. If you find yourself in this position, it is definitely worth your time to ask your landlord for more details (preferably in writing), so that you’re both on the same page. The last thing you want is to spend your time and energy finding a replacement, and then find out that there’s a problem. Here are four key areas to clarify with your landlord, to make sure there are no unpleasant surprises over the course of breaking your lease:
- Whose Responsibility To Market Your Apartment—100% on You?
Some landlords may help you market the apartment by advertising it along with their other listings. Others may have exclusive relationships with brokers, and they may want you to work with those brokers. And, many others may put 100% of the burden to find a replacement on you, and the landlord may even suggest you enlist the help of the broker of your choice. A number of landlords allow ALL of these marketing channels. Either way, these are all things which should be discussed with your landlord in advance.
- Building Rules, Especially for Coops / Condos
First, if you are in a condo or coop building, the landlord (i.e. the owner of your unit) may not realize that the rules of the building may dictate whether or not a short term sublet is even allowed. Usually they are not. For example, if you have 3 months left on your condo lease, while the owner may say “sure, find someone”, the building’s rules may not allow someone to take over your lease with just 3 months remaining. Because most condos and coops do not allow short term sublets, finding a new 12-month tenant is usually the only option. But even then, some coops and condos only allow owners to have one tenant in each 12 month period. Anyway, our point is that you want to also have an understanding of the building rules so no surprises sneak up on you right before you find a replacement tenant.
- Qualifications of New Tenant
You should ask your landlord what qualifications, paperwork, and fees would be required of a new tenant. For example, landlords may require tenants to supply tax returns and a letter of employment as proof of income. They also may require the tenant to have an annual salary that equals 40 times the monthly rent. Finally, they may charge an application fee. You want to know all of this up front so you can inform any prospective tenants. You would enter this information in the corresponding space on Leasebreak.com when you post your listing (“Additional Fees and Paperwork”).
- Lease Assignment, Sublet, New Lease?
All landlords and buildings are different, especially with respect to their preferences regarding leasebreaks. If your landlord hasn’t given you a preference, you may have to educate them on the three available options:
- “Lease assignment”. Would they prefer that you “assign” the remaining months of the lease to the new tenant? This is a great option for you as it would release you of the lease obligation. The landlord would likely process all of the paperwork.
- “Sublet”.Would they prefer that you “sublet” the remaining months of the lease to the new tenant? This is less than ideal for you, because it leaves you on the hook for the remaining months of the lease, putting you in the position of acting as “landlord” with your new tenant: you would have to qualify the tenant, collect a security deposit, sign a lease with them, and so on.
- “New Lease”. Would they prefer that you terminate your lease and have the new tenant sign a brand-new lease? Quite frankly, this is the best option for all involved. It would be easier for you to find a new 12-month tenant for the apartment; and, like the “lease assignment” option, you no longer have to worry about your lease obligation. Also, the landlord can often get higher rent for the apartment—the best of both worlds!