[Best Option for Early Termination] of Apartment Lease

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throwaway1111
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[Best Option for Early Termination] of Apartment Lease

Post by throwaway1111 »

I am 8 months into a 13 months apartment lease, which ends on March 2015. But I am closing on a house soon and need to terminate the lease.

Rent per month rent is $745. Electricity and water is paid separately.

I looked at the contract for termination clause, and also talked to the apartment office. The options I was given for moving out early are:
1. Pay a termination fee of $2400 (more than 3 months of rent). I will be free to go and the office will then be free to rent it out. Chapter closed.
2. No subletting allowed but find someone to add to the lease. And have them pay the monthly rent for the rest of the lease. The catch is I will be on the lease too, and will be legally responsible till the end of the lease on March.

So I posted the apartment on craigslist for $100 off each month till March and had multiple people interested in it. But now that I think about it, its actually very risky to add someone to the lease, let them live in the apartment, hope they pay on time and leave the apartment in proper condition at the end. From the apartment's point of view, everyone's on the lease is equally responsible in case anything goes wrong. So I could be held liable at the end.

So what are my options:
1. Should I just pay $2400 and move on?
2. Do you think I can do some kind of contract with the new tenant (even though the office doesn't allow subletting) freeing me of any responsibilities and liabilities after his co-lease starts?

The other wicked thing that crossed my mind was to move out of the apartment, leave the apartment vacant and keep paying each month. That way, I would be paying close to $3200 (with water etc.) total by the end of March. But since the apartment won't be allowed to double-charge for rent at least here in Texas, they won't be able to rent out the apartment till April, which might force them to cooperate with me now or may be a little later when they know I am serious.

Any suggestions?
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Re: [Best Option for Early Termination] of Apartment Lease

Post by Alex Frakt »

throwaway1111 wrote:The other wicked thing that crossed my mind was to move out of the apartment, leave the apartment vacant and keep paying each month. That way, I would be paying close to $3200 (with water etc.) total by the end of March. But since the apartment won't be allowed to double-charge for rent at least here in Texas, they won't be able to rent out the apartment till April, which might force them to cooperate with me now or may be a little later when they know I am serious.
You'll just be throwing money away. They'll be happy to take your rent until the end of the lease whether you are there or not. No one in the "apartment office" is going to care if the owner is missing out on a month or two of potential double rent.

IMO, handing over the keys, but staying liable for the lease is too risky, I'd pay the $2400 first.
chead
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Re: [Best Option for Early Termination] of Apartment Lease

Post by chead »

If I were in your shoes, I would go with option #2. It's really not all that different from subletting. When you sublet, you're typically still responsible for the place. Sure, in your situation, if stuff goes wrong, it will be more messy than a formal sublet, but that still seems preferable to $2400 guarantee loss.

Put some time and energy into finding a good tenet. You can seriously cut the risk with some reference calls, a background check and proof of employment. It sounds like you have an attractive place and you certainly have wiggle room on the price when considering the $2.4K alternative, so be choosy. Be picky. Find a trusted friend to rent it to and give them a good deal, but ask for a bigger deposit.
john94549
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Re: [Best Option for Early Termination] of Apartment Lease

Post by john94549 »

Check your state and local laws on tenants' rights and eviction. I guarantee you that your apartment landlord has. The costs of evicting (actual and imputed) are already built into your monthly rental. In effect, good tenants subsidize bad ones. Whether you co-sign or sub-let, there is risk. Pay the $2400 and be done with it.
miles monroe
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Re: [Best Option for Early Termination] of Apartment Lease

Post by miles monroe »

paying the 2,400 is easily your best option.

clark howard has said that if you are looking for a house, and your apartment lease does not have a early termination clause, that you should negotiate one to become effective if you purchase a house (obviously done on the front end). he suggest that 3 months is fair to both parties. the 2,400 meets that suggestion. good luck on the new home.
denovo
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Re: [Best Option for Early Termination] of Apartment Lease

Post by denovo »

You have very little to lose by putting someone else in the unit.
"Don't trust everything you read on the Internet"- Abraham Lincoln
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throwaway1111
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Re: [Best Option for Early Termination] of Apartment Lease

Post by throwaway1111 »

I've had over 15 people contact me about the craigslist post in 3 days. Finding the right person to take over is definitely a challenge. The apartment office does a background check, credit approval etc. But still, most people that contact me are either out of work or won't have a place to live soon or have some sort of problem. Hard to get lucky there.

Will see how it goes.
Last edited by throwaway1111 on Wed Oct 22, 2014 6:56 pm, edited 2 times in total.
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DonCamillo
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Re: [Best Option for Early Termination] of Apartment Lease

Post by DonCamillo »

Most people interested in subletting would be special situations, less credit worthy and higher risk than regular tenants. Good for the landlord, because he still gets the return while you take the extra risk. Much riskier for you. I doubt that you are ready to become a landlord, even indirectly. Pay the $2,400 and consider it a moving cost.
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harrychan
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Re: [Best Option for Early Termination] of Apartment Lease

Post by harrychan »

You are already putting yourself at risk by violating tenant laws yourself by choosing your sublet tenant. You are required to offer housing to the first qualified applicant regardless of status, race, age, sex, and other factors or face discrimination lawsuit. It shows how little you know about being a landlord. Pay the early termination and get it over it. You may need the apartment if you plan to do some renovation and tske your time to move. Consider it a cost of buying a house.

One more concern if you have been advertising on cl is scammers who move in then dont pay rent and wait to be evicted. There was an article about a real estate agent who knew how to game the system by getting a lease, not pay a penny, and wait for a buyout including condition to not go after her credit.
This is not legal or certified financial advice but you know that already.
freebeer
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Re: [Best Option for Early Termination] of Apartment Lease

Post by freebeer »

You may not want to invest the time but one option I would consider were I in your shoes would be to retain the apartment and be an AirBnB host. Legally this may be considered a sublet in violation of your rental agreement but there's some grey area and a landlord, even if they find out about it, is arguably disincented to sue with only 3 months to go. It might even lead them towards a negotiated termination with less than 3 months rent. AirBnB has some nice properties: you can reliably screen prospective guests by checking out reviews left for them by other AirBnB hosts, no one can stiff you on the rental fees (which AirBnB collects for you), and there's a "host guarantee" to compensate you if someone trashes the place. Even if you only get guests a few days each month it might pay your rent and who knows, you might make a decent profit.
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Re: [Best Option for Early Termination] of Apartment Lease

Post by Alex Frakt »

freebeer wrote:You may not want to invest the time but one option I would consider were I in your shoes would be to retain the apartment and be an AirBnB host. Legally this may be considered a sublet in violation of your rental agreement but there's some grey area and a landlord, even if they find out about it, is arguably disincented to sue with only 3 months to go. It might even lead them towards a negotiated termination with less than 3 months rent. AirBnB has some nice properties: you can reliably screen prospective guests by checking out reviews left for them by other AirBnB hosts, no one can stiff you on the rental fees (which AirBnB collects for you), and there's a "host guarantee" to compensate you if someone trashes the place. Even if you only get guests a few days each month it might pay your rent and who knows, you might make a decent profit.
Except that it is highly likely that this is violation of the OP's lease which, if the landlord is so inclined, will likely result in a lawyer letter demanding the full remaining value of the lease plus the lawyer's costs and whatever other fees the landlord can think of. I used to work for a law firm that represented landlords and it's possible to really make a tenant's life miserable if the landlord insists and the tenant gives them an opening. And this was in California, which is widely regarded as a very pro-tenant state.
JGoneRiding
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Re: [Best Option for Early Termination] of Apartment Lease

Post by JGoneRiding »

harrychan wrote:You are already putting yourself at risk by violating tenant laws yourself by choosing your sublet tenant. You are required to offer housing to the first qualified applicant regardless of status, race, age, sex, and other factors or face discrimination lawsuit. It shows how little you know about being a landlord. Pay the early termination and get it over it. You may need the apartment if you plan to do some renovation and tske your time to move. Consider it a cost of buying a house.

One more concern if you have been advertising on cl is scammers who move in then dont pay rent and wait to be evicted. There was an article about a real estate agent who knew how to game the system by getting a lease, not pay a penny, and wait for a buyout including condition to not go after her credit.

What state law r u reading! You can not discriminate based on race, sex, etch but you can totally hold out for a 'well qualified' candidate. Which for most LL is the one that is well and stably employed with no effictions and no criminal record. The op can also hold out for one that is able, wanting to complete the lease and reject anyone that says the only want it for say 3mos
SDBoggled
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Re: [Best Option for Early Termination] of Apartment Lease

Post by SDBoggled »

Since you are already half way there... act like a landlord.

Advertise at the same rent or even $50 higher : Find a great tenant, background check, demonstrate 3 x times rent then present to leasing office for their approval - to give new tenant a lease for the remaining months of your lease or longer - their choice.

The landlord cares about the quality of tenant and the rent.... the early termination fee is to cover them for loss of rent and costs for changeover. My thinking is that if you can find a well qualified tenant, there is probably room for negotiation about the early termination. Even if they charge you one month instead of three - you win???

I have done this previously, but it was easier as it was with a private landlord.
Saving$
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Re: [Best Option for Early Termination] of Apartment Lease

Post by Saving$ »

There is risk in being a LL. Even more if you don't know what you are doing.

If you do this renting out thing, you want to make 100% sure the LL is screening just as tight as they would if you were not on the lease.
What happens to your Security? Does the LL do a new tenant walkthrough when you move out and new moves in?
If not, how do you get your security back in March? What is tenant ruins it for more than the SD?
What if tenant wants to stay in unit and renew? Does tenant then pay you the security? I doubt it.
I would attempt to renegotiate the early termination.
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throwaway1111
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Re: [Best Option for Early Termination] of Apartment Lease

Post by throwaway1111 »

The apartment office would do a history check, credit-approval and employment check when they add the new tenant to the lease. So its not like I can pick up a random person from craigslist and add them to the contract. So the new tenant would be equally responsible too, legally speaking.
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Re: [Best Option for Early Termination] of Apartment Lease

Post by Alex Frakt »

throwaway1111 wrote:The apartment office would do a history check, credit-approval and employment check when they add the new tenant to the lease. So its not like I can pick up a random person from craigslist and add them to the contract. So the new tenant would be equally responsible too, legally speaking.
9x times out of a 100, you'll be fine. But if you are in the unlucky 1 or 5 out of 100, you could be on the hook for a lot more than the remaining rent, including legal fees, additional rent until eviction, damages to the unit. Since you have a house, it's going to be much easier for the landlord to go after you than the new tenants who have lost their job or gotten divorced or whatever caused the non-payment in the first place. There might be some sort of landlord insurance that you could get to cover you, but I expect that will eat up most of the money you are hoping to save.
Bfwolf
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Re: [Best Option for Early Termination] of Apartment Lease

Post by Bfwolf »

I'm surprised how risk averse everybody is here. Between those two choices, I would absolutely try to get another tenant in there to complete your lease. Yes, something could go wrong, but it is unlikely, and the risk of it costing you a LOT of money is very unlikely.

But I actually think your best option is to find somebody who will take a whole year of a lease on with you subsidizing some portion (worth significantly less than $2,400). Under those circumstances, I would be surprised if your landlord would not let you out of the lease entirely and sign a new lease with this tenant. It gets them an additional 7 months without risk of it sitting empty.
mlipps
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Re: [Best Option for Early Termination] of Apartment Lease

Post by mlipps »

I once had a lease with an early termination clause of only one month's rent if my employer compelled me to move out of state. That's all I'm saying...
denovo
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Re: [Best Option for Early Termination] of Apartment Lease

Post by denovo »

JGoneRiding wrote:
harrychan wrote:You are already putting yourself at risk by violating tenant laws yourself by choosing your sublet tenant. You are required to offer housing to the first qualified applicant regardless of status, race, age, sex, and other factors or face discrimination lawsuit. It shows how little you know about being a landlord. Pay the early termination and get it over it. You may need the apartment if you plan to do some renovation and tske your time to move. Consider it a cost of buying a house.

One more concern if you have been advertising on cl is scammers who move in then dont pay rent and wait to be evicted. There was an article about a real estate agent who knew how to game the system by getting a lease, not pay a penny, and wait for a buyout including condition to not go after her credit.

What state law r u reading! You can not discriminate based on race, sex, etch but you can totally hold out for a 'well qualified' candidate. Which for most LL is the one that is well and stably employed with no effictions and no criminal record. The op can also hold out for one that is able, wanting to complete the lease and reject anyone that says the only want it for say 3mos
Yes, , also especially since a lot of those laws do not apply when you are seeking what is effectively a roommate in the sense that you guys are considered to be legal co-tenants.
"Don't trust everything you read on the Internet"- Abraham Lincoln
denovo
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Re: [Best Option for Early Termination] of Apartment Lease

Post by denovo »

Alex Frakt wrote:
throwaway1111 wrote:The apartment office would do a history check, credit-approval and employment check when they add the new tenant to the lease. So its not like I can pick up a random person from craigslist and add them to the contract. So the new tenant would be equally responsible too, legally speaking.
9x times out of a 100, you'll be fine. But if you are in the unlucky 1 or 5 out of 100, you could be on the hook for a lot more than the remaining rent, including legal fees, additional rent until eviction, damages to the unit. Since you have a house, it's going to be much easier for the landlord to go after you than the new tenants who have lost their job or gotten divorced or whatever caused the non-payment in the first place. There might be some sort of landlord insurance that you could get to cover you, but I expect that will eat up most of the money you are hoping to save.

Most people who get a new house, are 80 percent or more in debt for the value of the property, and I suspect a homestead exemption would cover the rest. Nevertheless, it wouldn't hurt to get the highest security deposit possible from the new tenant.
"Don't trust everything you read on the Internet"- Abraham Lincoln
denovo
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Re: [Best Option for Early Termination] of Apartment Lease

Post by denovo »

OP, I did some helpful research for you. http://www.nolo.com/legal-encyclopedia/ ... 36234.html

The state of TX puts no statutory limits on how much security deposit you can collect, but I would check to see if any local ordinance restricts this. . Since I guess you will be looking to rent for 4 months, what I would do to make yourself secure is the following.

In your ad, ask for at least 2 months security deposit, 3x income to rent requirement with 12 months work history, no evictions or criminal record, and present the tenant. They would have no good reason to refuse someone like that unless acting in bad faith. And no way, I would return the property and let them double-collect.

However, everything is negotiable. Ask them for a reduction in the early termination fee, imply you'll be a happy person who will provide referrals, but if otherwise, ......
"Don't trust everything you read on the Internet"- Abraham Lincoln
freebeer
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Re: [Best Option for Early Termination] of Apartment Lease

Post by freebeer »

Alex Frakt wrote:
freebeer wrote:You may not want to invest the time but one option I would consider were I in your shoes would be to retain the apartment and be an AirBnB host. Legally this may be considered a sublet in violation of your rental agreement but there's some grey area and a landlord, even if they find out about it, is arguably disincented to sue with only 3 months to go. It might even lead them towards a negotiated termination with less than 3 months rent. AirBnB has some nice properties: you can reliably screen prospective guests by checking out reviews left for them by other AirBnB hosts, no one can stiff you on the rental fees (which AirBnB collects for you), and there's a "host guarantee" to compensate you if someone trashes the place. Even if you only get guests a few days each month it might pay your rent and who knows, you might make a decent profit.
Except that it is highly likely that this is violation of the OP's lease which, if the landlord is so inclined, will likely result in a lawyer letter demanding the full remaining value of the lease plus the lawyer's costs and whatever other fees the landlord can think of. I used to work for a law firm that represented landlords and it's possible to really make a tenant's life miserable if the landlord insists and the tenant gives them an opening. And this was in California, which is widely regarded as a very pro-tenant state.
Fair enough Alex, and I did mention this consideration... personally, in this situation I would be more inclined to chance it if the lease language was somewhat ambiguous vs. if it were a clear violation. Also, I'm an absentee landlord in California ... I've had several tenants make my life miserable but never had the opportunity to return the favor and any time lawyers have been involved I've lost, not made, money. So I just don't imagine that a landlord would in practice be very motivated to get a lawyer involved... and even if so as you know a lawyer letter has no legal standing. I would imagine the only time a landlord has sufficient motivation to go nuclear on a tenant via lawyers is when they are desperate to get a tenant out or if major dollars are involved, neither of which is the case in OP's situation.
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