Getting Sued by a Landlord for Breaking Your Lease Early? Maybe Not
When most people rent an apartment, there’s generally a lease involved. A lease is a written agreement that offers security to a landlord that a stream of income can be relied upon. A lease also offers security to a tenant that they just can’t be evicted for no reason. In many leases, there is language that assesses a penalty or fee on the tenant if they vacate before the end of the lease. Is a tenant really liable, however, for such an early termination fee found in most leases?
Before answering the question of whether a tenant actually has to pay a termination fee for breaking a lease early, we have to look at some of the basics. (We’ll be referring to a residential lease in this article. If you’re a commercial landlord or tenant, keep in mind that many courts strictly enforce the terms of a commercial lease. If you’re a commercial tenant, you should have negotiated a good guy clause as a term.)
First, the lease. A lease isn’t a lease unless it’s a lease. That is, a lease is a written agreement that contains material terms of the tenancy, including start date, end date, the rental terms, and conditions of living. I always chuckle a little when someone comes into my office with a document they printed off the internet that’s titled “Month to Month Rental Agreement,” and then it’s missing these basic items. A lease isn’t a lease unless it’s a lease, so be sure to review the lease (regardless of whether you’re a landlord or a tenant) and make sure these basic items are included in the lease.
Assuming that there is a valid and enforceable lease, the next question is to look at any default language. For purposes of this topic, we want to know whether there is any language addressing the situation of a tenant vacating the premises before the expiration of the lease. Many commonly used leases have a paragraph titled ‘Default and Remedies.’ It’s often in this paragraph where you’ll find the language addressing what happens if a tenant breaches a lease by leaving early.
The language found in a lease commonly used here in NYC is as follows:
TENANT’S DEFAULTS AND LANDLORDS REMEDIES
A. Landlord may give 5 days written notice to Tenant to correct any of the following defaults:
- Failure to pay rent or added rent on time.
- Improper assignment of the Lease, improper subletting all or part of the Apartment.
- Improper conduct by Tenant or other occupant of the Apartment.
- Failure to fully perform any other term in the Lease.
B. If tenant fails to correct the defaults in section A within the 5 days, Landlord may cancel the Lease by giving the tenant a written 3 day notice stating the date the Term will end. On that date the Term and Tenant’s rights in this Lease automatically end and Tenant must leave the Apartment and give the Landlord the keys. Tenant continues to be responsible for rent, expenses, damages and losses.
C. If the Lease is cancelled, or rent or added rent is not paid on time, or Tenant vacates the Apartment, Landlord may in addition to other remedies take any of the following steps:
Use dispossess, eviction or other lawsuit method to take back the Apartment, and
To the extent permitted by law, enter the Apartment, rent and added rent for the unexpired Term becomes due and payable. Landlord may re-rent the Apartment and any thing in it for any Term. Landlord may re-rent for a lower rent and give allowances to the new Tenant. Tenant shall be responsible for Landlord’s cost of re-renting. Landlord’s cost shall include the cost of repairs, decorations, broker’s fees, attorney’s fees, advertising and preparation for renting. Tenant shall continue to be responsible for rent, expenses, damages and losses. Any rent received from the re-renting shall be applied to the reduction of money Tenant owes. Tenant waives all rights to return to the Apartment after possession is given to the Landlord by a Court.
So after digesting that for a minute, it seems pretty clear-cut. If a tenant vacates early, they could be on the hook for the balance of rent owed on the lease, as well as the additional expenses incurred by the Landlord to re-rent the apartment. The positive to that is that the rent collected from a new tenant is supposed to offset what the original tenant would owe. Additionally, this particular lease provision doesn’t include language charging an additional stand-alone penalty/fee/assessment for the breach of the lease.
To answer our original question – of whether a tenant is liable for a penalty for early termination of a lease – let’s assume that this lease DOES contain an early termination fee of one month rent. Is this assessment enforceable?
There are several cases from courts here in New York that have held that a penalty or assessment for early termination of a lease may be enforceable provided that the lease has language that requires the Landlord to attempt to re-rent the apartment, and offset the balanced owed by the new rent collected. That is, in the lease we used above, if that lease contained a fee due to early termination, that fee would likely be enforceable since the lease contains a provision for the Landlord to try and re-rent, as well as offset the balance owed by a tenant under the lease by the rents collected from the new tenant. (Additionally, the amount of the assessment cannot be grossly disproportionate to the value of the lease.)
What if your lease DOES NOT have this language requiring a landlord to re-rent and offset? Then, in that case, it’s ARGUABLE – not 100% certain, but arguable – that an early termination assessment or fee may NOT be enforceable. In that instance, a landlord would essentially be double-dipping if they were allowed to collect the balance on the lease, collect rent from a new tenant, as well as collect our hypothetical one-month early termination fee.
Ideally, before you enter a lease, you go through it to understand what kinds of duties, obligations and liabilities are created by it. It would help to have it reviewed by an attorney. Assuming, though, that it was a circumstance that wasn’t anticipated, all may not be lost. If you’re trying to break your lease, you might be able to argue that a penalty or fee being assessed for leaving early is not enforceable. It all depends on the language contained in the lease.
If you have questions about breaking a lease early, contact the Law Office of Richard Kistnen today.
Law Office of Richard Kistnen
128-22 Rockaway Boulevard
South Ozone Park, NY 11420
Tel.: (718) 738-2324