In New York City, signing a lease can be a real cause for celebration: you found a place! You can’t get kicked out! But it also legally binds you to pay rent for its term, which means, should you need to leave your apartment, you can’t just walk away. So if you're thinking of trying to get out of your lease, it might not be as easy as you expect.
"Basically, your lease is a contract, and you have to start from the position that you’re obligated," says Manhattan real estate attorney Steven Wagner of Wagner Berkow (a Brick Underground sponsor). "You either have to find some reason to have the landlord agree to let you out or find something the landlord has done to breach the agreement."
[Editor's Note: An earlier version of this post was published in 2017. It has been updated with new information for July 2018.]
Ending a lease early is a pretty standard thing in the world of real estate, but unless you're relocating for work and have an employer willing to pay for the balance of your rent (lucky you), you've got some financial responsibilities to face before you leave. In a worse-case scenario, you could be on the hook for the entirety of the lease.
“I don’t think tenants realize they made a contractual commitment by signing a lease, and they assume they can cancel if their needs change. That’s just not the case,” says Adam Stone of The Stone Law Firm and Stone Realty Management, who says his property management company has seen a recent increase in tenants wanting to break their lease. Contracts bind both sides, he explains.
“I think people feel if they come and tell you they need to break a lease, you’ll put it on the market, get a higher rent, and they can do that without any penalty," says Melissa Noblit, chief operating officer of Mirador Real Estate, who says she's also noticed an uptick in lease breaks of around 25 percent over the past year.
Noblit says that some renters are under the misconception that "a landlord will just take their security deposit.”
Alas, it’s not that simple. While there is no standardized policy on lease breaks, most landlords will have some kind of general rule. (The exception would be independent landlords, who could respond on a case-by-case basis, with responses ranging from “absolutely not” to “sure, find somebody to take your place” to radio silence.)
“Big landlords all have a process because they’ve been asked it a thousand times,” says Phil Horigan, founder of leasebreak.com, a marketplace of short term rentals. “They’ll say, ‘Sure, we allow it. And there’s a very specific way to do it.’” Note: “Allow” does not mean “Don’t worry about rent you’re contractually obligated to pay.”
How much it could cost you
While it’s not a given that you’ll have to lay out some cash to get out of your lease, you should be prepared to do so. In practice, says Citi Habitats broker Rory Bolger, the “walk away” cost tends to range from one to three months rent, with the majority, according to the professionals we spoke to, being two.
The biggest mistake renters make in New York is assuming that the landlord has the responsibility to try to re-rent the apartment (i.e., “mitigate” damages) if the tenant walks before the lease is over, Wagner says. In reality, you're the one breaking the agreed-upon contract, and the responsibility lies with you.
Read on for some ways for you to get out of your lease:
Ask to be released
As soon as you know you want to get out of your lease, notify your landlord or management company in writing explaining your situation. Be upfront and transparent, and find out what your options are.
"Contact the landlord and see if they'd let you out of the lease, and under what terms," says tenant attorney Sam Himmelstein (another Brick sponsor). "Some landlords will act reasonably, so always approach them first—they may ask you to find a replacement, or to give them regular access to the apartment so they can market it and show it to prospective tenants themselves."
If it's a larger-scale landlord, they might have a tenant that needs relocating, or even another apartment with dates and terms that suit your needs. Some management companies will let you break the lease penalty-free if you're moving into another building in their network.
It’s important to keep in mind that it’s highly unlikely you are the first tenant to ask your landlord to get out of a lease. Bolger confirms it’s not an uncommon request. “It happens all the time,” he says. “We’re accommodating...as long as there’s no lost rent, you’re fine.”
"Send a registered letter to your landlord explaining why you need to break your lease,” says Gus Waite, a broker with Dwellworks Property Advisors. “Ask them for any suggestions they might have that would allow you to get out of the lease. They may keep you on the hook until they re-rent it, they may ask you to find a qualified tenant, or they may let you out with a penalty.”
Market conditions play a big role here: In a brisk rental market where the landlord expects to re-rent quickly, a penalty of two or three months' rent could add up to a nice profit. The dead of winter is typically a tougher time to negotiate an exit; if you can, wait until summer.
Alternatively, if your apartment is rent stabilized and you’ve been there at least a year, the landlord will likely be more than happy at the chance to get you out, and potentially raise the rent.
The trick here, as in every situation that ends with you walking away early, is to get your landlord to sign a "surrender agreement" containing language that legally releases you from the lease, Wagner says.
Find another tenant
No matter what your lease says, New York law says that if you offer up another, qualified tenant as your replacement, the landlord must assign the lease to that tenant and/or release you from your responsibilities within 30 days, or give a reasonable explanation for turning down the proposed tenant. You have a similar right to sublet if you live in a building with at least four apartments. If the landlord doesn’t respond to your request within 30 days—or within 30 days of receiving any additional information the landlord wants about the potential subletter—then by default, he's given consent.
So, you know someone who wants to move into your place when you want to leave? Problem solved, right? Maybe not. In fact, probably not. Most landlords will want approval of the new person moving into their building, and that doesn’t mean they have to think they’re nice people: tenants need to meet the financial criteria of the landlord, and pass whatever other screening process in place.
Requirements typically include making 40 times the monthly rent, a clean credit history, proof of employment, etc.
“A landlord is allowed to reasonably withhold consent, and they have to give a valid reason or reasonable basis for the refusal,” Wagner says. “What is reasonable will depend on the particular facts and circumstances, including financial responsibility, the legality of the proposed use, and the nature of the occupancy—for example, if the new tenant wants to use the apartment as a psychiatrist’s office, that could be a reasonable basis for refusal.”
The Met Council on Housing has a guide here on what constitutes reasonable or unreasonable refusal.
"If you can come up with an assignee who’s financially viable and qualifies, write a letter to the landlord saying, 'I want to assign my lease to this person, and here’s why I want to do it,'" Himmelstein says. "Provide documentation about the person."
If the landlord turns down a perfectly qualified applicant, you could leave anyway, claiming that the owner "unreasonably refused consent."
Once you surrender the keys, the landlord cannot take you to Housing Court, but they could sue you in Civil or Supreme Court for breach of lease and the rent due under the lease, Himmelstein explains. However, New York Real Property Law Section 226-b (the statute governing sublets and assignments) provides that if a landlord has "unreasonably" refused consent to an assignment, the landlord must release the tenant from the lease on 30 days notice. You could thus defend the landlord's breach of lease case by showing that the landlord's denial of your request to assign the lease was unreasonable.
"But landlords usually don't let it get that far," says Dan Marrello, formerly of Town Residential.
One thing to note here: The right to assign your lease doesn't apply in co-op and condo buildings, according to Marrello, but frequently you're dealing with individual owners who don't want to get attorneys involved, and are inclined to be reasonable. However, as buildings crack down on Airbnb and other short-term rentals, some boards will refuse to let the owner re-rent to a new tenant for a lease of less than 12 months, in which case, you may be stuck.
Your best bet is to find out your landlord's requirements before you start vetting potential candidates, and cast as wide a net as possible on social media, Craigslist, and search sites like Leasebreak, Take Over Lease, and Flip.
If you're leaving the apartment early because it has serious problems—such as mold, bed bugs, lead paint, or construction noise—then you may have a case for constructive eviction, in which you allege that the landlord has failed to uphold the warranty of habitability conferred by New York law on all rental apartments.
To claim constructive eviction, you must move out first.
"This is risky business because if you are wrong, you have to pay the rent," Wagner says. Thus, before you move, it is wise to stick around and document the problems.
“Call 311 and have the Housing Preservation Department or the Department of Buildings come in," Wagner says. "If they issue violations, that is objective proof of conditions."
In addition, you can take photos, send letters to the landlord, and call in experts to confirm the existence of mold, asbestos, secondhand smoke, etc. If possible, get a Certified Industrial Hygienist (a “CIH”) to do the testing.
Tactically speaking, the violations alone may be enough to pressure your landlord to let you out of the lease. If you proceed further and go to housing court, you may win, but you'll wind up on the tenant blacklist, which could make life harder the next time you try to find an apartment.
Make a few calls
The simple fact is that the more in-your-face you are, the more likely your landlord will want you to make a hasty exit. Of course, if you take this approach you should stay well within the bounds of what's legal. And you do run the risk of the landlord growing so frustrated with you that instead of just getting you out by any means necessary, they become less amenable to negotiating terms that might benefit you.
One tactic is calling in every little (but still valid) violation to 311.
"The misery you can cause starts with putting violations on the building," Wagner says. "There’s always something wrong with the building, even if not in your apartment."
If you choose this route (and think carefully before you do), here's where to look for ammunition:
- The façade of the building, if it’s six stories or more. If there’s anything weird such as bulges, cracks, loose mortar, or concrete, or bricks that are popping off, call it in to the Department of Buildings as a potentially hazardous condition.
- Does black smoke come out of the building every time the boiler is on? Call it in. This is a common problem in older buildings, and terrible for neighborhood air quality.
- If you live in a loft building, check the Department of Buildings website to see if there is a certificate of occupancy permitting residential use. If not, the landlord doesn't even have the right to collect rent in the first place. (Depending on the situation, calling inspectors to a place without a legal C of O could result in the city vacating the building, so that is definitely something to keep in mind.)
- Check the Department of Buildings website to see if there are any outstanding violations in your building. Call the city again and alert them to the fact that they have not taken care of violations.
- If you rent a non-stabilized apartment, determine whether the apartment has been illegally destabilized to reach its current market rent (tips on that process here). "If the landlord overcharged you intentionally, you may be entitled to treble damages," Wagner says. "The landlord may wind up paying you a lot of money and letting you out of your lease."
- Oil in the basement or an oil smell may indicate a leak, which can result in violations and big fines.
- For more potential violations, check out the Housing Maintenance Code.
Pick your moment
Just as landlords will be more likely to let you go during a hot rental market, their grip on you may relax the closer you are to the end of your lease term. Hence, when you sign your lease to begin with, if you think there’s a possibility you may need to move, it’s better to take a one-year lease with an option for a second.
In rare cases, a landlord may even be willing to put in a clause allowing you to terminate with 60 days notice.
“It’s not typical, but if you’re paying a lot of money for a lease and they’re really happy to have you, they might," Wagner says.
Bumps in the replacement road
In the best-case scenario, you inform your landlord you need to move, a qualified replacement is approved, and you’re off the hook with no additional cash outlay. Some tenants assume demand for New York City rentals will always fill an opening.
Not true. There are lots of reasons why an apartment might linger on the market, including it’s a slow time of year for rentals, such as late winter; the length of the lease is unusual (Horigan gives the example of a 17-month lease: “How do you market that?”), or it’s a short-term assignment or sublet, which tends to attract people who want a furnished apartment, and you plan on taking your stuff with you.
Yet another scenario: You’re trying to find a renter for your apartment, but your building is offering one month free rent for similar apartments. Or, your landlord plans on raising the rent on your bargain apartment to market rate, making it considerably less desirable—especially if part of the reason you got a deal is because it has some drawback that you could live with because of that competitive price.
If your apartment isn’t moving, you may have to bite the bullet and hire a broker or offer to pay a broker fee which isn’t ideal, but could save you the thousands in the long run.
Another additional fee you might have to face: turnaround costs, or cleaning and painting the apartment, which you might be able to skirt by offering to do it yourself. Again, another landlord-specific detail that's better to know about sooner rather than later.
No matter what, Bolger cautions, do not stop paying rent. To do so could result in your landlord initiating eviction proceedings, which is less of a concern in terms of having a place to live (you are leaving, after all), but dire when it comes to your prospects of renting anywhere in the future.
“Once it’s filed it’s on your record,” says Bolger. “Even if you fixed it, it comes up. That’s a big scare.”
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