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 if you need to leave your apartment early, you can’t just walk away without taking a financial hit. 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 to pay rent for the full 12- or 24-month period, and you have to start from the position that you’re obligated," says Manhattan real estate attorney Steven Wagner of Wagner Berkow & Brandt (a Brick Underground sponsor).
"Even though landmark rent reforms now require landlords to make a reasonable effort to re-rent an apartment rather than simply suing you for unpaid rent, you could still be on the hook for the entirety of the lease. 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," he says.
[Editor’s note: An earlier version of this article was published in July 2019. We are presenting it again here as part of our summer 2019 Best of Brick week.]
The new law is intended to put tenants and landlords on the same page, equally incentivizing both parties to find a new tenant who meets the building’s income requirements and can take over the lease of the apartment.
Here’s what to know about breaking your lease—and how to do it.
Ask to be released (in writing)
As soon as you know you want to get out of your lease, notify your landlord or management company in writing (preferably in a letter sent by registered mail) explaining your situation. Be upfront and transparent, and find out what your options are.
"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,” says tenant attorney Sam Himmelstein, a partner at Himmelstein, McConnell, Gribben, Donoghue & Joseph in Manhattan (and another Brick sponsor).
While ending a lease early is pretty common in the world of real estate, and there is no standardized policy on lease breaks, most larger landlords will have some kind of general rule and process. Smaller, independent landlords tend to respond more on a case-by-case basis.
“Big landlords all have a process because they’ve been asked it a thousand times,” says Phil Horigan, founder of Leasebreak, a marketplace of short term rentals. “They’ll say, ‘Sure, we allow it. And there’s a very specific way to do it.’”
“Allow” does not mean “Don’t worry about the rent you’re contractually obligated to pay.” But as long as there’s no lost rent, you may be fine, says Rory Bolger, a broker with CitiHabitats. For instance, a larger-scale landlord may have a tenant that needs relocating or upsizing or even another apartment with dates and terms that suit your needs. (Pro tip: Some management companies will let you break the lease penalty-free if you're moving into another building in their network.)
Gus Waite, a broker with Dwellworks Property Advisors, advises asking your landlord “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, charging you 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.
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
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 to approve 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 processes are in place.
Requirements typically include earning an annual income 40 to 45 times the monthly rent, a clean credit history, as well as proof of employment.
“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 tenant’s rights organization, The Met Council on Housing has a guide to what constitutes a reasonable or unreasonable refusal. Their site also outlines that you have the right to suggest another qualified tenant take your place if you intend to leave your apartment permanently. This is called “an assignment,” and the landlord must assign the lease to the new 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 sub-letter—then by default, they’ve given consent.
However, Himmelstein points out “with a sublet, unlike an assignment, [you are] still responsible for all the obligations of the lease, including the rent. And if the landlord reasonably refuses to consent—and it is often not clear what that looks like—the tenant cannot proceed with the subletting. If the landlord unreasonably refuses to consent to the sublet, then [you] can proceed with the subletting, but the landlord might challenge it in court.”
One thing to note here: The right to assign your lease doesn't apply if you’re renting in a co-op or condo building, but in these cases, you are frequently 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 may refuse to let the owner re-rent to a new tenant for a lease shorter than 12 months—in which case, you may be stuck.
Avoid breaking your lease in the winter, if possible
Breaking the lease in the slowest seasonal time for rentals—November through February or March—may be more problematic than in summer in terms of making the economics work for your landlord and the ease of finding a replacement tenant yourself if you go that route. Horigan says rents can be anywhere between 10 and 30 percent lower in winter and the landlord may have to offer concessions.
That said, it may also depend on how many similar units the landlord is trying to rent. Bolger says sometimes from the landlord’s perspective, to add another unit to the market is costly: “If a building has five one-bedrooms units available for the month of July and you are going to throw another one in the mix, that doesn’t help the landlord at all,” he says.
If you’re trying to find a new tenant to take over your lease or sublet your place, note that most people start looking for a place to rent 60 days in advance and up to 90 days on full-service luxury apartments. “The best starting place is to have the apartment marketed 60 days in advance [of a lease break]” says Bolger.
Your security deposit is (technically) safe
New rent reforms requiring landlords to try to re-rent an apartment after a lease break have created some confusion over whether your landlord can keep your security deposit for breaking a lease.
If every landlord was able to keep the security deposit whenever a tenant breaks their lease, it would undermine the law that requires landlords to mitigate damages by trying to re-rent the apartment, says Ellen Davidson, a staff attorney with the Legal Aid Society in New York. She maintains the new laws mean landlords can’t retain your security deposit simply because you break your lease.
However, Wagner says it’s an “overstatement” to say your security deposit is safe. He says the new law makes it less likely a tenant will be sued for breaking a lease, but notes that damages could still include repainting, paying a brokerage to re-rent the apartment and lost rent. And of course, your security deposit is still vulnerable if there are unpaid utility bills or damage to the apartment.
Adam Frisch, managing principal at Lee & Associates Residential NYC, a company that represents small building owners in Manhattan, says that if given the choice between forfeiting their security deposit or being sued for lost rent, most tenants will choose the former, and “if a tenant agrees to it and a landlord agrees to it, and the property manager facilItates it, and it is done in a building that’s a private company, how exactly is the government going to find out about it?”
Be prepared for other financial consequences
Even though your security deposit is likely refundable if your apartment is clean, undamaged and there’s a working set of keys, you may still face some kind of penalty for breaking your lease.
“A lease is a contract and contract damages would apply,” says Wagner.
Unless you negotiated it before you began renting, a lease-break policy is unlikely to be included in your lease. If it is, however, it might lay out specific monetary penalties if the lease is broken in the slower winter months or if you’re not flexible when it comes to showing the apartment to new renters. Frisch uses this kind of policy and says he has “very rarely had any push back from that,” noting “most tenants appreciate it is a flat fee in return for knowing [they] can leave.”
One small NYC landlord says he offers to end a tenant’s lease early for a specified fee. He’s one of several landlords who think tenants “appreciate certainty” when it comes to ending a lease before the full term and that tenants expect some kind of fee if the terms of the contract are not met.
Whether or not your lease has a lease-break policy, additional fees you might have to face are cleaning or painting costs. According to maintenance housing code, a landlord is required to paint every three years, so your landlord should not be dealing with an unexpected paint job, but Davidson notes that’s “not a rule that’s regularly followed.” You may have a fight on your hands if your landlord claims he needs compensation for an unexpected repaint of the apartment.
Bolger says, “The cleanest scenario would be to pay the broker fee of one month’s rent and work hand in hand with the broker to make [the unit] presentable and rent it in the time frame that works for the existing tenant.”
Finally, even though your landlord is required to try to re-rent your apartment, the new rent doesn’t have to be the amount you were paying. In that scenario, you may be on the hook for the difference between your rent and the new rent. (And in case you were wondering, this principle of lost rent does not go both ways: If your landlord rents your place for more than you were paying, you don’t get a piece of the profit.)
Frisch says landlords are unlikely, in practice, to go after tenants for a few thousand dollars in lost rent. He says 50 percent of the lease breaks he deals with involve a tenant moving to a new city, often internationally. ”The process by which I could sue someone in Europe for $5,000? It’s theoretically possible but it’s impractical and also, it just creates resentment,” he says.
Connecting the dots with the tenant blacklist
New rent reform laws specify that landlords can no longer use the tenant blacklist to vet incoming renters. That means you should, in theory, feel less intimidated when it comes to fighting back if a landlord is making demands for fees.
In practice though, the ban on using information from NYC Housing Court isn’t free of loopholes. Frisch says it’s simply “unenforceable.” He says landlords will find other ways to vet incoming tenants and because, under the recent law reforms, landlords can no longer take more than one-month’s security, it just makes it more difficult for people with shaky credit to find housing in NYC.
So far, everything above applies to a scenario where you’re moving out voluntarily, rather than a situation where your apartment has become a living hell—or at least, what a reasonable person would consider uninhabitable.
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. If a landlord is refusing to correct issues like mold or lead paint, it can constitute harassment says Wagner and tenant protections in these situations just got better. “Now, there’s a specific provision in the new laws enabling the tenant to claim legal fees in these circumstances,” he says.
To claim constructive eviction, you must first move out. "This is risky business because if you are wrong, you have to pay the rent," Wagner says. So, before you move, it’s 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. There’s always something wrong with the building, even if not in your apartment.”
Your detective work could include finding out whether the building has any violations; if apartments have been illegally deregulated; if there are problems with the façade of the building; if there are issues with the efficiency of the boiler; or if the Certificate of Occupancy matches the use of the building.
In addition, you can take photos, send letters to the landlord, and call in experts to confirm the existence of issues like mold, asbestos, or secondhand smoke. Violations alone may be enough to pressure your landlord to let you out of the lease.
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