What Do You Do When The House Of Your Dreams Is For Sale But You're In A Lease?
Posted on: 31 July 2016
Sometimes the right home just comes along at the wrong time. If you weren't intending to look at homes for sale for another year or so, but the market in your ideal residential area happens to be right or the home of your dreams is suddenly up for sale, you may have a big complication: the lease on the place you live now. Should you break your lease to buy a home? Can you break your lease to buy a home? This is what you should consider.
You have a duty under the law—but your landlord probably does too.
The first thing that you want to do is look at your lease because that's your formal contract with your landlord. The second thing that you want to do is look at landlord-tenant laws in your state. Both may give you some answers about your legal obligations and your landlord's legal obligations.
Some leases contain a buy-out clause that allows you to pay a fee in order to end your lease early without further obligations. Even if it doesn't, you aren't necessarily trapped or obligated to pay out the remainder of your lease. Your state's laws likely place a certain amount of responsibility on your landlord to mitigate his or her own damages if you do break the lease. For example, landlords in Washington are required to make reasonable efforts to re-rent your place even if you break the contract. They can only charge you for the time that the dwelling goes unrented.
You may also be able to come to an agreement with your landlord.
Unless your landlord hasn't been in the rental business very long, you probably aren't the first tenant that's wanted to break a lease. Once you're sure that you're buying and know the date of your move (and not before, just in case there's a problem and you don't get the house or your move-in date is delayed), talk to your landlord. If the rental market is strong, he or she may welcome the opportunity to re-rent your home to a new tenant at a new (higher) rate.
Even if it isn't, you'll gain a clear understanding of what your landlord expects in terms of compensation. You may be offered a buy-out or your landlord may agree to notify you as soon as the place is re-rented in order to settle up.
You need to add in the cost of breaking the least to your purchase.
Don't make the mistake of assuming that your security deposit will cover the landlord's lost rent. Security deposits are often used to cover small repairs and minor damage to rentals first—before they're applied to an unpaid lease. Assume that even in the best of rental markets that your landlord will have to take a week or two to make sure that the place is in top shape and repaint for the next tenant. That means that you can anticipate the loss of a single month's rent, at a minimum, when you're calculating the cost of your purchase and move.
If the rental market where you currently live is soft, you may be on the hook for a few more months, depending on how long it takes the landlord to rent the place out. If the landlord has to lower the rent for the next tenant in order to stay competitive in the market, you'll be responsible for the difference between what the next tenant is paying and what you would have paid until the end of your lease.
As long as you go into the situation aware of your responsibilities and rights, the landlord's responsibilities and rights, and a clear understanding of how much you may have to pay to terminate the lease early without risk of further legal action, there's no reason to let a lease stop you from buying the house of your dreams if it becomes available. Contact a business that offers homes for sale for more information.
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