How to Deal with Your Lease When You’re Planning on Buying a Home

Deciding to buy a home is one of the most exciting moments of your adult life. Whether you’ve been a renter for a decade or just choosing to jump into home ownership at a young age, it’s an absolute rush to tour houses, work with a real estate agent, and find yourself a permanent place to call home.

But what do you do about your lease agreement when you’re getting ready to buy a home? Is there a way to break it without penalty? How do you broach the subject to your landlord?

Let’s dive into all these questions and figure out how to deal with your lease:

First, Plan Ahead

Most things in life require proper planning, including homebuying. Although the real estate market moves pretty quickly, you should always make sure that you’re actually in a position to buy a home before you even look. If your lease isn’t up for another six months, it’s probably not the right time to enter into the market — even if you’re convinced that the home you have your eye on is the house of your dreams.

Realistically, it takes about four months to go through the whole process of buying a home. Take a look at your lease agreement and see when it ends so you can determine a start date for your house hunt.

See If You Can Negotiate a Mortgage Clause

When you’re thinking about buying a home and your lease is up soon, you might want to consider approaching your landlord to see if you can negotiate a mortgage clause into the agreement, which could help you get out of your lease without penalty when you decide to buy a home. Check your local and state laws (or consult an attorney) to see what rights you have as a tenant regarding clauses that pertain to breaking your lease.

The main thing to remember is that you need to do this as early as possible. Being upfront and direct with your landlord will go a long way toward getting them to work with you and finding a solution that benefits both parties.

Go Month-to-Month

Another way to deal with your lease when trying to buy a home is to decide to go month-to-month instead of signing a six or 12-month lease agreement. You will likely have to pay a little extra for rent each month, but it’ll still end up being a lot less than paying penalties and months of rent for an apartment you’re no longer living in.

Make sure to get any agreement with your landlord in writing so you can guarantee that won’t be locked into a lease when you’re about to buy a new home.

Ask if You Can Sublet

Look at the lease agreement you signed at the beginning of your tenancy. Does it have any clauses about subletting? Subletting is the somewhat common practice of having another person move in and finish out a lease while the original lessee moves out. Ultimately, it is still the responsibility of the original lessee to make sure the rent is paid on time, but it’s a great way to get your rent taken care of without having to pay any penalties for breaking your lease early.

Talk to your landlord about subletting your apartment and be very upfront about move-in/move-out dates. If they allow it, just note that you will still be responsible for ensuring that your apartment is clean and free of damage once the lease agreement is over.

If you don’t have a subletting clause in your lease agreement, don’t just ask a subletter to move in without your landlord’s knowledge. This could result in fines and possibly even a lawsuit.

Be Prepared to Pay a Penalty

You might happen to find your dream house with four months still left on your lease. If you’re preparing to close on your new home but still have a few months rent to pay, what do you do? In this case, you might just have to be prepared to pay a penalty.

Take a look at your lease agreement and see what the penalties are for breaking it early. You may potentially have to pay all of your remaining rent plus a fee, or a single fee that’s determined by the number of months you have left.

Talk to your landlord to see if there’s any way that you could potentially lessen the penalty (like helping them find a new tenant, working on advertising for a new tenant, etc). If they’re resistant, you might just have to face the facts: you’re going to owe them a chunk of change for breaking your lease early.

While it might sting in the short term, you’ll soon be moving into a new home that you own — and sometimes you have to make sacrifices to get what you really want.