The First Four Steps Towards Living Flexibly
People have a lot of misconceptions about what they can and cannot do as a renter. The process of getting on and potentially needing to break a lease is often a nerve-racking and intimidating experience. L-E-A-S-E has become this scary word that holds us back from moving forward with our lives, keeping us at tired jobs and in relationships we might do better without.
Contrary to how we might feel about them, leases and real property laws were designed to provide tenants and landlords security, not undue stress. There are actually a few surprising ways that U.S. law protects renters, and we’ve put these together as a few lessons to help you make decisions based on what you want or need to do, not what your lease stipulates.
Lesson #1: A replacement renter is your friend
If you are on a lease and starting to get antsy or nervous about the commitment, the best thing to do is find someone as qualified as you, who is willing to take over your lease.
Why? You ask. Well it all comes down to some complicated-sounding but actually pretty simple legal terminology. In the U.S., 42 states and DC recognize that a landlord has a duty to “mitigate damages” caused to him or her when someone breaches their residential or a commercial lease. This means the landlord must make reasonable efforts to eliminate any losses. For example, a landlord cannot sue for the remainder of the lease while intentionally keeping the apartment empty.
Because of this duty to mitigate, when a lease-breaking tenant assigns a lease, thereby delivering a qualified tenant to the landlord, the landlord must make a decision about whether or not to accept the assignment. The landlord cannot reject the assignment and/or sues the original tenant without having reasonable reason to do so. If you have presented a qualified replacement (someone who will pay the rent reliably) then his/her rejection of that qualified tenant could be deemed unreasonable and used against him in determining whether or not s/he honored the duty to mitigate.
Lesson #2: You have more leverage if you can prove your replacement is qualified
You will always fare better if you can prove that your replacement is in fact a qualified tenant. We know — you don’t usually ask friends of friends about their credit score. But credit scores do matter! You’ll also want:
- A background check
- Their history as a renter
If it is found that the duty to mitigate was not followed, the tenant will not be liable for losses.
Lesson #3: In practice, reason wins
It’s good to be aware of these laws as a renter. It helps you to commit to a lease more freely, and move on as your life (not your lease) dictates). The important thing to keep in mind, though, is that your landlord has expenses that they’re trying to keep down. Two of those expenses are the losses when someone defaults — for instance if you lose your job and can’t pay the rent anymore — or if a unit is left vacant. In practice, they want to keep these costs down. That’s why, regardless of the state, it does not make financial sense for a landlord to sue a tenant who breaks a lease if they are presenting a a qualified new assignee or sublettor.
Lesson #4: Subletting is legal
One of the most common questions we get is “I can’t use Flip if it says in my lease that subletting isn’t allowed, right?” Wrong!
Generally the qualified replacement rule still applies — it all comes down to you not just finding a sublessee but finding one who is as qualified as you and letting your landlord know. This varies based on state. For example in New York and Illinois, tenant law is especially friendly: you are allowed to sublet even if it expressly forbids it in your lease.