It’s the first of the month, and your rent is due. Unfortunately, you were laid off from your job this month – it seems like the economic slowdown is affecting your industry, and your boss can no longer afford to keep you on board.
This type of situation happens to hundreds of unfortunate individuals every day, and if you’re one of the unlucky ones to be put in this position, your immediate concerns will be how you can afford to keep living.
Your primary concern may be keeping your accommodation, but in some cases – this might not be a possibility, and you’ll need to break your lease with your landlord. Being unable to pay your debts is an uncomfortable and stressful experience to handle. Many people get lost in despair, thinking that they may wind up homeless on the street, or living in a tent.
However, it’s critical that you keep a positive mindset during your ordeal. You will bounce back from this, and secure your lifestyle. In the meantime, you’ve got to deal with your current situation, and make a plan to settle with your landlord.
When you move into an apartment or home you sign a lease to secure the property as your place of residence. While many of us sign on the dotted line without a thought in the world to what we’re doing, we should take note that we are engaging in a binding, legal document.
Breaking your lease is not as simple as giving your landlord a call to tell them you’ll be moving out at the end of the month.
A lease is a contract between you and the landlord, and you’re liable for the full amount, regardless whether you intend to see it out to the full term. Your landlord has the right to enforce the terms of the lease and pursue you to settle your outstanding financial obligation.
Avoid the Run-Around and Make a Plan
The moment that you learn you cannot make the rent payment this month is the time to take action. Waiting around, wallowing in self-pity about how you’re not going to make the rent is a waste of precious time. Most landlords will start the eviction process on the 15th of the month if you fail to make rent on the first.
You can dodge them during this time, or you can face the music and tell them you’re running late with the rent. It’s always advisable to inform your landlord of your current financial situation before they start to take action.
People don’t like you leaving them in the dark on these types of situations. Should you fail to pay your landlord, and fail to inform them of the reason for the non-payment, you may end up with your stuff tossed out onto the street on the 15th if you fail to pay. Landlords are people too, and if you’ve had a good relationship with them, they will accommodate your position to a certain extent.
What they won’t tolerate – is you failing to inform them about your situation, leaving them to make their assumptions about what’s going wrong.
2-weeks should be enough time to try and find some money to help pay your rent.
You could take a temporary or part-time job working as a bartender or waiter at your local restaurant. While this won’t make you rich, it will certainly help to pay off your landlord.
You can also look at some of our tips for making money quickly:
- How to Hold a Successful Garage Sale
- Easy Ways to Make Some Extra Money Fast
- Boost Your Income: 5 Ways to Make Some Extra Cash
If it comes to the 12th, and you still have not managed to raise the money you need, consider selling some of your possessions to give you some breathing room until you establish an income stream. If you give your landlord a portion of the rent, even if it’s only half, they will see you’re trying to make an effort, you communicate with them – and this may be enough to save your living quarters.
Taking action on your current situation is the only way you’ll manage to receive a positive outcome. Don’t despair –take action!
A Quick Guide to Breaking a Lease
In some circumstances, breaking your lease will be unavoidable. You may not be able to meet your financial obligations due to whatever reason, and your only option on the table is to default.
This guide will provide you with everything you need to know before you decide to alert your landlord and tell them that you’re breaking the lease.
Legal Ramifications of Breaking a Lease
If you have no other choice than breaking your lease, you need to prepare for the possibilities that occur when you inform your landlord. As we already mentioned, a lease is a binding legal document. In the contract, you agree to rent the property for the landlord for a given period.
Most leases run for 6-months or a year, and you are liable for every single payment during this time frame. Should you fail to pay, your landlord has an air-tight case against you, and the chances are that they will pursue you with legal representation for the outstanding payment due.
This situation also places you in a predicament. If you still have 6-months left on your lease, and the landlord wins their case against you for defaulting on the contract, then you are responsible for payment on the full amount, (6 x your monthly rental,) as soon as the court declares you liable.
As a result of the court’s decision, you now must come up with the full outstanding amount – which is far more than a month’s unpaid rent. The chances are you have no access to the money you need to pay this off, and as a result, you may end up facing some significant consequences.
Here’s are the legal ramifications you can expect from your landlord in the aftermath of your court case.
Your Landlord May Sue You
Should the court find you in default, your landlord may choose to sue you to recover their funds. If the court rules in favor of your landlord, and they almost always do, then you will have to make arrangements to pay the outstanding debt.
Should you not have the capital available in your savings or investments, then your landlord may seize your possessions and sell them at auction to recover the funds. Should the landlord fail to raise the full amount from the sale of your assets, they may still place a credit judgment against your name for the outstanding balance.
The Effect of a Credit Judgment
Should your landlord decide to lay a judgment against you, you can expect your financial life to become ruinous over the following seven years. A blacklisting stays on your credit report for up to seven years after the date of issue.
During this period, you won’t be able to apply for any cr5edit facilities, with any creditor. The credit judgment sits on your report, and any potential creditor will run your credit score before approving a credit facility. When they see you have a blacklisting against your name, they will no longer have an interest in providing your credit.
A judgment not only makes applying for credit a hassle, but it also has a set of ramifications that can drastically affect your lifestyle.
With a credit judgment, you can forget about finding a new apartment – the new landlord will run your credit score and discover the issue. The chances are any new landlord that finds out you have a judgment from non-payment of rent, will be very hesitant to engage in a new lease with you.
Being stuck with a judgment may affect your employment opportunities as well. Corporates and companies don’t like to hire people with credit judgments as they feel they are a security risk to the financial health of the company. They may think you are inclined to risky behavior to settle your debt – including stealing from the business. You may find it challenging to obtain insurance or healthcare as well.
Strategies for Breaking a Lease without Damaging Your Credit
By now, you should understand the severity of a credit judgment against your name. It should be your top priority to avoid this happening to you. Fortunately, there are strategies you can use to prevent your landlord from taking legal action against you to recover their lost rental income. If you can’t afford to pay, try a few of these ideas to avoid a credit judgment.
Breach of Contract
The first place to start with attempting to break your lease – is with reviewing the contract. Landlords have a written obligation to the tenant upheld in the agreement. Landlords are responsible for providing you with safe, and healthy living quarters.
Should they fail to live up to their end of the bargain, you have grounds for “breach of contract.” A breach may include things such as the landlord failing to fix leaking faucets or lighting points throughout the property. They may have promised to fix the broken staircase, and never get around to it.
The point is that you can use your landlord’s negligence against them. If you have previous email or text correspondence with the landlord discussing faults of the property and their intention to fix the problems, then that is good enough evidence to present in court. Take pictures of the broken fixtures or appliances and make sure you keep the paper trail.
Check for an Early Termination Clause
Some rental contracts have a clause that stipulates the tenant can break the lease if they encounter financial hardship, medical problems, or another serious grievance. Most landlords remove this clause from the agreement, but many don’t have the foresight or legal expertise to do so.
Find Someone to Take Over the Lease
Should you fail to find any way out of the lease after reviewing the contract, the next step should be finding someone to take over the rest of the lease for you. This strategy is useful, and it can work in one of two ways.
The first way is that you find a new tenant, and your name remains on the lease. The new tenant pays you, and then you pay the landlord. However, this strategy does not offer any protection on your behalf, and if the new tenant damages the property or defaults on the payment – you remain liable.
The second strategy is to inform your landlord of the new tenant and have them void your contract. The new tenant takes up a new lease agreement, and you’re let off the hook for the outstanding balance of the rental agreement.
Forfeiture of Your Security Deposit
When you sign the lease before you move into the property, the chances are that you had to pay a security deposit. This deposit ensures that the landlord has money on hand to make any repairs to the property after you vacate the premises.
However, if the rental is still in excellent condition, and you only have a month or two left on your lease, then you can convince the landlord to use your security deposit to cover the outstanding balance.
Most landlords don’t like to take this approach. However, if they understand your situation, they may be willing to comply with your request.
Arrange Payment Terms
Being stuck with a judgment for 6-months outstanding rent on your lease is a financial hardship. Should you decide to take the matter into your hands, instead of relying on the court, you may receive a more favorable outcome.
If you owe the landlord several thousand dollars, ask them if you can pay off the outstanding debt over a period of a few months. The landlord may have their attorney write up a debt agreement you’ll need to sign, but at least you won’t receive a judgment against your name.
Should you fail to repay the obligated amount in the contract, your landlord has the right to sue you for the outstanding figure.
Wrapping Up – Get Unstuck and Move On
Life hands us lemons from time to time. However, it’s up to you to decide if you’re going to sit and cry in despair about your situation. Feeling that the world is against you will get you nowhere. It’s time to own up to your responsibilities and take action to pull your life back on track.