What to Do About an Apartment Lease When Buying a Home

You May Have Options Other Than Breaking Your Lease

Apartment lease documents signed by hand next to brown notebook, glasses and keys

The Spruce / Michelle Becker

If you are a renter and are considering the big step of buying a new home, you may wonder what you're going to do regarding your fixed lease agreement on the apartment. Unless your home purchase is timed so that you can take occupancy at the exact time your annual apartment lease ends, it might appear you will be out some money. Either you will need to renew your lease on the apartment, in which case you will be legally obligated to pay that lease on the apartment; or you will need to leave your apartment early, in which case you'll be paying both your new home mortgage payments, as well as the remaining monthly payments on your apartment. Nor can you just break your lease and stop making monthly payments on your apartment—if you have a fixed lease agreement, you are obligated under law to pay until the end of the lease term, and a renter who just stops paying will likely find themselves in very tricky legal waters. 

Fortunately, there may be some other options in this situation. The first thing to do is to meet with your landlord to discuss alternative leasing options that can let you stay in your apartment until you're ready to move, with little, if any, financial penalty. 

Switch to a Month-to-Month Rental Agreement 

Rather than renew your lease, ask your landlord whether you can continue to occupy your apartment on a month-to-month basis. This offers the ultimate in flexibility, and it's ideal if you're confident you'll move in a matter of months. To end a month-to-month rental agreement, you typically just give 30 days' notice to your landlord, and then you leave without a penalty. The only risk to keep in mind is that your landlord also gains the right to end the arrangement with 30 days' notice—which they may do if the apartment building is in high demand and they have an opportunity to lock in another long-term fixed lease.

Some landlords will agree to month-to-month rentals for a slightly larger monthly rental fee. This is to be expected since they are running a risk of the apartment sitting empty when you give unexpected notice. But this is a small price to pay for having the flexibility to leave your apartment when you want. 

Renew Your Lease for a Shorter Term

Rather than renew your fixed lease for another year, see if your landlord will agree to a shorter fixed term, such as six or even three months. If you renew for three months, for example, and still haven't purchased a home, you can then renew for another three months. This option offers some protection to the landlord, who will have the opportunity to seek new tenants in time to minimize the apartment sitting empty, while still giving you some flexibility when timing your new home purchase. 

Can I Sublet?

You may also wonder if you can rent the apartment yourself for the months you'll be absent, then use the money to pay your rent to the landlord. This does happen frequently but can get you into difficulty if you are not careful. First, the rental lease you signed is between you and your landlord, and any damages that arise from a subletting tenant will be your responsibility. And you may need to act like a sub-landlord, collecting the money yourself and then paying the landlord. It's also possible your lease has clear prohibitions against subleasing, for obvious reasons—your landlord has leased to you based on your financial background and reputation, and introducing an unknown tenant into the equation can be very problematic. 

Still, it is worth a try if your landlord won't agree to change the lease in other ways. Approached directly, and allowing the landlord to interview and approve the person you've chosen may be all it takes to get the deal done. The landlord's concern, after all, is about losing money on an apartment that sits idle and provided the income stream remains steady, they may agree to a sublet arrangement. 

You will, though need to advertise, interview, and select an appropriate candidate, which can be difficult. Remember that you are responsible for who you select, and you may not have much legal protection if your sub resident fails to pay—the responsibility to the landlord is yours. 

Do not try to sublet on the sly, without telling the landlord. You almost never get away with this, and it's not worth the risk. 

When Other Options Aren't Available

It's possible that your landlord won't agree to any of these options. Also, if your lease is several months away from expiring—for example, you just signed a one-year lease a few weeks ago—then chances are you'll be ready to move to your new home before your lease expires, which means you won't have the opportunity to try these options. If this is your situation, then your goal should be to break the lease in a manner that means minimal penalties.