Buying your first home in a sellers’ market requires patience, skill, and time. The patience to fall in love with a home only to be outbid by other buyers, the skill to identify the right property, and the time to study inventory and market trends while constantly watching for that new and perfect listing. But time alone is not enough – buyers must also have great timing. With inventories of desirable homes lasting mere days or even hours on market in Greater Boston, many first-time buyers struggle to balance flexibility for their home’s closing and their apartment lease obligations. Some buyers think it is critical to purchase a property with a closing date that coincides with their lease end date, while others worry about facing excessive penalties and fees if they break their lease. Fortunately, Massachusetts law affords tenants many protections, and if you know your rights then it’s possible to work with your landlord to structure a smooth and affordable transition.
A common misconception about lease break situations is the belief that tenants must pay a fee to terminate early, or pay the rent for the remainder of the term. In Massachusetts early lease terminations, landlords have a duty to mitigate. This means that if you vacate the premises with proper notice prior to the lease end date, your landlord must make reasonable efforts to find a replacement tenant. If your landlord does find a suitable tenant, then she may not collect fees from you that overlap with the new tenant’s tenancy. For example, let’s say that you are renting an apartment with a lease end date of August 31, but you wish to close on your new home on June 30th. You inform your landlord on May 20th of your intent to break the lease before July 1st, and she charges you a two-month early termination fee. Massachusetts law requires her to make reasonable efforts to find a replacement tenant, and if she finds a tenant to move in on July 1st, then she may not charge any termination fee, because there was no gap in tenancy. If she finds a tenant to move in on August 1st, then she may only charge you for the vacant month of July. However, the landlord carries the burden of showing reasonable efforts. Therefore, it is a good idea to offer to help find a replacement tenant – if you find a suitable replacement then it is very difficult for the landlord to reject that tenant and charge you for the vacant months.
It is also a good idea to review the subletting and assignment clause in your lease, if any. Subletting means to maintain your lease as the lessee, but then lease your rights out to another party. Assignment is a straightforward transfer of your rights to a different tenant. Many leases prohibit both practices, while others require the landlord’s reasonable consent. If subletting or assignment is allowed, then finding a new tenant to take your place is a great option to avoid paying for vacant months.
Knowing and exercising your rights is a great first step, but it’s also important to respect your landlord’s interests by keeping her informed, and collaborating to find a mutually beneficial solution. In a market with quickly-rising rents, many landlords will welcome early termination. Others are sympathetic to the needs of their renters and are happy to assist you in the process of buying your first home. In the event that your landlord is contentious, however, it is important to know your rights and avoid paying unlawful penalties or allowing your lease to adversely affect the buying process. You have enough on your plate managing the search for your new home – it’s probably the most important purchase of your life to date – so don’t let your lease be a controlling factor in its outcome.