Most leases in Texas are written for initial fixed terms, usually 12 months. Renewal periods are also usually written for a fixed number of months. During these fixed terms, the tenant has agreed to remain in the property and pay rent through a certain date, and the landlord is obligated and required to allow the tenant to remain for that period of time. The only exception is a month-to-month lease which can be terminated with a 30 day notice by either party.
So what happens if it’s October, your lease doesn’t end until the following May 31st, but life circumstances are forcing an early departure from your Austin rental home?
Perhaps you’ve lost your old job and already found a new one, but the new job requires relocation to another city? Sometimes tenants divorce and neither can afford the rent alone, so both have to move. Sometimes tenants are under no financial duress but elect to buy a new home and terminate early, and simply include the early termination costs in the overall financial decision to buy the new home.
There are a number of life circumstances that can cause a tenant to contact us and ask “what happens if I can’t finish my lease term”?
This is called Early Termination and is covered by paragraphs 27 and 28 of the Texas Association of Realtors Residential Lease Agreement.
Paragraph 27 covers Default, whereby a tenant simply moves out and stops paying rent. We call this a “skip” and it results in legal action, damage to the tenant’s credit report, and ultimately the account being placed for collection. In the event the tenant buys a house, our attorney will sue, then after obtaining a judgment, we place a lien on the property. In other words, the worst financial and credit consequences possible are realized, and the price is paid for years to come.
Paragraph 28 provides a graceful exit from the lease. Most tenants want to avoid damaged credit, ruined rental history and collection, a judgment and a lien on their new home, so we more commonly operate under Paragraph 28, which involves locating a replacement tenant to take over the occupancy of the home and allows the tenant to depart on good terms. Below, I’ll outline how this works.
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