As we move away from the Holiday season, many buyers are starting to become more serious about purchasing a home due to the rental rates continuing to rise and fear of waiting too long with interest rates. But what starts to become a dilemma, is trying to time a home purchase with the end of a lease. Most people don’t want to be stuck paying both a mortgage and a rental payment. With taking this into consideration, it is important to understand the rental ramifications and also your rights as a renter as you make the transition to homeownership.
We will begin with the ramifications. To begin, you will need to give your landlord a written 30 day notice if the lease is less than one year, or a written 60 day notice if the lease extends beyond twelve months. At the minimum, you will be responsible for the rent for either that 30-60 day time period. Although each lease contract is different, there could also be an early termination fee in addition to the rental payments you are responsible for.
With the assumption that the landlord is going to follow through with the terms of the lease, you could be responsible for paying out the rest of the lease, until a suitable replacement tenant has been found. There is potential that a landlord could be lenient depending on your history as the tenant, the current market, and if a replacement can be found quickly.
As for your rights as a tenant, you are not required to live in the property, so as long as you are paying rent. Your landlord must also be making an active effort to lease the property out to find a replacement tenant. Once the replacement tenant is found, your landlord is no longer allowed to continue to collect rent from you as soon as the new tenant begins to pay rent.
Now for our recommendation: we recommend for you to be upfront with your landlord from the get-go. Give a proper notice with your explanation, continue to be current on your rental payments, maintain the property well, and abide by all other terms of the lease. Also, try to find a qualified tenant on your own by asking family, friends and neighbors to ensure that the property gets re-leased out as quickly as possible. Lastly, always look for help from your real estate agent. They can make sure the proper notice is given, as well as negotiate through this process smoothly for you.
The lease to home ownership overlap can be helpful in situations where your new home purchase needs work done. Especially with construction usually taking longer than expected, you won’t have to worry about living in a construction zone and can make a seamless move.
If you find yourself in a similar situation, please contact our office for further advice and recommendations.