Terminating A Lease

: Chris Lee Law Firm

  Filed under: Bankruptcy

terminating lease agreementWhether renting a home, apartment or business suite, contractual obligations of a lease are often quite stringent. Typically, a lease contract will include penalties for defaulting as well as steep costs for terminating the lease prior to the end of the lease term. When finances become tight the temptation to break one’s lease early may set in, but this is generally a bad idea that could cost far more in the end.

A Word Of Caution

Typically, getting out of a lease contract early requires a renter or tenant to pay out the remaining balance of the lease term. This means that if a person moves out of their apartment 6 months before the end of their lease, they could be legally responsible for paying that 6 months worth of rent. If the property becomes occupied by another tenant or the renter finds someone to sub-lease the property, they may be absolved of this liability. Filing for bankruptcy generally does not allow a person to  resolve their lease debts without some repayment. While a bankruptcy may be able to eliminate the need to repay the remaining lease term debts, it will still require a person to pay out the early termination fee.

In a business bankruptcy, a tenant can terminate a commercial lease by filing bankruptcy.  However, this process comes with some additional considerations. First, the tenant has 120 days from  filing the petition to assume or reject the lease. Assuming the lease requires that the tenant resolve their prior debts with the lease holder and resume normal payment. Rejection of the lease means that the tenant does not plan to resolve their prior debts and intends to vacate the premises. Bankruptcy laws can still require that the tenant be held liable for repaying the early termination fees of the lease. However, these fees are generally capped at around 15% of the value of unexpired lease term.


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