breaking a rental lease- financial penalty?

Submitted by bishida on Thu, 10/16/2008 - 07:00
Forums
Credit repair

greetings!

I have to get out of my 1-yr lease with my landlord due to an illness in my family. We cannot seem to find common ground to negotiate early termination terms (they want 4 months worth of rent money, in full, I just can't afford that). They are threatening to put a poor mark on my credit-- something to effect of: DEFAULT OF PAYMENT DUE TO EARLY TERMINATION.

I established my credit over 10years ago, and currently have a credit score of 775. All my other loans/lines of credit in "good" standing. My loans are under $14k (car/student), and credit cards are all paid off. Do you know how many points this will lower my credit? I'm worried it will get knocked down below 700.

THANK YOU FOR TAKING THE TIME TO ANSWER MY QUESTION!

goodnatured

Can you find some one to take over the lease? Have you tried this option to sub lease the apartment?

Mon, 10/20/2008 - 03:15 Permalink
Mary

Hi bishida
As far as I know, if you terminate the rent agreement, it would mean a breach of contract and so the house owner may even sue you to the court to make you pay the entire cost. So I think that you should pay the four months rent, which will save you from being sued. Now as Goodnatured said, you can sub-lease the apartment for these 4 months and get the money back. However, if you escape the payment, this may be reflected as outstanding debt in your credit report and lower your credit score.

Mon, 10/20/2008 - 12:07 Permalink
Justin

It is very difficult to say how much your credit score will reduce if you do not pay off the four months rental. But as far as I know, since your credit score is 775, it should not go below 720 because of this debt. However, this depends on the FICO algorithm. I think that the idea of sub lease is a good one but it is very difficult to find a person who will agree to rent the apartment for a four month period.

Mon, 10/20/2008 - 12:15 Permalink
anthony

Hi bishida
Since you are terminating your contract, you are fully responsible to the landlord for the payment for one year. This is because, the landlord may have missed an opportunity to offer the house to somebody else as you had already made a lease agreement. Now since the landlord is asking you to pay only 4 months rent, I think that you should pay it and get it in writing that the landlord has agreed for lease termination in return of the 4 month rent. But if you don't pay the rent, it may get reflected in your credit report and lower your score.

Tue, 10/21/2008 - 12:39 Permalink