A Primer On Lease Agreements
The basic components of a lease agreement in North Carolina are the same as in other states. The tenant and landlord agree on the lease amount (rent), the lease term, use of the premises, security deposits, advance rent, and utilities. The agreement may also include goods or services that a landlord is to provide to the tenant such as housekeeping. Lease agreements that can run for many pages, but they generally cover the above components .
To help avoid any possible misunderstandings, it is always best to ask questions beforehand to clarify anything before signing a lease, which is a legally binding contract. If a tenant does not ask clarifying questions and signs a lease, it will be well-nigh impossible to convince a judge that the tenant did not agree with terms of the lease, even if an honest misunderstanding exists.
Legally Breaking A Rental Agreement
North Carolina law provides several legal reasons to break a lease without fear of repercussion. The following are common legal grounds upon which a tenant may break a lease legally:
Military Duty. In accordance with the Servicemembers Civil Relief Act (SCRA), tenants under the jurisdiction of the act are afforded protections that prevent them from being penalized for breaking a lease when their military service ends. Under the SCRA, tenants can break a lease if they have served on active duty for 30 days or more away from their usual home. North Carolina has also enacted legislation that closely mirrors the SCRA in this regard. 50-34(d).
Uninhabitable Premises. If a landlord fails to perform necessary repairs to bring the rental property up to the rental agreement standard, and the property is uninhabitable, a tenant may terminate the lease. 42-26. North Carolina law defines "uninhabitable" specifically: 43-37.
Breach of Contract. A landlord’s breach of a rental contract is another basis for breaking a lease. Examples of a landlord’s breach include failure to provide heat or failure to comply with local building codes. If the landlord breaches the lease contract again within the next 12 months, the tenant may simply terminate the lease. 42-46.
What Happens If You Break A Lease Agreement?
The consequences of breaking your lease can be both legal fees and monetary damages. For example, the tenant can be sued by the landlord for the amount remaining on the lease plus lost rent until the apartment is turned over to a new tenant who pays rent, or the end date of the lease, whichever date comes first. The landlord does have an affirmative duty to mitigate its damages and attempt to rent the apartment to a new tenant who pays rent.
If a lawsuit is filed, discovery will be conducted in the form of interrogatories to both parties, requests for production of documents to both parties, and depositions of the parties. A trial will be conducted if the case is not settled prior to trial.
Another possible consequence of breaking your lease without legal grounds may include problems renting in the future from another apartment complex. More and more apartment complexes are using services like "Tenant Background Network & Applicant Services" and "Resident Research LLC." These types of companies provide landlords information about previous renters and their history regarding broken leases, evictions, etc. to give the landlord a complete credit and criminal history. If the tenant has a history of breaking leases, this can be readily viewed by prospective landlords. Bad or limited credit can cause tenants trouble purchasing or leasing cars or making other major purchases. Having items sent to collection can damage a tenant’s credit rating, which can also make one’s existing loans more expensive if higher interest rates are charged.
Additionally, it is possible that the landlord may not immediately perform the accounting or return any deposits until all charges the apartment complex wishes to claim are resolved. The landlord in North Carolina is required to provide a written itemized accounting of the amount of the security deposit remaining and the reason for its disposal. If the landlord has not provided the security deposit accounting or has failed to send the accounting to the tenant’s forwarding address and as provided in the lease, then all claims to the deposit are lost to the landlord. If the charges added to the accounting add up to more than the amount of the security deposit, the tenant may sue for a refund of the security deposit, attorney’s fees and court costs. If the tenant prevails on this type of claim, the judge may have the right to award him or her the amount of the security deposit and up to twice the amount of the deposit as punitive damages (for example, if the tenant’s lease deposit was $1000, the tenant may recover up to $2000 in punitive damages.)
In addition to the above, the landlord may try and collect the money owed on the lease from the tenant using a collection agency. In North Carolina, if the debt collector sends a letter to a tenant advising him or her of a debt, he or she does not have to respond to the letter. N.C. Gen. Stat. § 58-70-95 provides certain protections and grants several rights to consumers when a debt collector contacts them. The principal protections are as follows:
Under 18 U.S.C.A. § 803 et seq., a debt collector who fails to comply with the Fair Debt Collections Act of 1978 by employing abusive debt collection practices such as threatening and harassment, and unfair or deceptive debt collection practices, can be subject to civil liability under the act. A tenant who successfully claims that a debt collector violated the FDCPA can recover actual damages, additional damages up to statutory limits, costs, and reasonable attorney fees.
The bottom line is that it is illegal to break the lease, which can be signed electronically or by hand, without grounds.
Written Notice Requirement
The notice for a termination of a lease in North Carolina is required to be in writing unless the lease is for a period of seven days or less. N.C. Gen. Stat. § 42-14(a). If the lease is for a period of one month or longer and is for a rental value of $1,250 per month or greater, then the landlord must give one month’s written notice to the tenant. Id. If the rent is less than $1,250 per month, however, the landlord must give two months written notice in order to terminate the lease. Id.
Notice from the tenant for any leases other than week-to-week must be given in writing if the rental period is for a period of one month. Notice for leases less than one month in which rent is payable every seven days must be given in writing of at least seven days before the expiration of the period for which the rent is due. Id. Finally, a tenancy by the week requires a minimum of two days notice. N.C. Gen. Stat. § 42-14(b).
Regardless of tenancy type, written notice for termination of the lease must be given to the landlord, or to any person on the premises as an agent or representative of the landlord. Id. Should the notice be given to anyone other than the person specified in the lease as the landlord or to someone not authorized to receive delivery under the North Carolina Rules of Civil Procedure, the notice will not be valid. Id. The notice requirements are strictly construed, and strict compliance with the terms of the statute is required. Spencer v. Modlin, 6 N.C.App. 432, 171 S.E.2d 869, 870 (N.C. Ct. App. 1970).
Negotiating With Your Landlord
Negotiating a lease termination with your landlord is often the most effective path toward reaching a favorable outcome. For one thing, most landlords would prefer to avoid an extended period of vacancy in his or her property. For another, most landlords are all about paperwork and documentation, and if you have an agreement from your landlord that he or she agrees to terminate your lease early, it can go a long way toward protecting you against possible legal litigation.
Note that we say most landlords, not all. Bear in mind that some landlords may see your early termination as a potential money-making opportunity for them by virtue of renegotiating the terms of your lease. In many of these cases, landlords will try to convince tenants that they can terminate their existing lease, sign a new lease that is slightly more expensive than the old one, and then the landlord gets to enjoy the benefits of a little cash before you move out.
Unless you absolutely have to relocate as soon as possible and there’s no possibility of you being able to secure another lease on a key date until the early termination; if your landlord offers you this deal you should reject it, as it’s probably not in your best interests and is a way for your landlord to squeeze a little extra money from you .
Another strategy you might use when negotiating to terminate your lease is to offer to broker a new tenant for your landlord, in exchange for your lease being terminated. This could be a preferred strategy if your lease includes an obligation to pay the landlord’s costs if he or she gets a new tenant because your company is leaving early (typically these costs include advertising, the cost of placing a notice on the property, etc.).
If your lease contains this clause, and especially if you’ve only paid a few months of rent, many landlords may be willing to take you up on your offer to find a new tenant in exchange for a lease termination.
This can be a valuable strategy if your departure is not imminent (if you still have several months left on your commitment to your lease), but you’re starting to notice some problems. If you see that the property is not receiving the maintenance it needs, for example, your position is a good one, because you could offer to find a tenant who can pay for the repairs and maintenance that your landlord is neglecting.
Every negotiation is unique, so it’s important to consider the full context of the situation along with your related needs before heading into any discussion with your landlord.
Legal Help For Breaking A Lease
Unless you are breaking a lease for active duty military or other qualifying situations under the Servicemembers Civil Relief Act (SCRA), ordinarily there is nothing wrong with a landlord and tenant negotiating an early termination of a lease. Assuming both sides agree to shorten a tenancy, the next step is to reduce any such agreement to writing, memorializing what should occur when a lease is terminated early. But when are circumstances so bad that you should not be dealing with the landlord directly, and instead are better off seeking the services of a legal professional?
Some situations that would warrant getting qualified legal advice before discussing an early termination of a lease include:
- Existence of strong positive or negative feelings towards your landlord: A landlord or tenant who engages in what can only be described as "fits of anger" or "emotional outbursts" is not a situation that will likely end well for the person without counsel at their side. It is important, regardless of the circumstance, to talk in a calm and collected manner. Having a lawyer who understands your position will be essential to working your goals into any lease modification agreement. The perception that counsel will "Sue!" at the drop of a hat creates extreme anxiety in a negotiator that will create a barrier to discussion. This is unnecessary if expectations are clearly defined early on.
- Terminating a lease for cause: If you are the tenant and find grounds for terminating a lease early and your landlord vehemently denies the right to terminate, then it is time for an attorney. There are many reasons for terminating a lease early that could lead to an adversarial proceeding between the parties in front of a third party. You may want to get an attorney involved before sending the lease termination notice to your landlord to understand what to expect should the landlord decide to fight you.
- Substantial economic consideration: Although this is an obvious point, it does bear mention. When a tenant pays $1,000 monthly in rent, negotiating a lease termination will save landlord and tenant money vs. the cost of an eviction hearing. When a tenant pays $30,000 per month in rent, letting a tenant break the lease early saves money, but it is critical that all issues be addressed. For this reason, knowing your rights and obligations under an applicable lease termination statute is paramount to avoid losing substantial money.
- When you are in a protected group: Those protected against discrimination based on age, sex, religion, nationality, or known disability are automatically protected. If you are in a protected group, your landlord cannot discriminate against you for your status as a member of that group, even if your landlord does not know you fall in a protected group. A landlord who terminates your lease based on any one of the protected categories is acting illegally. Keep in mind that some associations have rules that limit the ability to rent a unit, or prohibit short-term rentals. If a tenant violates such association rules, then there could be consequences. You may want an attorney who understands the interplay between the lease and the homeowner’s association rules.
If you are faced with the possibility of legal action, whether it may involve terminating your lease early or not, it is crucial that you obtain competent legal advice. This is especially true when discussing potential disputes with your landlord or landlord’s representative that could later land you in court.
Options For Tenant If No Longer Able To Pay Rent
Even if you desire to get out of your subject premises as soon as possible, you should consider subletting the property (which is sometimes also called "re-letting") or finding a replacement tenant. North Carolina landlords are usually required to consider a sublet; however, if a tenant is evicted, often no further notice is required and even if a landlord has a duty to accept a replacement tenant, it is usually for good cause. Subletting your leased property can partly ease financial burden, but the alternative is that you remain responsible for the full terms of the lease.
If your landlord is amenable, they may allow for a subtenant. A sublet is an agreement between you (the lease tenant) and a third party (the subtenant) for the lease of the property, but it does not release you from the full terms of the original lease and the subtenant is not liable to your landlord under the lease – the subtenant has a contract with you only. In North Carolina, if a landlord is unwilling to allow a subtenant – for example, when a landlord believes that doing so would violate the lease between the landlord and tenant – you cannot usually assign or sublet the property without permission. An assignment means that the original tenant relinquishes all rights to the property and the lease is entirely transferred to the subtenant. If a sublease is permitted by your landlord, it is recommended that the prospective subtenant be the same age group for purposes of background checks and criminal history.
Your lease may contain a clause stating that you must notify the landlord in the case of a sublet. That would mean sending a letter to the landlord providing his or her contact information, the new proposed term of the lease, and the monthly rent. Your landlord then has about 10 to 20 days to respond to your requested sublet. If accepted, the landlord usually has the right to approve the sublet tenant; if the landlord does not approve the tenant, then you have the opportunity to propose a new tenant.
Further Resources For North Carolina Tenants
In addition to the North Carolina Bar Associations’ section on tenant law, a number of different housing or tenant rights groups exist to offer additional assistance. One of the largest housing alloyed groups, Housing Alliance has compiled a list of resources for North Carolina tenants and landlords. As stated on the page "[the] Housing Alliance provides its constituents housing information and technical assistance to communities, organizations, and individuals throughout the state of North Carolina. The Housing Alliance shall monitor, coordinate, and expand activities by and between its members, partners, and relevant organizations to contribute to strategic impact and efforts to ensure safe and healthy homes for all."
The North Carolina Justice Center also provides information regarding their Nonprofit Housing Counsel. "The NC Justice Center is the nonprofit organization housing 18 different nonprofit legal , policy, and budget programs. The center serves as an umbrella organization for the individual affiliate programs. Though the programs focus on different areas of concern, they are all committed to addressing the needs of low-income North Carolinians."
The North Carolina Housing Financial Assistance Program provides funds to address a wide variety of housing needs. "The Housing Finance Division, which is the State’s primary issuer of multi-family housing bonds and administrator of a number of diversified loan programs, oversees the North Carolina Housing Finance Agency’s Consolidated Affordable Housing Program."
As a final resource, the North Carolina government has maintained a housing website that includes a variety of resources for tenants and landlords. This may be one of the best places to start because in addition to a list of other websites, also providing locations to local government branches.
