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If You Think A Lease Takeover Is Your Only Option, You Should Read This

6 reasons why letting someone take over your lease might not be the best way to get out of your contract early (number 5 could really cost you)

· Residential Lease

Stop pretending you are happy to be doing a lease takeover

No one wants this. It is a hassle. But there is a lot of money at stake and you cannot afford to do nothing. We totally get that. Food, shelter and water—of these, we spend the most, by far, on where we live.

But just remember that when you are thinking about doing a lease takeover, it is not because that is your preference: it is because you feel like you have to, like you have no other option, because you might not know of any other way. And that is a scary basis for decision-making when that amount of money is at stake.

The purpose of this article is two-fold:

  1. Explain 6 important things you need to know before you do a lease takeover.
  2. Tell you about a free tool that will actually recommend which lease takeover alternative is right for you.

And the bottom line on top here is that lease takeovers are not the best option when you need to get out of your lease agreement early. There are faster, cheaper, safer ways, and if you want a recommended alternative to a lease takeover, you can use this tool we built to get a free recommendation specific to your circumstances.

lease takeover alternative

But if you have the time right now, you can read these 6 facts that explain why letting someone take over your lease might not be the best way to get out of your contract early.

1. Who else wants someone to take over their lease?

About 36.9% of all US housing units are occupied by renters (source: US Census Bureau), and in any given month, there are more than 10,000 tenants advertising that they need to get out of their lease early:

  • "Looking for a subleaser to take over my lease!"
  • "Take Over Lease"
  • "Sublet my apartment"
  • "Need to Transfer Lease...New Job out of Town!"
  • "Lease take over ASAP"
  • "2 Bedroom, 2 Bath, take over our lease!"
  • "Long term lease takeover"
  • "Lease takeover, great, quiet apartment close to campus"
  • "LEASE TAKEOVER!! FIRST MONTH (june) Free!!!"

The majority of these people need to get out of residential leases, for apartments, houses, condos, or sometimes a single room.

Point # 1: the first thing you should know is that, if you are one of those 10,000 tenants who needs to get out of your lease early, then you are obviously not alone. Many people are facing the same problem at this very moment.

assignment vs sublet

2. The (elusive) lease takeover: how most people try to solve this problem

Larry: "Hey, Chuck. This is my wife, Sherry. She is great and all, but she and I are no longer a good fit. So I was wondering, would you be willing to takeover my marriage to Sherry so that I could get out early?"

Chuck: "Sounds great. Where do I sign?"

Now, there is a reason why you might have been a little surprised by Chuck's response. If you, for example, were in Chuck's shoes, you might be begin your response more cautiously. You might ask Larry a few more questions.

What do you mean you "are no longer a good fit?" And what makes you think that Sherry and I would be any better of a fit? I mean, you are asking me to takeover your agreement with Sherry sight unseen, and frankly, I am skeptical that I would even want an agreement that you yourself do not want.

Yeah, this illustrates rather well, I think, all of the hurdles you must figure out how to overcome when you are trying to find someone who wants to take over your lease.

Point # 2: you have to explain, convincingly, why they want a contract that you yourself do not want. And while this is obviously a tall hill to climb, it is not impossible.

3. Are lease takeovers expensive? Honestly, yes

You no longer want to be in your lease, and that makes your lease an "unwanted lease." Chances are that you are not going to simply find someone who wants your unwanted lease. You have to create that person, and the way you create that person is by offering an attractive incentive.

The thing that makes this exchange less "impossible" is offering a compelling economic incentive to whomever takes over your lease. You can even see this right away in some of the ad headlines sampled above: "LEASE TAKEOVER!! FIRST MONTH (june) Free!!!" It is as if Larry instead said to Chuck, "how much would I have to pay you to take over this agreement with Sherry?" That is how lease takeovers are really accomplished.

lease takeover example

For example, Sarah and Erik, one couple in Colorado, signed a 12-month lease for a condo when they decided to sell their house. Their plan was to move out of their house and into the condo, which, since they had two small children, made it easier to get their house in prime showing condition. So they moved out and settled into their new condo. However, five months later, their house had still not sold, and the housing market had shifted in a way that made it seem less likely that their house was going to sell anytime soon. So they were stuck making both a mortgage payment and rental payment every month. They needed to get out of their lease early.

So they went down this path like so many people do, and they began advertising that they needed someone to take over their condo lease. They must have answered twenty or thirty inquiries, most of them tire-kickers, and for about three months, it did not seem to be going anywhere--so many man-hours wasted, trying to convince Chuck to take over Larry's agreement with Sherry.

Then they got serious about making it happen, and they modified their offer to include an expensive (but necessary) incentive for anyone who would take over their lease: about $2,500. Ouch! But it worked. They were able to find someone who ended up taking over their lease.

Point # 3: if you want someone to seriously consider taking over your lease, you are probably going to have to offer an expensive (and therefore attractive) economic incentive, usually in either pre-paid rent or cash upon signing.

Offer Still Going

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4. But will a lease takeover actually solve your problem?

Much depends on how you define your "problem." If your problem is merely that you want someone else to pay the rent for the remainder of your lease term, then yes, a lease takeover might solve your problem. But if you are like most people, then you are probably also hoping that this person who takes over your lease will fully excuse you from further liability--and that is just not how it usually works.

Let me explain by citing a clause from an actual lease that Matt, a tenant in Oregon, wanted to get out of.

lease takeover liability

In particular, pay attention to these two lines:

  • "It is understood by Tenant that execution of re-lease agreement does not release Tenant from Tenant’s obligations under this Lease."
  • "Even if a third party executes the re-lease agreement, Tenant shall remain liable for all sums due under this Lease in the event of a default by such third party."

So going back to the earlier example of Sarah and Erik in Colorado, who were able to find someone to take over their lease, this is what these two lines would mean for them in terms of ongoing liability: if the person who agreed to (1) pay their rent for the remainder of their lease and (2) not damage anything fails to comply with either 1 or 2, then Sarah and Erik would be responsible to pay the landlord. Ouch! But this time, it is a different kind of ouch...more like a gotcha!

Most leases include similar language. This means that if you define your problem as one part, "I want someone to pay my rent for the remainder of my term," and one part, "and I do not want to be responsible if the person who takes over my lease fails to pay rent or ends up damaging the property," then a lease takeover is not likely to solve your problem--part of the problem, yes, but all of the problem, no.

Point # 4: you probably do not want to be responsible at the end of your lease for damage caused by someone else; nor do you want to be responsible for unpaid rent that the person who agreed to takeover your lease was supposed to pay; but unfortunately, a lease takeover usually does not protect you from either danger.

5. Exactly how scary is your liability with a lease takeover?

Look, I know this might strike you as redundant at this point since we are still talking about lease takeover liability. But it is probably an important enough point to take a moment to try to quantify. Because if a lease takeover just sets you up for a surprise bill from your landlord 12 months down the road, because the person who took over your lease turned out to be derelict, then it would be way better to spend a little more time now, before you execute the lease takeover, to try to understand what kind of liability you have to plan for.

Now, the first thing we should note is that "scary," of course, is a relative term. And if the "scare" is economic, then how much money you could afford to spend on a surprise bill matters. If you can afford to foot the bill for, say, $10,000, in surprise property damage and unpaid rent, 12 months from now, then maybe this point is not actually that scary for you. But that is not true of most people who advertise lease takeover offers.

Most people who advertise lease takeover offers would rather endure the hassle of trying to find someone to take of their lease than the expense of just writing a check to the landlord for their remaining obligations under the lease. And this, of course, has to do with discretionary income. For the purposes of this explanation, I am going to assume that you are not a trust-fund baby and thus wish to avoid as much expense as possible.

In terms of unexpected, future bills for which you could be responsible, the best method for surveying the possible hazards of a lease takeover is to simply categorize by risk type. And to keep this exercise brief, we will ignore many otherwise legitimate risks so that we can focus a just a few that are more common and costly. We can call these categories "accidents," "negligence," and "people claims."


(And just so you know, I made up each of these category titles based on how I would describe what types of damages they might include).

Take accidents first.

Accidents might include small damages like a window broken by an errant baseball or a hole in the sheet rock poked by a swinging door knob. These are accidents, because they are common types of property damage that do not necessarily result from a person just being dumb or, as a lawyer might say, negligent. Accidents are common and costly in aggregate, and you should keep them in mind when you sign a lease takeover, because in most cases, you are still technically responsible for paying to fix them.

Now we can look at negligence.

Negligence might include the HVAC system seizing because the person who took over your lease never changed the air filter on your return vent. Negligence might also include any damage caused during a wild party. Or it might just be what happens when you shove too many tampons into the wrong hole.

lease takeover damage

Amanda from California sublet her condo, and in just the first few days, her new tenants flushed one too many feminine pads down the toilet. The toilet clogged, overflowed, and leaked into the hallway and into her neighbor's condo below, wrecking everyone's of the wood floors—the diagram above shows how it happened. Her total bill for damages stemming from just this one incident was $10,000. Amanda said:

"$10,000 won't kill me. We can afford it. I don’t like it. I hate it. It's ridiculous how exposed I feel. This could happen to anyone, that people decide to trash someone else’s house. And to someone else $10,000 in damages, those people can get really screwed."

The water leak was actually the second such incident for Amanda in the last 12 months. The first was when the people to whom she sublet crashed their car into the garage wall, which damaged both her wall and her neighbor's (damage pictured below).

lease takeover complaint

When asked about how these incidents have changed her view on subletting, she said: "I can't help but assume they will trash my home and ruin everything. The loss of faith is worst than my monetary damage."

(And that last sentence suggests that she is one of those people who can afford to write checks for this type of damage. Remember, most people cannot).

Lastly, we can look at people claims.

People claims is sort of a catch-all category for any claim initiated by someone other than you. Unlike a claim for accidents or negligence, a people claim is not a claim by you against the person who takes over your lease; a people claim is against you, by either the person who takes over your lease or someone else entirely.

Few renters of apartments or houses consider the fact that they could have a liability lawsuit on their hands when someone is injured on or in the property they are renting. What kinds of injuries, you might ask? Nowadays, any number of things could potentially prompt someone to sue you for damages, from accidentally scalding someone with hot coffee, to leaving a pair of shoes on your stairwell that trips a guest on her way downstairs. Claims are filed annually for everything from serving alcohol to someone who later causes a car accident to severe dog bites.

Here are a few statistics to consider regarding renters liability claims that might happen in your apartment or rental home:

  • The average annual cost of dog-bite claims is $29,396
  • On average, the cost of slip-and-fall accidents exceeds $12,000
  • The cost of legal defense in a slip-and-fall lawsuit is $50,000

As you can see, costs associated with seemingly minor accidents around apartments and rental homes can come with a very high price tag.

Dog bites, in fact, account for about a third of home liability claims. If you (or the person taking over your lease) own a dog, regardless of whether or not a pet is permitted in the lease, you can be held liable for medical and punitive costs if that dog happens to bite someone. If the dog destroys doors, screens and other property belonging to the landlord, you will typically be held liable for that damage as well.

lease takeover safe

What if someone slips and falls and is injured in your apartment? Nationwide, slip-and-fall injuries happen to approximately 25,000 people every day. While many of these falls cause only minor injuries, they have the potential to require extensive medical treatment if they result in trauma to the head, neck or spine. If you can be found in any way accountable, you may be liable for these medical costs.

Finally, you can be held liable for any property damage in the property that goes beyond normal wear and tear. This means that if you or your sub-tenant accidentally cause a fire or cause water damage, you will be responsible for paying all associated repair and replacement costs. This includes covering property damage in neighboring units if the damage spreads beyond your rental home.

Many tenants believe that their landlord’s insurance will cover the costs of liability claims and lawsuits, but this is not always the case. Landlords are only held responsible if the injury or property damage resulted from their failure to properly maintain their property. For example, if a guest falls on your wet kitchen floor, you may be held liable, whereas if someone falls down the stairs because of a loose foot board that your landlord has failed to repair, your landlord will most likely be held responsible. While those who live in apartments are generally not responsible for keeping outdoor walkways clean and clear, renters in single-family dwellings often are.

And here is the most important part of liability that you need to understand before you let someone take over your lease. In normal circumstances, you would be the tenant, and you would probably have renter's insurance to protect in case of any of these potentially expensive people claims. However, most renter's insurance policies do not protect you once you sub-lease. So it is the worst kind of double-whammy: you remain liable to the landlord for accidents and negligence, and you remain liable for people claims, even when the cause is your sub-tenant's fault, and most insurance policies will not cover any of these claims.

Point # 5: not only is your liability massive when you trust a stranger to not damage your property, but most renter's insurance policies will deny any claim you make once you sublease, so you remain fully on the hook for the life of your original lease even after someone "takes over your lease."

6. Will your landlord even allow a lease takeover?

Most leases say something about your right as a tenant to let someone take over your lease. They usually have headings in your lease agreement like "Assignments" or "Subletting." And there are really only two positions you will find most lease take on the question of subletting:

  1. Either lease takeovers are prohibited outright.
  2. Or they are prohibited unless/until the landlord gives you permission to let someone take over your lease.
Obviously, if your lease is type number one, then you may not even have option to do a lease takeover. But if your lease is type number two, you need to understand what is really happening when your landlord gives you "permission" to look for a sub-tenant.

There is an job ad I like that does a really good job making fun of things people do for free (even things that are necessary, like driving your kids around). It is a job ad by a school looking for bus drivers:

lease takeover cost

It is a funny ad. But its message is important. It is worth pausing to reflect when you encounter a situation in which one group of people are paid to do a job that others do for free. And when you do the legwork of finding your landlord's next tenant, you are doing that job for free, despite the fact that leasing agents get paid to do this. How much do leasing agents get paid, exactly? It varies, but a standard commission you would commonly find for procuring a tenant who signs a 12-month lease would be one month's rent. So on a 12-month lease, a landlord is willing to allocate one of those twelve rent payments to whomever can find him a new tenant--unless you are his current tenant, in which case he will pay you nothing. This does not really make sense, but it how this typically works, nonetheless.

And in addition to not paying you for the work you are essentially doing for him, your landlord will probably give you a hard time all long the way. When you first announce to him that you would like to find someone to take over your lease, he will probably give you a hard time. When you ask him to participate in the selection process so that you are not doing work to find candidates he would not consider to be qualified, he will probably be reluctant to be so transparent by just telling you exactly what kind of sub-tenant he would accept; so you are left rolling the dice with random Craiglist ads. When you finally bring someone to him for consideration, he will you through this convoluted process of "vetting" this candidate before he agrees to the sublease: background checks, financial checks, reference checks, etc. And your landlord might even charge you a fee for this "extra work" you have caused him.

It is common for landlords to require a 60-day notice from you, that you would like to find someone to take over your lease, before you can bring him any candidates to consider. This means that you are on the hook for two more month's rent that you might not even derive any benefit, if you have already moved out of the property and it is just sitting vacant. It is also common for a landlord to require you to forfeit your security deposit in exchange for his agreement to let you sublease. So you the 60-day delay amounts to an extra 17% of rent payments you might have to make before you go, and a forfeited security deposit amounts to an extra 8%. It is like you are paying a 25% "restocking fee" just to get your landlord to permit you to do a lease takeover.

Point # 6: when you do a lease takeover, you are really playing the role of an uncompensated and unappreciated leasing agent, whom your landlord will also continue to hold personally liable for any subsequent damages that occur; and it is generally a bad idea to do valuable work for someone who refuses to pay you and who does not appreciate the work you have done.

Conclusion: "Okay, what hell else is there besides a lease takeover?"

As I said in the top of this article...

...and can now reiterate with more meaning, now that you have read the 6 reasons lease takeovers are not great... takeovers are not the best option when you need to get out of your lease agreement early. There are faster, cheaper, and safer ways, and if you want to use the tool we built to give you a free recommendation specific to your situation, on which lease takeover alternative is right for you, then click the button below to get started.

Yes, you can use our tool for free. Why would we do that, you might ask? Because we like getting people out of leases, and we are damn good at it.

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