When someone leases their apartment to you, your lease obligations are typically the rent and utility bills. This is a great option for people looking for an affordable lease and a hassle-free move.
On the other hand, lease takeovers appear to be a feasible strategy to get out of a lease arrangement without paying the penalty. Lease takeovers are a great way to transition into a new living space, but finding a suitable renter to take over your lease may be difficult.
What is a Lease Takeover for an Apartment?
A lease takeover or a lease assignment is a process where you can take over someone else‘s lease with the consent of the property manager or landlord. This means that you will be responsible for paying the rent, and the current tenant will no longer be liable for it.
The current tenant has to agree to this, and they need to sign a lease transfer form that states they are transferring their rights and obligations under their original lease agreement with the landlord to someone else, including the security deposit. Under this circumstance, they will no longer be the official tenant.
Once the new tenant signs the document, the prior tenancy will come to an end, and the “old tenant” will no longer be obligated to pay rent.
Breaking a lease often means you incur penalties, but a lease takeover is a way around those penalties. With that said, there are other instances where you do not have to incur the penalties. For example, if your landlord fails to maintain a living environment, you may be eligible to terminate your lease. Similarly, if you are on an active duty military assignment and you get deployed or given any other military assignment during the term of your lease, you can break your lease with no repercussions. Learn more ways on how to break a lease without penalty here.
Is a Lease Takeover the Same as Subletting?
A lease takeover or lease transfer is not the same as subletting.
Subletting is renting out your space to another person, although they are not registered as the tenant responsible for the unit on the apartment lease agreement. The person renting your space becomes a new tenant and pays you a percentage of the rent each month, but they are not an “official tenant.” This can be beneficial because they cover part of the rent payments while you are still responsible for making sure that all bills are paid.
With that said, if the new tenant fails to pay rent and you fail to cover their part, your name is on the dotted line. This means your credit score can suffer, but not the sublettor’s because they do not officially take over your lease.
Is a Lease Takeover a Good Idea?
It is a good idea in certain scenarios. For instance, an apartment lease takeover is a way for renters to avoid being penalized when needing to move to a new location, such as in the case of a job change.
When the original tenant moves out, they will find someone else to take over their existing lease, who then pays the same amount of rent to live there as the original tenant. The new tenant takes over the responsibility for any damages or bills incurred, too
How Does a Lease Takeover Work?
The rental agreement is one of those documents that can be quite confusing for some people. In order to avoid any confusion or mistakes, you should take your time and be careful when reviewing this type of document. Learn how to read an apartment lease here.
Before you step in and take over, or let someone else take over the remaining rent, go over the lease agreement in great detail.
That said, here is how to go about a lease takeover:
Understand Your Lease Terms
If you are having your lease taken over, that means you will move-out of your current apartment before the lease is finished. Learn more on how to move-out of an apartment here. With that said, before you get too excited about moving to a new place, make sure you review your lease terms to establish that it allows for a lease takeover.
Many apartment leases have strict stipulations that prevent this; meaning that if you need to move out early, you may have to pay lease break penalties regardless of a lease takeover situation. You should also double-check with your state’s laws. Even if the landlord does not agree, some states allow for a lease takeover. So, in addition to verifying your lease agreement, your state or local laws should be the next best thing you can look at.
Read on to learn more about what happens next if the apartment enables lease takeovers/lease transfers. Some laws stipulate that if you engage or initiate a lease takeover, finding you to forfeit the security deposit or that you must give 60 days’ notice before moving out. Learn more about Michigan Security Deposit Law here.
Consult with Your Landlord
Lease takeovers are a great way to end your lease prematurely without incurring a penalty cost. However, before you jump into anything, you need to contact the landlord and get their approval.
Working closely with the landlord will make the process go more smoothly.This is because the landlord may be hesitant to let someone else take over your lease, especially if you have been a good renter. That said, you must persuade the landlord that you will be able to find a suitable tenant who will not cause any problems.
Once the landlord or the property manager understands your motives, acquire their approval in writing. Never proceed with a verbal agreement as this could be detrimental to your lease arrangement. Written consent of the landlord’s approval will help convince a prospective tenant that you have the landlord’s support.
Remember: If you want to take over someone else’s lease, the first thing you should do is make sure the landlord allows for it and has a written agreement signed. This will assist you in avoiding any issues that may emerge as a result of taking over a lease down the road.
Find the New Tenant
After the landlord has given you written clearance, the next step is to find the right tenant and vet them. Landlords may be more willing to let you continue forward with your lease takeover if you can locate someone as excellent as you, or even better.
Remember to mention that it is a lease takeover while advertising your apartment. When looking for someone to take your place, leaving out certain details could be risky. Some candidates will jump right in if it is a lease takeover because it is more convenient than hunting for an apartment from scratch, especially with the limited number of vacancies these days.
Once you have narrowed down a few candidates, double-check with the landlord about the vetting process to ensure you are both on the same page. For example, most landlords will want to take care of the credit and background checks for the new prospective tenant because of the potential risk when renting an apartment. In other cases, some landlords may prefer that you shoulder most of the responsibility for evaluating the prospect in accordance with their criteria.
Formal Lease Takeover Agreement
Once the current tenant finds someone to take over the lease, a lease takeover agreement will need to be prepared. The current tenant, the new tenant/future tenant, and the landlord will all need to sign it.
This agreement will state that the current tenant is transferring the tenant responsibilities to the new tenant/replacement tenant, who will take over the lease and that both the landlord and the new renter are aware of the terms.
Once signed, the original renter will no longer be obligated or responsible for paying rent; instead, the new tenant will be.
How to Take Over Someone’s Lease
When you take over someone else’s lease, there are a number of things that you need to be aware of. At the very least, you need to know how much the rent is and what the current balance on the security deposit is. You also need to know if pets are allowed in the building and about the apartment pet policy. Learn how to find apartments that allow dogs here.
That said, here are three main things you should do to prepare for taking over a lease agreement:
Prepare for a Credit Check
Credit checks are standard in the rental market, so expect a full credit history and background check if you are looking to rent, even if it is a lease takeover. Prepare all financial documents, including your credit report, bank statements, and any other documentation that shows you have the financial means to pay the rent.
Most landlords will put you through the same rental application as everyone else, so do not expect any surprises. Learn more about what credit score do you need to rent an apartment here.
Inquire About Conditions
Before signing the lease takeover/lease assignment form, ask the landlord about the condition of the unit. A landlord may stipulate that he will not participate in the apartment’s repairs, or may request additional payments in return. You must be aware of such matters and agree on everything that affects your tenancy. The present tenant may be prepared to undertake the cleaning and possibly repainting. You have the upper hand until you sign the agreement, so take advantage of it.
If you do not know how to go about the new lease, consider visiting a law firm to hire their services. You would be better off spending a few bucks on a new lease through an attorney than risk a potential penalty for future lease violations because you did not grasp the provisions.
Do Not Go Behind the Landlord’s Back
The greatest mistake you can make is to take over the lease without the landlord’s permission. Even if the departing tenant assures you that the landlord is in favor of the takeover, do not agree to go ahead unless you have received written permission from the landlord. To be safe, meet with the landlord in-person to confirm the same.
Think about this, if you take over the apartment without permission, how do you expect to request apartment maintenance or any other services from the landlord?
The lease agreement is one of those documents that can be quite confusing for some people. In order to avoid any confusion or mistakes, you should take your time and read the lease carefully when reviewing it. That said, the lease takeover can be a pleasant or stressful procedure, depending on how you go about the situation.