Canceling lease renewal long before it begins

This is an NYC midtown studio for $2350 (not stabilized, just a solid deal because it’s and old 5th floor walk up).

In mid-June, I signed a renewal for Sept 1 for a year. Days later, I got an unexpected offer in another city. I don’t want the hassle of subleasing, I want out of the lease with minimal loss of time and expense.

Questions:

1) If I tell the landlord I want out, I’m leaving them in the same position they’d be in if I simply hadn’t renewed. So shouldn’t they just let me off the hook, or charge a nominal convenience fee?

2) Say they play hardball and tell me I’m bound to this lease. My thinking is, tell them I plan to breach and they’re welcome to sue me. I believe they’re obligated to mitigate damages by making a reasonable effort to find a new tenant. If true, their obtainable damages are a few grand at best, and that’s too small to sue over. Thoughts?

3) Lastly, the gas has been off in the building for the last month, with no ability to cook or use the laundry room because of it. Appears to be an issue with the building that ConEd is investigating, and no compensation offered to tenants. If they try to hardball me on the lease, I’m wondering if this helps my case at all (ie threaten to seek damages for this gas shut off if they come after me).

Again just looking for any thoughts on getting out of this with minimal waste of money and time. Thanks!

 

Thanks for the comment.

If you don’t mind, let’s assume the lease doesn’t say anything helpful to me. I say this because I’ve seen many residential leases and the *friendliest* term I’ve ever seen allows the tenant to terminate the lease early with a 3-month payment.  To me that’s very unlikely to be my best option.

 

If there is nothing in the lease, then not much you can do except ask the landlord. Some will understand and it won't be a big deal, some will want you to sublet of pay. People on the Internet can't help you here.

 
Controversial

I’m sorry to say this guys but I see a lot of “why don’t people respect RE” threads on WSO and this is an example of why. It’s like y’all just don’t want to think sometimes.

So far responses have basically been “buh it’s a contract, it will tell you your options.”. No guys . . absolutely, 100% no.  Not how it works.

What y’all are basically telling me is that if the lease says I have to pay 3 months rent to get out of this, then that’s what I do? Just ignore the practical reality that nobody’s going to actually go to court for a few grand? 

That can’t be the right answer. I’m quite certain that I, a RE noob, will get a much better result than the pros in this forum are saying I can get.

Will report back. Maybe I’m a RE pro after all.

 
Most Helpful

Yes, there is a duty to mitigate damages, but what that standard is for the court to decide. Did he do enough by listing it in the newspaper once and showing it to his cousin or does he have to have open houses and list it as a premium listing on Streeteasy? 

Is tenant court in NYC favorable to tenants? Yes. Are you going to spend a whole lot of time and money fighting if you take the asshole approach with your landlord and he decides to take it right back? Probably. Can you do that from your new great city, with your new great job? You decide how much you are willing to fly back and forth, hire lawyers/or rep yourself. What is that worth to you?

​​​There is no prescribed way for this to turn out. It is literally a negotiation because your lease is silent, which means it is going to hinge on you. Play stupid games, win stupid prizes. 

Side note: you asked a bunch of CRE people about a residential lease. Most of us are actual investors, not property managers or single landlords. When you manage 30k apartments, you have different rules than when you manage 3. So go fuck yourself with the comments about RE being lesser than. 

 

Just needed to know about duty to mitigate, so thanks for that first sentence.

As for the rest of it . . OK.  I’ve seen plenty of resi posts here before, and especially recall a thread about how difficult a new NYC law was going to be for landlords here. That thread is exactly what came to mind when I asked this question.

Sorry if my feedback about RE generally (not personal to you or any individual) wasn’t what you wanted to hear. But it’s accurate AF so do what you want with it. And frankly it *does* apply to you if you actually think I’m going to realistically end up in court over this.

 

I’m the moron who’s going to get out of this at less than <$1000 cost with a simple, common sense negotiation that doesn’t involve any of the needless factors you guys think are important.

I included the amount of the rent (ie small) for a reason . . you get you guys to recognize that a lot of what normally matters, may not matter here.  But some people just can’t get outside the box I guess.

 

If you don't get out of this for anything less than $0, you are indeed a moron. Just talk to your landlord, explain the situation, he won't give a flying fuck cuz he'll backfill you in days in this rental market because your rent is clearly low af and below market. And if he starts flexing, start throwing the utility bs in his face just to let him know you'll show up to play ball. Worst case scenario you can just sublet it on leasebreak or something. I've done this before. This is not complicated. You're welcome. 

 

Lol how are you really blaming us, you signed a contract with no termination rights or ability for you to point to a section that could protect you. Talk about thinking things through. If it's not in the contract which I'm surprised by tell the landlord sooner rather than later.

You want to insult us, figure it out on your own. If you have to pay or sublet you learned a cheap lesson in nyc and with your attitude towards people trying to help you I hope it happens now.

 

You probably are not getting the response you hoped for because it simply is not in anyones interest. Discussing this adds little value to experienced CRE professionals. 

That said, the best option is to talk to the landlord directly, they will probably just keep your deposit. Doctors are notoriously bad at the human aspect of negotiation, but you seem friendly enough. If you deal with a property management co and would like to contact the owner directly, DM me the address, happy top help. 

 
Dr. Rahma Dikhinmahas

I'm sorry to say this guys but I see a lot of "why don't people respect RE" threads on WSO and this is an example of why. It's like y'all just don't want to think sometimes.

So far responses have basically been "buh it's a contract, it will tell you your options.". No guys . . absolutely, 100% no.  Not how it works.

What y'all are basically telling me is that if the lease says I have to pay 3 months rent to get out of this, then that's what I do? Just ignore the practical reality that nobody's going to actually go to court for a few grand? 

That can't be the right answer. I'm quite certain that I, a RE noob, will get a much better result than the pros in this forum are saying I can get.

Will report back. Maybe I'm a RE pro after all.

Holy shit he went there...absolute madman 

 

If it’s not already in the lease agreement, I would just explain your situation to the landlord.

I think it’s highly unlikely he makes you pay the next 12 months and will likely want a breakage fee instead (maybe ~$5,000?).

Look at it from his perspective. He’ll get a free $5k+ in his pocket and given how competitive NYC apartments are, will probably find a new tenant in 24 hours.

 

Thank you for actually taking a practical approach.

My guess is, I’ll get a proposal like what you said.  Large-ish break fee, few months.

I don’t think I’ll accept that because my suspicion (subject to anyone on this forum correcting me on this) is that I don’t even he can even get that much from me.  I suspect that if he tried to collect from me in court, he’d only be entitled to the damages he wasn’t able to mitigate. Which is around $0.  So my current thinking is I ask to be let off the hook for free . . and when he predictably says “bah we had a deal” I say fine, let me out for a few hundred bucks.  

 

Associate 2 in PE - Other

If it's not already in the lease agreement, I would just explain your situation to the landlord.

I think it's highly unlikely he makes you pay the next 12 months and will likely want a breakage fee instead (maybe ~$5,000?).

Look at it from his perspective. He'll get a free $5k+ in his pocket and given how competitive NYC apartments are, will probably find a new tenant in 24 hours.

This.

Unless it’s some landlord who’s only been at this for a few years, chances are they’ve been in this position before.

My $0.02: propose some type of compensation in your conversation - before they ask. You’re already creating an inconvenience for them (albeit minor) and you being proactive about compensating them would be viewed as an act of good faith.

Time is of the essence, so I would second others here and recommend that you have the conversation with them ASAP. Assuming you and he/she don’t already have a contentious relationship, I would expect a breakage fee or owing the equivalent of a few months rent.

 

Bring up the situation to him as soon as possible - you may get out without having to even pay 1 month rent

 

My opinion as well - the sooner the better for sure. It's probably a situation that's arisen before for him, and if you've been a good tenant for however long you've lived there and you've just signed the lease a few weeks ago, your landlord may be a bro and say not to worry about it. More likely he'll charge $XK to break it but we'll see

 

Can't you just negotiate with him to find him a new tenant and pay eventual contract fees?

Neither a New Yorker nor in RE so I might be absolutely dumb in my suggestion but sounds like the most human thing to do

 

Not a dumb idea at all.  Just slightly incomplete because my issue is, this lease doesn’t even begin til Sept 1.  The landlord would normally be showing the place in late July or August.  So in my view, it’s no skin off his back and he should just let me out.  

Said a bit differently: he wanted me to decide on renewal by June 30th.  Now I’m telling him July 11th, only 11 days later, that I want out. I don’t see that he could’ve lost very much in those 11 days. 

 

LL's position now:

They have a renewal lined up which didn't require showings, broker fees, or money spent on fixing up the place a bit for the next tenant (new paint, etc)

If you break the lease - that clearly puts them in a worse position - at least from a hassle standpoint if not economic as wellI.

I would not expect they will just let you out for nothing just bc you only signed 11 days ago.

You could be pleasantly surprised but I'd assume you have to offer them something.

If you really want to play hardball you need to raise the gas issue separately and say you aren't going to pay your current month rent unless/until they offer you a rent break for the gas being out. You can even play it harder saying that if the landlord can’t provide suitable compensation that you’ll break your current lease (and the renewal) early due to the landlord breaching it’s obligations. Might need a NYC real estate lawyer to look into how this gets phrased - Bc thats the kind of thing you'll have to send in writing.

Then you'd have some negotiating leverage for a horse trade. But for all intents and purposes it's 2 separate negotiations.

Maybe try to get low hanging fruit if the LL isn’t very smart/aggressive and ask to be let out for nothing, accept a minimal fee to get let out (1/2 month rent?).

If they get aggressive- go to plan B and bring in the gas issue.

 

Seems like you left out the key piece of info - can he release it at a higher rate? Did you renew at the same rate as your existing lease or did your rate increase?

I don’t work in the NYC market, but I thought I was told that a number of residential landlords/tenants pay brokers leasing commissions on residential units. He can pay a family member that commission and stick it to you on top of any rent differential if he wants to be a dick. And practically speaking, most landlords have an attorney who will show up to court for a few hundred dollars to rep them on eviction/unpaid rent matters. You will likely not have the same benefit if you’ve already moved.

As others have said, just reach out to property manager/landlord, tell them you have to move for work (keep it vague that it’s a new job), and tell them you would like to terminate the new lease. See what they say and go from there.

 

I didn’t think of that info as very key, because if my rate is a bit below market that’s only because he has the convenience of not finding a new tenant.  So I figure that’s small potatoes . . yes he could get $50-100 more per month on a new lease FWIW.

Your answer is really helpful overall, thank you.  

One follow up: what’s a typical rate for that leasing commission?

 

I would estimate the commission is one month’s rent, but he could jerk you around with additional BS fees if he wanted.

If I had to guess at it, landlord will charge you for the commission fee, plus $500-$750 in legal and advertising fees. He could claim he’s getting $50 more per month so he waives the fees and just charges the commission against your security deposit.

No one is going to say it, but landlords/PMs will charge an asshole tax so YMMV. Just start the conversation with them.

 

My friend broke out of a lease early and had to pay 1,000-1,500 and this was in the winter.

it’s the summer time, the prime market for apartments. I would just be civil, tell the landlord the situation. I would probably say because of work i have to move and wanted to talk about leaving early(dont boast about a great opportunity,etc) See what he says then. Should not be an issue since they did not get a broker involved. 

 

So by your logic, if the landlord came to you 3 days after you signed the early renewal and said he actually just decided he doesn't want the early renewal anymore (he found a higher paying tenant), you should just agree with no/minimal damages? After all, all you lost out on was 3 days of searching for a new apartment than if he never gave you the renewal option in the first place. 

 

I don’t think the losses are comparable because in that situation I’m losing a lease on the place I currently live in.  Apartments aren’t fungible like tenants are.  A landlord is fine with any tenant provided same rent paid, and responsible behavior.  But a tenant who loses apartment A won’t have an easy time finding the same situation in Apartment B, and will have to move belongings.  

So I see the parallels but not the same thing either.

 

You should talk to your landlord, and the outcome will vary. Everyone above who said it will depend on the contract or that it depends on the negotiation is being honest with you.  You're also missing the other side of the equation in that you should be requesting a relocation bonus out of your new offer. Those are quite literally offered to help alleviate these sort of costs when bringing in new employees from other regions.

Edit/addition: You should also do this as soon as you're finalized on whatever relocation you are contemplating, have signed the offer, etc.. So if that's already in process and you're preparing to move, you should do so as soon as you've gathered yourself on it so they can begin marketing.  I'm not sure how it works in NY, but generally Minimized LL Losses = Minimized breakage.  And in this case, as far as I'd be concerned as LL, I have guaranteed income through next year under your lease so the best outcome for you is it is re-leased asap.

 

Thanks for the suggestion on relocation bonus.  The problem is my relocation bonus is a cash lump sum, so the incentive remains to get the most I can out of the landlord negotiation. 

As for the terms of the lease: respectfully disagree with everyone saying the terms matter.  Landlord is only entitled to damages net of mitigation, so negotiation will be based on that.

 

Dr. Rahma Dikhinmahas

Thanks for the suggestion on relocation bonus.  The problem is my relocation bonus is a cash lump sum, so the incentive remains to get the most I can out of the landlord negotiation. 

As for the terms of the lease: respectfully disagree with everyone saying the terms matter.  Landlord is only entitled to damages net of mitigation, so negotiation will be based on that.

I’m sorry, but terms don’t matter?

No pain no game.
 

In case anyone was wondering, I sent the email below and got a quick reply saying they’ll let me out of it.  

Part of me wonders if they just plan to raid my security deposit instead, so I will probably have to withhold my last month rent and get yelled at. Oh well. 

Thanks to everyone who weighed in, you guys were helpful. 

—-

Dear [],

I hope you are doing well. 

Per our emails below, I signed a Sept. 1 renewal for the apartment a little over a month ago. 

Since then, a situation has arisen at work and I will likely need to relocate to the [] area soon. While it isn’t finalized, it’s likely.  So I wanted to notify you right away that it would be best if I no longer renew the lease.

For the following reasons, I’m hoping you will agree with me that any losses here are minimal:

1. It’s the peak rental season

2. Market rent for this apartment must be higher than what I am paying under the renewal

3. We are still 50 days from the start date

I am aware that in other lease break situations, there is often a break fee of several months’ rent. Given the points I listed above, as well as the significant inconveniences of our gas shut-off for the last month, I hope you’ll consider allowing me out of the renewal without a penalty. 

Apologies for any inconvenience and please let me know if you’d like to discuss further. I’m reachable at [ ].

Thanks for your time and consideration.

 

Way to use your head and take the right approach. 

Only thing I'd say is in general I don't like to even list the worst case scenario for myself out loud when negotiating. Like when you specifically ask to be let off without a penalty, I wouldn't have even mentioned a penalty and just have asked to shred the renewal. If he wants a penalty, he'll ask for a penalty. No reason for you to put the thought in his brain. Sometimes you get the "Wellllll, now that you mention it this is a bit inconvenient for me...." types who will ask you to pay up just because you indicated you'd be willing to do it.

 

Aut velit provident optio minus consequuntur aperiam mollitia. Dolore ut exercitationem cumque animi et alias. In aut a sed exercitationem odio id iure a.

Molestiae sed error qui. Quia rerum enim sunt in quisquam ut cupiditate voluptatem. Ipsam placeat laudantium eum vitae ex voluptatem et in. Voluptatum non et quasi aspernatur similique reprehenderit. Commodi velit saepe aut ut possimus sit vel.

Praesentium a aut beatae aut velit. Quia sit est aut praesentium voluptatem et. Voluptate eum magni aspernatur qui qui laboriosam. Accusantium quod explicabo quisquam omnis aut sunt necessitatibus fugit.

Nemo natus reprehenderit minus. Quos et in vitae recusandae quo illo. Eos nulla rerum explicabo aut maiores. Quos velit ex cupiditate. Quasi dolorem magnam provident omnis.

 

Laboriosam soluta quia temporibus consequuntur quasi quo aut natus. Aut perferendis omnis est nesciunt asperiores quia. Nobis velit et sunt fugiat quibusdam explicabo aut voluptatem. Voluptatem consectetur laborum cumque sit voluptate. Aliquid tempora iste corporis minima tempore reprehenderit.

Cum assumenda voluptas exercitationem qui corrupti velit optio. Blanditiis sed odit fugit quia quaerat et voluptas ea. Voluptas ut voluptas corporis qui similique.

Ipsam eius distinctio ipsam dicta corporis. Et nihil totam qui non est est.

Career Advancement Opportunities

May 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Lazard Freres No 98.8%
  • Harris Williams & Co. 25 98.3%
  • Goldman Sachs 17 97.7%
  • JPMorgan Chase 04 97.1%

Overall Employee Satisfaction

May 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

May 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

May 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (21) $373
  • Associates (91) $259
  • 3rd+ Year Analyst (14) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (68) $168
  • 1st Year Analyst (205) $159
  • Intern/Summer Analyst (146) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Secyh62's picture
Secyh62
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
BankonBanking's picture
BankonBanking
99.0
5
dosk17's picture
dosk17
98.9
6
CompBanker's picture
CompBanker
98.9
7
kanon's picture
kanon
98.9
8
GameTheory's picture
GameTheory
98.9
9
numi's picture
numi
98.8
10
Jamoldo's picture
Jamoldo
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”