Breaking a Lease: A Primer on Leases
Before you can consider breaking a lease, you should first have a good understanding of how lease agreements with your landlord work. Lease Agreements in Michigan are generally defined as any lease or rental agreement, either express or implied, written or verbal, under which the lessee or tenant is entitled to (1) occupy or (2) possess any residential unit, land, space, room, or facility. MCL 554.601b(1).
Under Michigan law, a lease is a contract which is subject to general contract principles. Woods v Kessler, 321 Mich 138, 140 (1938). To be enforceable, a contract requires an offer, acceptance and consideration, all of which exist in a Michigan lease . As part of your lease, be sure to check to see if it includes written rules, such as restrictions on pets or smoking, that will become part of your rental contract as well. The rules must be reasonable and not conflict with the lease agreement. Lease terms:
A terms of a lease (also referred to as rental agreement) between the landlord and the tenant must include: The most common types of lease agreements include month-to-month leases, yearly leases, and day-to-day leases. With a month-to-month lease, occupancy continues until terminated by the landlord or tenant. With a yearly lease, the parties are bound by the terms of the lease for a specified length of time or date. With a day-to-day lease, occupancy continues until terminated by landlord or tenant (usually in writing or by the occurrence of a certain event).
Lawful Grounds to Break a Lease
Military deployment might be the best-known exception, but it’s far from the only way Michigan landlords are legally obligated to end a lease early at no cost to the tenant. Examples include active military service, domestic violence situations, and uninhabitable living conditions, among others.
Under certain circumstances, the Servicemembers Civil Relief Act entitles members of the military or their dependents to break a resident lease without incurring any penalty. To be eligible for this protection, two conditions must be met: Regardless of military service, a landlord may choose to terminate a lease in one of three ways: If the tenant and landlord agree to break the lease, the property owner is not required to provide a reason. However, an agreement between the parties has to be made in writing. As for when the landlord can choose to terminate, Michigan law requires 30 days’ notice for month-to-month leases and 7 days’ notice for week-to-week leases. If breaking the lease early is not by mutual agreement, does not qualify under SCRA, or is for a valid reason, then it is up to the landlord to prove there was cause. Michigan state law recognizes a wide-range of legitimate reasons for breaking a lease. A few of these include the following: Realistically, most tenants will not be able to break a lease without giving at least 30 days’ notice, or paying a termination fee. In certain situations, however, the landlord can choose to waive the fee. Another option is to "sublet" the unit, assuming both owner and landlord approve.
Giving Legal Notice
Providing proper notice is an essential part of the lease termination process. When a tenant fails to provide the proper notice, it complicates the eviction process and could lead to additional liability to the landlord. While there are no uniform notification requirements for lease termination, Michigan law does provide for statutory lease termination periods in a few types of leases. Additionally, local ordinances may further limit lease termination periods so always consult the pertinent local laws.
Residential Lease
Most multifamily residential leases will have a thirty (30) day termination clause. This clause typically requires the tenant to provide notice at least thirty days prior to the end of their lease term. In Michigan, this notice can be provided in writing or verbal communication. However, if a tenant provides proper written notice, they are strongly encouraged to send the notice via certified mail with return receipt to eliminate any confusion. A landlord must then notify the tenant that their lease will be terminated due to non-renovation. No other action is required by the landlord, regardless if any failure to give proper notice was caused by the landlord.
Commercial Lease
In Michigan commercial leases, the default statutory termination period is one year. However, many commercial leases will have a contractual termination clause and will require much longer termination notice periods. Michigan law does not require landlords or tenants to justify their decision to terminate a lease. A tenant, however, must state in writing whether they will be remaining in possession of the premises.
Multifamily Student Housing
If a tenant wishes to discontinue occupancy, they must provide notice at least thirty days prior to their monthly rent payment date. If the lease requires payment on the first of the month, then notice must be given on or before the last day of the previous month. If the lease provides for payment on the tenth of the month, then notice must be given on or before the last day of the month prior to the month the rent is due.
Talking with your Landlord
Once you’ve gathered all of the necessary information, it’s time to negotiate your lease termination with your landlord. Generally, landlords are more likely to work with you to terminate your lease if you communicate directly with them. Be polite and honest, as volatile behavior will likely work against you.
Be proactive. The sooner you get the ball rolling on breaking your lease, the greater your chances of negotiating a deal that will benefit you. Falling behind on contacting your landlord can seem like a sign of bad faith.
Also, remember that negotiation is a two-way street. Your landlord may be unwilling to let you out of your lease without some type of compensation, either in the form of a lease termination fee or by asking you to find a replacement tenant.
When proposing a solution, consider:
Coming to an agreement you both find acceptable is usually a better outcome for both parties than forcing a legal solution. It’s also often less expensive for you than paying a lease termination fee.
Legal Repercussions of Breaking a Lease
If you aren’t able to find a legal or lease violation justification for breaking your lease, the legal ramifications can be significant. Your landlord may file an unlawful entry and detainer action (eviction) against you for unpaid rent or other damages caused by breaking your lease. Even if your landlord does not file an unlawful detainer action, your decision to break your lease may have significant consequences including the following:
Eviction
The most immediate consequence of breaking a lease can be eviction proceedings. Your landlord may be able to bring an action against you requiring you to leave the premises. Evictions are a special proceeding in which a landlord sues a tenant to recover possession of rented residential property. The court will decide who is entitled to possession of the property. The landlord may be entitled to a judgment against the tenant to recover possession of the premises, back rent and future rent until the end of the term.
Credit Damage
The Michigan Landlord & Tenant Law also allows the landlord to recover from you the rental installments due under the lease from the date of termination until the end of the lease term , subject to the landlord’s duty to mitigate damages. This means that if the landlord can find a new tenant for the lease, you may have to pay less in rent than specified in your lease. Otherwise, you are likely to be held responsible for the entire amount of rent due under the lease since the date the lease was terminated until the end of the specified term. And as with any financial obligation, this amount can have a significant impact on your credit score.
Bankruptcy
Bankruptcy may not free you from your obligations under a lease. The lease may be defined as part of the "bankruptcy estate," meaning that you may be obligated to pay any outstanding rent under the lease. This will also include paying damages for breaking the lease.
Oral Leases
Perhaps you entered into an oral lease and broke it. Again, this is likely to fall within the category of breach of contract, although it may be possible to argue for a different basis that more closely matches the facts of your situation.
Contacting an Attorney
Navigating the complexities of lease agreements can be challenging. Having an understanding of your rights under Michigan law can save you from unnecessary expenses and help you identify your legal options for breaking a lease. Consulting with a qualified lawyer can ensure that you are familiar with both state laws and the nuances of your specific lease agreement. Steps taken without professional legal advice may not be the most cost-effective how to break a lease option. A legal professional can help you determine whether you have cause to break a lease and what you need to do to minimize financial penalties.
Michigan Resources for Renters
A variety of resources are available to address the various concerns of renters in Michigan. The Michigan Department of Agriculture and Rural Development helps settle disputes and assures compliance with the Michigan property maintenance code. The department also produces the "Michigan Landlord and Tenant Kit , " which provides information about your legal rights as a tenant. The Customer Assistance Unit at the Michigan Department of Consumer and Industry Services deals with consumer cost recovery and refers complaints pertaining to landlord-tenant concerns. The Michigan Tenants’ Rights Organization maintains a small collection of landlord-tenant law pamphlets and fact sheets that cover a range of topics. Other organizations such as the Michigan Legal Services can help to resolve issues between landlords and tenants. Rental Housing Journal has also produced brief fact sheets regarding your rights and responsibilities as a renter.