February 15, 2016

How to Break an Apartment Lease in Chicago

When tenants enter into a lease, they seldom expect to move before the end of its term. Unfortunately, life circumstances or poor landlord-tenant relationships occasionally necessitate moving before a lease ends. The consequences of breaking a lease without legal grounds often catch tenants by surprise. This post will address the consequences of breaking a lease without legal grounds and some alternatives to breaking a lease.* Terminating a lease for conditions affecting the habitability of the apartment and other landlord violations of state and local law will be addressed in a future post.

When a tenant and landlord sign a lease, a tenant promises to pay rent for a certain period of time in exchange for the right to occupy an apartment; it is a legally binding contract. If the tenant stops paying, even if he or she moves out, the landlord has a breach of contract claim against the tenant. The value of the landlord’s claim is calculated based on the total amount of rent remaining to be paid over the term of the lease, plus reasonable marketing expenses, minus any rent the landlord secures from a new tenant. The landlord has a duty to take reasonable action to find a replacement tenant. Thus, a tenant that illegally breaks a lease may owe many thousands of dollars, especially if the termination occurs in winter, when new tenants are hard to find.

Given the substantial liability of improperly breaking a lease, tenants are often interested in learning about legally ending a lease. The best way to end a lease is by agreement between parties.

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Terminating a lease by agreement

When tenants find they need to end a lease, first they should attempt to reach a mutually acceptable agreement with their landlord. Tenants do not have a right to demand an agreement, but one can often be reached—especially in the summer when new tenants can easily be found. If the tenant and landlord reach an agreement, it is important that it be documented in writing, signed by both parties, and include the following basic terms:

  1. Date of termination, transfer of apartment, and utility termination;
  2. Release of tenant from the lease with no further rent due;
  3. Due date and amount of any agreed-upon compensation to the landlord; and
  4. Whether the security deposit will be forfeited or returned pursuant to law. 

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Tenants interested in terminating by agreement should give their landlord as much notice as possible and be open to the reality that a termination fee might be necessary. The tenant should never accept an oral-only agreement and ensure the written agreement terminates liability for further rent.

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Buy-out

Buy-outs are similar to lease terminations by agreement but are often as a matter of right. Chicago landlord-tenant law does not mandate buy-outs, but many larger landlords include such clauses in lease agreements. To terminate by executing a buy-out clause, the tenant must typically give the landlord 30 or 60 days’ notice of intent to execute the clause by filling out a form. The tenant must then pay the buy-out fee, typically 2-3 months’ rent, before vacating. When considering a buy-out, tenants should read the clause carefully to make sure the duty to pay rent is terminated. There have been occasions where landlords have included buy-out clauses that only end liability for rent if a new tenant was found.

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Sub-leasing and re-letting

Sub-leasing and re-letting are distinct lease termination methods. Many landlords and tenants do not understand the difference between the two, but the distinction is very important.

Tenants in Chicago have the legal right to sub-lease. The landlord can require consent to sub-lease, but consent cannot be unreasonably withheld. Typically, this means that a landlord cannot refuse a sub-tenant that meets the landlord’s legitimate standards, such as credit-worthiness, as long as those standards do not exceed those that the landlord had required of the original tenant.

In a sub-lease, the original tenant takes over the role of landlord to the sub-tenant. The original tenant remains liable for rent, damage, and sub-tenant misconduct. The original tenant also assumes all the responsibilities of a landlord under Chicago landlord-tenant law. Sub-leasing is risky and rarely advised.

In contrast to sub-letting, when a tenant re-lets, the original tenant does not become a landlord and does not become liable for the new tenant’s conduct. Re-letting involves the original tenant presenting the landlord with a new tenant and the landlord signing a lease with the new tenant; this relieves the original tenant of further obligations under the lease. Tenants in Chicago do not have the legal right to re-let, but many landlords allow it. Re-letting is a desirable way to end a lease and produces a fair outcome for both parties.

*This article presumes the property is regulated by the Chicago Residential Landlord and Tenant Ordinance. The most common class of apartments not covered are units in owner-occupied buildings of six units or less. For a list of all exempt property types, please reference 5-12-020 of the Chicago Municipal Code.

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J. Andrew Brabender is an attorney at Brabender & Chiang, LLC, a law firm that represents Chicago tenants in lease terminations, security deposit disputes and other claims under the Residential Landlord and Tenant Ordinance.

Disclaimer: Domu, LLC is not a law firm. Domu does not provide legal advice in its newsletter, blog, or in any other forum. Any opinions expressed by J. Andrew Brabender are his own. He is not an agent of Domu. This piece is intended to supply general information to the public. Please consult with an attorney before acting.

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