Skip to Content

What’s the Difference Between a Lease Termination Charge and a Reletting Charge? (Comparison)

What’s the Difference Between a Lease Termination Charge and a Reletting Charge? (Comparison)

If you’re planning to move out and break your lease, then there are a few things that you should consider before doing so. Renting a place comes with a few benefits and disadvantages, moving out whenever you want to is one of the biggest setbacks of renting a place.

Most of the time you’re required to give your landlord a notice one month prior to moving out. If tenants break the lease before time, then there are some penalties and charges that they will have to pay.

In this article, I’ll tell you that what is the difference between a lease termination charge and reletting charge.

What’s a Lease Termination Charge?

A lease termination charge is a fee that allows you to break your lease early without any loss or risk of paying the entirety of rent due for the lease term.

But depending on the contract that you have signed, you might have to pay some additional fees or some charges for ending your lease early. The few you’ll have to pay for ending your lease early are usually defined in your lease.

According to Delaware Statutory Trust (DST), when the property is sold and the DST is dissolved, a termination fee may be due from the DST to the master tenant for ending the lease so as not to obstruct the property for the new owner of the property.

The property Laws for Lease

What’s a Reletting Charge?

A reletting charge is a fee that you pay to cover the damage of the landlord. You have to pay the estimated cost to the landlord for finding and placing a new tenant.

The reletting charge is described as written in the lease document and has your signature; excessive amounts (i.e. more than two months of rent) are typically void regardless of whether you agreed or not.

Tenant Has to Pay to Cover the Loss
The tenant has to pay for the loss of the landlord.

How Does the Lease Termination Charge Differ From Reletting Charge?

A lease termination charge and a reletting charge are two different things. A lease termination charge is a penalty that you have to pay to your landlord for ending or breaking the lease early.

Before leasing a place, you have to sign a leasing contract that mentions for how many months or years you are going to lease the property and pay the rent. If you decide to leave the property early and break the lease, then there is a certain amount that you’ll have to pay to your landlord.

Most of the time, you have to inform your landlord in advance that you’re going to end your lease. If you fail to do, then you’ll have to pay the rent for the remaining months and you’ll have to pay a penalty.

Whereas, a reletting charge is a fee that you pay to your landlord for ending the lease early. It’s the amount your landlord collects from you for causing the inconvenience by making the decision of breaking your lease.

What’s the Cost of Breaking a Lease?

The cost of breaking a lease depends on your leasing agreement. It’s mentioned on your contract that what will be the expense of ending your lease before time, so make sure you read your lease thoroughly before signing it.

In most cases, tenants have the option to pay a certain amount of fees to leave the place early. In such cases, tenants have to pay rent for one or two months, and then they can break their lease.

Regardless of whether tenants have paid any termination fee for leaving the place or not, it’s a rule by all the states that tenants have to inform landlords at least 30 days before moving out. If a tenant decides to move out uninformed and doesn’t give the landlord a prior notice, then he’ll have to pay the rent for the remaining months, assuming that the landlord couldn’t find a replacement.

However, there’s one thing that you should consider before ending or at least early, according to U.S. News, “if the landlord has to re-rent the place or unit at a price lower than already rented, then you have to pay that difference.”

For example, if the previous tenant’s rental rate was $1,000 a month, but the landlord was only able to find a new tenant willing to pay $900 a month, then the initial tenant has to pay the difference in the rent of $100 a month to a landlord.

Tenants Have to Find Replacement
Usually, tenants have to find a replacement for the place.

Ways to Break a Lease?

There are various ways to break your lease early without paying any high fees or charges.

Finding a Permanent Replacement

In most states, the landlord starts looking for new tenants as soon as a former tenant informs them that they would like to break the lease. Most of the time, the landlord asks the old tenant to conduct research a find them a new tenant for their place.

If the tenant and landlord fail to find a replacement, then the tenant will still be required to pay rent by law. But if the landlord successfully re-rents the place and gets a new tenant, then the old tenant can leave the place without paying any additional charges. But if the rent is lower than the previous rent, then the former tenant will have to pay the difference in cost.

Subletting the Unit

Subletting the unit is another way to move out and end your lease early without paying any extra charges and feel. Subletting the unit is when the tenant who originally signed the lease agreement finds another person to pay the monthly rent.

The new tenant is a subtenant. For example, a student in a big city rents an apartment for one year but only needs to live in that apartment from September to May. After that, the student decides to move out of the apartment and finds a temporary summer subtenant to live in the apartment and pay the monthly rent.

However, you do have to check your lease agreement before subletting to see whether you are allowed to have a subtenant or not. Unfortunately, most of the lease agreements don’t allow tenants to sublet a home to a subtenant. 

Negotiate With Landlord

Another way to end your lease early is to negotiate with your landlord. You can discuss the issue with your landlord and tell him your reasons for moving out early. Landlords are also humans and most of them will understand if you need to move out of a unit for personal or professional reasons.

If you treat your landlord with respect and pay your rent on time without making your landlord wait. And if you help your landlord to find a replacement with the same rent then I’m sure that your landlord will allow you to break the lease without any penalty.

However, do keep in mind that you’ll still have to pay the rent through the end of your contractual agreement. But to improve your chances of breaking the least without any penalty and additional charges, I would recommend you to discuss this with your landlord.

Whereas, the reletting charge is the additional cost you have to pay to your landlord to cover the damage. It’s a certain amount that the landlord takes from you for causing the inconvenience of you deciding to break your lease early.

Conclusion

Now that you’re aware of the difference between a lease termination charge and a reletting charge, you should be ready to make your decision. You should consider the pros and cons and then decide what is suitable for you.

A lease termination charge is a fee or penalty that you have to pay for ending your lease early. It’s mentioned in your lease of contract that you have signed how much amount you have to pay if you plan to move out early.

And the reletting charge is the expense that covers the landlord’s cost of finding a new tenant. If you move out early and the landlord fails to find a replacement, then you’re responsible for paying the rent.

So make sure to read your lease or contract thoroughly and understand all the clauses before taking any decision and before deciding to end your lease early.

Other Articles