In a lease takeover, a renter hands off the responsibilities that come with their lease to a new tenant. While it can be a tedious process, finding someone to take over a lease is a promising way to get out of a lease without incurring penalties or the hassle of subletting.
Below, we’ll dig into how to orchestrate a lease takeover, including the considerations to make and the challenges you may face.
What is a lease takeover? Is it the same as subletting?
While the processes for coordinating both a subletting arrangement and a lease takeover are very similar, these two arrangements are different in terms of the legal responsibilities they represent.
When you sublet your rental, you are still the official tenant as far as the lease document is concerned. Your name remains on the original lease, and as such, you are responsible for paying the rent on time and upholding all other stipulations of the lease document. That means, if your sublessee fails to pay the rent one month, you will still be on the hook for it.
In the case of a lease takeover, you transfer the lease to someone else’s name, making them the official tenant and relieving you of your obligations to uphold the lease agreement.
The individual taking over your lease is now the official tenant. They are responsible for paying the rent to the landlord and upholding the terms of the lease. If this tenant fails to do this, you are not liable for the rental.
So, how do you go about arranging a lease takeover?
Know the terms of your lease
Before you begin searching for someone to take over your lease, make sure that your lease agreement permits it. Some leases have clauses prohibiting lease takeovers. If yours doesn’t, that’s fantastic!
If it does, you may still have options.
In some locations, state law dictates that landlords cannot refuse a tenant who organizes a reasonable lease transfer. In others, such as California, the law dictates that unless the lease specifically states otherwise, lease transfers are permitted. Read your lease carefully and cross-check the state laws regarding lease transfers to ensure you know your rights.
Next, look for lines in your lease that dictate any penalties, fees, and the amount of notice you must provide before a lease takeover. In some cases, you may be forced to forfeit your damage deposit if you enter into a lease takeover. You may also be required to provide as much as 60 days’ notice before a lease takeover.
Even if your lease prohibits a lease takeover, it might still be worth talking to your landlord to see if you can wosk something else. And even if your lease does allow it, your next step is going to involve your landlord no matter what.
Consult with your landlord
Before you can move forward with a lease takeover, you need to ensure your landlord is on the same page. Ultimately, you won’t be able to go through with a lease transfer without your landlord’s approval, so the sooner you speak to him about your situation, the better.
Even if your lease agreement allows lease transfers, your landlord may be skeptical about the situation. After all, finding good tenants is a lot of work, and he already worked hard to find you! The easier you can make the lease takeover process for your landlord, the better.
Speak to your landlord about your intentions to move out of your rental early and explain that you wish to find a replacement tenant to take over your lease. Secure your landlord’s permission in writing before proceeding with a lease takeover.
You can use this document with your landlord’s written consent to demonstrate to prospective tenants that the lease takeover is legitimate. The form may also come in handy if any issues arise at any point in the lease takeover process. Keep a copy somewhere safe for your records.
Note: If you are a prospective tenant hoping to take over someone else’s lease, always request to see evidence of the landlord’s consent. Otherwise, your lease takeover could be invalid, and you will be vulnerable if anything ever goes wrong with the rental.
Find and vet the tenant
Once you’ve secured your landlord’s permission to move forward with a lease takeover, it’s time to find your ideal tenant.
Create a compelling ad for your apartment, and be sure to disclose that it would be a lease takeover arrangement. This could be an appealing opportunity for someone who isn’t ready to commit to a full-year lease, as they only have to sign on for the number of months remaining on your lease agreement.
Dress your ad up with beautiful photos of the space and highlight the key features of both the rental and the neighborhood to ensure you attract the right tenant.
Once you’re happy with your ad, begin sharing it on rental marketplaces, to your social media network, and amongst your friends and co-workers.
Now that you’ve collected a pool of interested candidates, it’s time to arrange showings. The showings are an excellent opportunity to feel out the applicants and get a sense of whether they seem trustworthy or qualified to rent the apartment. You can also use this time to address any questions or concerns prospects may have about the lease takeover arrangement.
Speak to your landlord about the tenant vetting process to determine precisely which aspects he will handle and which steps you will be responsible for. Some landlords will be more hands-on than others when it comes to showings and communication with applicants. Ultimately, the future tenant will be liable to your landlord, so it will likely be left up to your landlord to formally vet the candidates with credit and background checks.
In some instances, your landlord may want you to take on the bulk of the responsibility of finding someone to take over your lease. Most leases have a one-year term because finding the right tenant is a tedious and time-consuming process. That’s also why leases typically have severe financial penalties if you break them early. So, while locating a replacement tenant is definitely a time-consuming process, it could save you a significant amount of money in the long run.
Create a formal lease takeover agreement
Once you select a tenant for your lease takeover, you need to draft a formal lease transfer document. This document serves as an official record that you are passing the responsibilities of the lease on to the new tenant. You, your landlord, and the new tenant must all sign and date this document.
This lease takeover agreement is often referred to as an “Assignment of Lease” form. If drafting such a document sounds intimidating, don’t worry. You can find templates online.
Once this document is signed, the new tenant will also sign a new lease for the property. Your name will not be on the new lease, as the “Assignment of Lease” document has officially removed your obligations to the landlord.
Note: If you are a tenant taking over someone else’s lease, this document is an essential part of the process. Always request a completed Assignment of Lease form. This document is proof that the landlord is authorizing the lease takeover. If you don’t have written evidence of the landlord’s consent, the lease takeover may not be legal, and you could find yourself without any rights to the rental.
If you need to move out of your rental before the lease is up, a lease takeover could potentially help you avoid the fees associated with breaking your lease.
Before you can transfer your lease to someone new, you will need your landlord’s consent and a qualified candidate who is willing to take over the responsibilities of the lease.
While the actual process is relatively straightforward, finding and vetting a tenant can be time-consuming. Additionally, you may be required to give your landlord two months’ notice before you can hand off your lease to someone new.
If you’re on a tight timeline and need out of your apartment quickly, a lease takeover may not be a realistic option. But, a lease takeover arrangement is an excellent option for someone who has the time and energy to follow the steps outlined above.