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Effects of non payment of penalty for early termination of lease

Mark Cappel
UpdatedMay 22, 2024

If I vacate my rental early an not pay the penalty, will hit my credit report like a foreclosure on a house?

Hi Bill, I am about to move out of an apartment complex and into a home I have purchased. I am breaking my lease to the apartment early due to numerous issues I have had (broken AC unit, broken dishwasher, noisy neighbors, etc.). They are trying to get me to pay the one month penalty for leaving early. I do not think I should pay due to all the issues (my record of complaints with the office is very long). They claim if I don't pay it will hit my credit report like a foreclosure on a house? Is that correct and do I have any options to fight this? Thanks for the help!

Before you decide whether or not you want to terminate your lease without paying the early termination penalty demanded by your landlord, you should consult with an attorney who can advise you of your state's laws relating to the termination of leases. Most states allow tenants to terminate leases for limited reasons, such as if the apartment is unsafe or unhealthy. However, the issues you mention in your question (the air conditioner and dishwasher not working, and the neighbors being loud) may not be legally sufficient to terminate your lease without penalty. Again, I encourage you to discuss the situation with an attorney to determine if you can safely terminate your lease without the risk of liability.

While early termination of your lease could lower your credit score, it should not damage your credit rating to the same degree as a foreclosure on a home. However, if you terminate your lease, you landlord could sue you for the full balance owed on the remaining lease. If the landlord obtains a judgment against you, they may be able to garnish you wages, levy your bank account, or even place a lien on your new property, depending on the laws of your state. In addition, a judgment would appear on your credit report, and could cause even more damage to your credit rating.

If you find that the complaints you have mentioned are not sufficient to terminate your lease, you may want to pay the penalty to allow you to leave the apartment without worrying about further repercussions, such as a lawsuit or credit problems. You may find that paying the penalty is well worth the amount of trouble it will save you with your landlord. Again, you should discuss this with your attorney to determine the best course of action for your particular situation.

If you would like to learn more about credit reporting, I encourage you the visit the Credit Information page. To read about Tenant's Rights law in your state, you can also visit the U.S. Department of Housing and Urban Development website.

I wish you the best of luck in resolving this situation, and hope that the information I have provided helps you Find. Learn. Save.



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SSteph, Mar, 2011
I only have a cpl of mo. left on my lease but my apt. is becoming increasingly uncomfortable to live in. I don't know if I can or should break my lease now. Most currently my ac has been broken for a week now in the Texas heat and I have a young child who is crying because of the heat and that I can not even cook for without bringing to temp. of the apt to 100 degrees. My washer has been broken since the freeze several months ago now, and safety is also an issue because I came home late one night to find my patio door broken by a rock just as several cars in the lot had been done. I do not like my daughter uncomfortable or unsafe! And feel that my property in not holding up to their end of the lease as I am paying for a place with ac, washer, etc. what do i do?
BBill, Mar, 2011
If you break your lease now, you may expose yourself to collection efforts the landlord could pursue to collect the monies you did not pay as well as being evicted. I recommend that you contact a tenant's rights organization in your area. Check out the Web site for the Texas Tenant Advisor. Their site contains links to other tenant's rights organizations and to legal aid organizations that assist people with low incomes.
BBill, Sep, 2008
That is way too much, I have heard about apartments charging just about 1 month's rent to cover for the termination but not 3 months. I suggest you take a look at your lease terms, sometimes they will have a clause in there that will basically state that you are liable for the rent payment for the time it takes to rent the apartment again.
JJanice, Sep, 2008
Hi, there is a gun shooting before our apartment and I am in my early pregnancy, it is unsafe to live there. but the apartment insist 3 month rent of early termination fee for us. do you think it is reasonable?