When you sign a lease agreement with your landlord, this legally binds you to see it through to the end. Regardless of whether you have a month-to-month lease or a full-term contract, you typically will have to pay a fee if you decide to break your lease all of a sudden. But what if you have no choice but to move out? To avoid the penalties of an incomplete lease term, consider a strategy known as a lease takeover.
But what is a lease takeover exactly? To help you understand the concept of lease transfers, we’ll provide you with a comprehensive guide. We’ll discuss lease takeovers, how they work, and how they differ from the more common practice of subleasing. On top of that, we’ll also look at lease takeovers from the perspective of a renter and dive into the potential pros and cons of lease transfers. Ready? Let’s get started!
Key Takeaways
A lease takeover is the practice of transferring your lease to another to prevent breaking your agreement with your landlord.
Renters benefit from the flexibility and cost-efficiency that lease transfers have to offer.
When you take over, you become the official tenant on the lease, which is different from the practice of subleasing.
How Does a Lease Takeover Work?
So, what is a lease takeover, and how does it work? Let’s say that earlier in the year, you signed a 12-month lease for an apartment in Austin for work. However, a couple of months later, you were promoted and designated to a new office across the country. So, what do you do?
A lease takeover legally allows you to transfer your lease agreement to a new tenant, so you won’t have to pay any fee or incur penalties. How it works is that you’re responsible for finding a tenant who will take over the remaining months of your lease. When you do and your landlord approves the new tenant, you completely release any claim and responsibility over the rental property.
Now, for the renter’s perspective. When you rent a property through a lease takeover, this means that you become the official tenant once you sign the agreement. When you do, you are now fully responsible for rent, maintenance, repairs, and the terms and conditions of the original lease.
In our opinion, as an Austin property management company, we see lease takeovers as an effective strategy that benefits all the parties involved. You avoid paying any fees for breaking your lease, and the one taking over gets a short-term lease (which is probably what they are looking for). Aside from that, landlords don’t have to deal with costly vacancies that breaking the lease early can cause.
Lease Takeover vs. Sublease: What’s the Difference?
When we talk about lease takeovers, it is commonly compared to the more common practice of subleasing. Although relatively similar, there are distinct differences between the two.
So, let’s talk about subleasing and subtenants. As mentioned, they are quite similar to takeovers since they both involve finding a new tenant who will help you avoid breaking the lease agreements. However, a key difference here is that when you sublease, you’re only renting out the unit and not transferring the lease to the new tenant entirely.
This also means that you are still legally responsible for fulfilling the terms of the lease, such as paying rent and making repairs. What typically happens is you write out a separate lease between you and the renter, while the original agreement between you and the landlord stays intact. Just remember, your landlord still has to approve and clear the subtenant.
Pros & Cons of Doing a Lease Takeover
Now, let’s look at lease takeovers from the point of view of a potential renter. At first glance, taking over someone else’s lease can be a great solution if you’re looking to rent short-term. But other than that, what else should you consider? To give you a better idea, here’s a brief review of the advantages and disadvantages of doing a lease takeover. Let’s start with the pros:
Flexibility
Typically, leases that need to be taken over only have a few months left in them. This works for you if you’re looking to rent for just a while but don’t want to deal with month-to-month leases.
Cost Efficient
Most of the time, lease takeovers come either at a slightly cheaper rate or with some perks and incentives. This is primarily because the current tenant is extremely eager to get someone to take on their deal as soon as possible.
Faster Turnovers
While you will still go through a tenant screening process, turnovers are faster since the unit is already move-in ready. This is perfect for tenants looking for a place to live quickly.
Now, let’s talk about the cons:
Established Terms and Conditions
There’s little to no room for negotiations when it comes to lease takeover. Since you’re only taking over an already existing agreement, you can make any changes or adjustments to suit your preference.
Property Maintenance and Repair
Considering that you’re the secondhand renter for the property, it will have signs of normal wear and tear. You will bear the responsibility of repairing and maintaining the unit if you want to bring it to its peak condition.
How to Find a Tenant For a Lease Takeover
Now that we’ve established the potential pros and cons of lease transfers, let’s run it back and find out how you exactly find someone to take over your lease. Here’s a rundown of the step-by-step process to help you find the right person to take over your lease.
Let your landlord know about your intent to have someone take over the remainder of your lease. Don’t proceed if you don’t get your landlord’s approval.
Start advertising your offer to find potential tenants. Use popular and trusted platforms to market your offer to a larger audience.
When you do, conduct a preliminary screening process by requesting their proof of income and employment, and references.
Brief candidates on the details of the lease agreement, including the rate, payment terms, property rules, and other key terms and conditions.
Endorse qualified tenants to your landlord for them to further screen and assess.
Once your landlord approves a tenant, complete the necessary paperwork needed for the lease transfer.
Take Your Next Steps With Stone Oak Property Management
Lease takeovers offer a great solution for tenants, landlords, and renters. With the opportunity to transfer leases, you don’t have to worry about facing penalties for breaking your agreement. On top of that, you’ll be able to offer flexible housing to someone in need and avoid vacancies for your landlord. Despite the potential pros and cons of lease takeovers, all parties can benefit greatly from them.
Whether you’re a tenant looking to transfer your lease or a renter searching for a lease to take over, we at Stone Oak Property Management are ready to help. With more than two decades of experience, we offer tailor-fit solutions to match what you need.
Need help? Connect with us for advice and guidance from industry experts.
