Lease Transfer Risk Help

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Topic Author
ilikeshreddingmail
Posts: 50
Joined: Wed Feb 24, 2021 12:44 am

Lease Transfer Risk Help

Post by ilikeshreddingmail »

Hey Bogleheads,

I’m moving states and currently have a lease with an apartment complex. I found a third-party that’s willing to take over my lease for the last 6 months of it (starting in a month or so), and the complex is willing to do a “work around” to facilitate the lease transfer.

To do a lease transfer, I must:
1. Add the third-party to my lease
2. Then (sequentially) release myself from the lease (requiring both the third-party and I to sign)
3. A new contract is then established between the complex and the third-party

I’m having my lawyer draft up a contract that includes a non-refundable security deposit, transfer fee, and costs associated with some furniture they’ll be purchasing from me. It also includes the target date when they can move in, the apartment address, etc.

One concern of mine is that I cannot find a way to protect myself from a case where the third-party gets added onto my lease, then doesn’t do step 2, which is to release me from the lease (thus still binding me to the contract that I cannot get out of). Through some Googling, it looks like the third-party owns a restaurant in town, giving me some peace of mind about their trustworthiness.

Is there anything I could do to protect myself in the event this happens? Unfortunately, the apartment is not allowing any contingencies on #1. At this point, it’s more of a risk mitigation point than a problem that has occurred. Anything I should include in the personal contract to further protect myself?
Last edited by ilikeshreddingmail on Wed Jun 29, 2022 3:54 am, edited 1 time in total.
EmberPJ
Posts: 6
Joined: Mon May 16, 2022 9:40 pm

Re: Lease Transfer Risk Help

Post by EmberPJ »

To do a lease transfer, I must:
1. Add the third-party to my lease
2. Then (sequentially) release myself from the lease (requiring both the third-party and I to sign)
3. A new contract is then established between the complex and the third-party

I’m having my lawyer draft up a contract that includes a non-refundable security deposit, transfer fee, and costs associated with some furniture they’ll be purchasing from me. It also includes the target date when they can move in, the apartment address, etc.
Is there anything I could do to protect myself in the event this happens? At this point, it’s more of a risk mitigation point than a problem that has occurred. Anything I should include in the personal contract to further protect myself?
I would discuss this with your lawyer. I would want both 1 & 2 completed BEFORE the new tenant takes possession. This could be addressed in the contract your lawyer is drafting. Is there any reason steps 1 & 2 can’t be done simultaneously? The entire process could be completed “in escrow” - similar to house closing, with your lawyer or the landlord’s lawyer (or even a title company) serving as the escrow agent. Technically, #1 would occur before #2, but effectively they would be completed at the same time, together with all payments to you and/or the landlord.

You mentioned a security deposit. Security deposits are often governed by specific state or local laws. I’d distinguish between any non-refundable payments to you, and the security deposit. Your lawyer and the landlord can help determine if your security deposit will be refunded to you by the landlord, or if it will be assigned to the new tenant (in which case they will need to reimburse you, in accordance with the contract your lawyer is preparing).

Congratulation on your move. I hope this process goes smoothly for you.
Topic Author
ilikeshreddingmail
Posts: 50
Joined: Wed Feb 24, 2021 12:44 am

Re: Lease Transfer Risk Help

Post by ilikeshreddingmail »

I would discuss this with your lawyer. I would want both 1 & 2 completed BEFORE the new tenant takes possession. This could be addressed in the contract your lawyer is drafting. Is there any reason steps 1 & 2 can’t be done simultaneously? The entire process could be completed “in escrow” - similar to house closing, with your lawyer or the landlord’s lawyer (or even a title company) serving as the escrow agent. Technically, #1 would occur before #2, but effectively they would be completed at the same time, together with all payments to you and/or the landlord.
[/quote]

Thanks for all this insight. Unfortunately, the leasing agents aren’t allowing any contingencies, and they’ve warned me that they’re doing this workaround of lease takeovers as a “favor”. Could I add a contingency to my contract that I’m drafting with my lawyer?
You mentioned a security deposit. Security deposits are often governed by specific state or local laws. I’d distinguish between any non-refundable payments to you, and the security deposit. Your lawyer and the landlord can help determine if your security deposit will be refunded to you by the landlord, or if it will be assigned to the new tenant (in which case they will need to reimburse you, in accordance with the contract your lawyer is preparing).
Thanks for this insight as well. So my current landlord won’t be refunding me the security deposit, so I suppose I should ask my lawyer to use the word “refund”, as opposed to giving me a security deposit.
johnubc
Posts: 870
Joined: Wed Jan 06, 2010 5:54 am

Re: Lease Transfer Risk Help

Post by johnubc »

Your lawyer can easily take care of this - making the legality of #1 contingent on #2 being executed.
Topic Author
ilikeshreddingmail
Posts: 50
Joined: Wed Feb 24, 2021 12:44 am

Re: Lease Transfer Risk Help

Post by ilikeshreddingmail »

johnubc wrote: Wed Jun 29, 2022 9:12 am Your lawyer can easily take care of this - making the legality of #1 contingent on #2 being executed.
Do you think my lawyer should be able to take care of it if #1 and #2 are all contracts done by the apartment complex? It seems as thought the complex doesn’t want to do anything besides provide that specific online document to sign.

Can my lawyer create a separate contract that states the contingency of #1 on #2 even without the apartment complexes’ support?
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