Every year, thousands of tenants in the Greater Chicago area need to break their lease. Sometimes it’s because they have roaches, rats, bedbugs, or similar vermin. Other times, it’s a divorce or change in employment. The reasons are varied, but whatever they are, the current living situation isn’t working out. When I speak to these tenants, one of their most common questions is “how much does it cost to break a lease?”
This article will answer that question. It will cover the maximum amount a landlord is allowed to charge for a broken lease, some common solutions for tenants interested in breaking a lease, and fees and penalties associated with breaking a Chicagoland lease.
Key Takeaways
- Breaking a lease in Chicago without legal grounds typically costs 2-5 months’ rent, depending on timing, notice, and market conditions.
- There are many factors that are at play when terminating a lease early.
- Hiring a lawyer can often reduce the cost of breaking a lease early substantially.
What Is the Maximum Amount a Landlord Can Charge When a Tenant Breaks a Lease?
Before discussing how much it costs to break a lease, it’s necessary to understand the maximum amount a landlord is allowed to charge a tenant for breaking the lease.
Overview of Lease Termination Cost Formula
When a tenant breaks a lease without legal grounds, the duty to pay rent does not end. This is true under federal, Illinois, Cook County, and Chicago law. The tenant must continue to pay rent until a new tenant is found to replace them. Once the landlord knows the tenant is breaking a lease, the landlord must take reasonable steps to find a replacement tenant. Lease break lawyers call this “mitigation of damages.”
Advertising the unit is the primary means of mitigating damages. The landlord must take reasonable steps to market the unit, which often involves listing the unit on websites like Redfin, Zillow, and Facebook as well as hiring a real estate agent to place the unit on the Multiple Listing Service and market it to potential tenants. The lease-breaking tenant is responsible for reasonable marketing expenses, which tend to be, at most, the one-month fee charged by real estate agents.
Once the landlord finds a new tenant, the lease-breaking tenant is responsible for paying the difference between their rental rate and the new tenant’s rental rate for the remainder of the lease term. (The new tenant’s rate is often lower than the original tenant’s rate since the landlord had to find a new tenant with little notice and during a sub-prime time of year.)
Accordingly, the maximum cost of breaking a lease in the Chicago area is determined by this formula:
All of the remaining rent for the entire lease + Reasonable marketing expenses – Rent received from a replacement tenant during the term of the original lease
Factors That Determine How Much It Costs to Break a Lease
The actual maximum amount a landlord can claim in an individual case is difficult to determine because finding a new tenant is unpredictable. That said, based on our experience, there are several factors that contribute to the cost of breaking a lease in the Chicagoland area.
Time of year: Time of year is the most important factor in determining the cost of breaking a lease. Chicago has a very defined moving season that starts in May and ends in September. Almost all residents want to move when the weather is good, so landlords design their leases to end during the summer, creating a moving season. If a lease is broken in early summer, the landlord will probably only lose a month of rent, all else being equal. If it is broken in the middle of winter, the consequences are often much worse.
Amount of notice: The amount of notice is the second most important factor used to determine the cost of breaking a lease. Most quality tenants are not looking to move into a unit immediately upon signing a lease; they are usually looking to secure housing a month or two in advance of the end of their current lease. Therefore, if a tenant gives no notice of breaking their lease, a landlord will almost certainly lose a month of rent. The more notice the tenant gives, the better.
Desirability of unit: Some areas of Chicago have hotter rental markets than others. If the unit is in a very desirable area, that helps to secure a new tenant. The same can be said for a unit that is unique in desirable ways. If the apartment is special, it is more attractive to tenants looking for a place to live.
Price of unit: The price of a unit is also a factor that determines how difficult it is to find a new tenant. Units that are priced within the range of what middle-class people can afford rent the fastest. In contrast, it is harder to find a new tenant for an extremely expensive unit if the current tenant breaks their lease. There just aren’t that many people looking to rent a penthouse for $15,000 a month.
Rental amount versus market rate: Rental amount versus market rate is an interesting factor affecting the cost of breaking a lease. Of course, if a long-term tenant has a rental rate substantially below market rate, it is much easier to find a tenant at that discounted rate. However, almost all landlords are excited to bring the rent up to market rates, so they often seek a new tenant at a much higher rate than what the outgoing tenant paid. (This is not proper mitigation.) Conversely, if the outgoing tenant was committed to a rate far higher than market rate, the landlord may lose rent even upon finding a new tenant immediately.
Size of the building: Another tricky factor that contributes to the cost of breaking a lease is the size of the building/complex. If a Chicagoland tenant is breaking a lease in a large apartment building or a complex run by a single landlord or management company, the landlord may be tempted to lease similar empty units before attempting to find a tenant for the unit where a tenant is terminating their lease.
Condominium rules: If a tenant is renting in a condominium building, draconian condominium rules can throw a wrench in the works when it comes to finding a replacement tenant. Renting a condo comes with a long list of advantages and disadvantages, but, in general, most condominium associations do not care for renters and can make terminating a lease more risky and expensive. The complications are legion, including obscene move-in and move-out fees, minimum lease terms, strict limits on the number of rentals, and how the rental allocation is distributed. I have even seen associations that rotate the allocation of rentals, so losing a tenant might mean the landlord cannot rent again for a year or more.
The Bottom Line: Maximum Cost of Breaking a Lease in Chicago Area
As discussed above, it’s impossible to determine the maximum cost of breaking a lease in the Chicago area with certainty because finding a new tenant is unpredictable. However, based on my experience as a lease-breaking lawyer, I’ve observed that a tenant usually pays 2 to 3 months of rent under ideal conditions and 4 to 5 months of rent under difficult conditions. This includes the landlord’s lost rent and marketing expenses.
How to Reduce the Cost of Breaking a Lease
Since the maximum cost of breaking a lease can range from very expensive to debilitatingly expensive, most tenants desire to reduce the cost. Next, I will discuss techniques to lower the cost of breaking a lease.
Work with a professional
Nobody likes to pay an attorney, but speaking with a lease-breaking lawyer as soon as possible will let the tenant know where they stand, what their options are, and the risks of pursuing those options. Lease termination is complex and involves federal, state, county, and municipal law. There are notice deadlines that must be met and specific language that must be used. A qualified attorney can save a tenant a lot of stress and money, but the vast majority of techniques can only be used proactively, not retroactively. When a tenant contacts me after breaking their lease and moving out, damage control is usually the best we can do.
To help tenants get the advice they need, my firm allows them to purchase an hour of attorney time rather than committing to a 4-figure retainer right off the bat. Click here to contact us.
Plan ahead
In any lease termination, even one with absolutely no chance of having grounds to terminate, planning ahead reduces the cost of breaking the lease. If a tenant starts the process of working with a lawyer a month or two in advance of breaking the lease, there are more techniques available to the lawyer. These include grounds that require lengthy notice, extensive documentation, negotiation, mitigation assistance, and a lack of mitigation defense. Moreover, in the worst-case scenario, it gives the landlord more time to find a new tenant.
Don’t be a jerk
Being a jerk rarely makes things better, and being very kind can often reduce risk. I have seen cases where landlords have let their tenants out of a lease with no additional cost or penalty simply because they liked them. Conversely, even tenants with strong termination grounds can end up in a risky situation when their landlord is willing to light money on fire just to punish a tenant they hate.
Terminate with grounds
Most tenants in Chicago and Cook County are protected by strong tenants’ rights laws like the Chicago Residential Landlord and Tenant Ordinance and the Cook County Residential Tenant and Landlord Ordinance. These comprehensive regulations provide many grounds for termination. Moreover, if these grounds are present, they can be used to terminate a lease even if the tenant wants to break the lease for reasons that have nothing to do with the grounds. For example, if a tenant wishes to break a lease due to a divorce, we would explore every possible grounds, including things like a missing notice, unlawful entry, and a vermin infestation.
Outside of Cook County, available grounds are more limited, but regulations (like the Safe Homes Act) and common law remedies (like the warranty of habitability) may be used.
Gather paperwork
A lot of the cases I handle are severely hamstrung because tenants lose or dispose of important papers. In Cook County, some of the most important grounds involve missing lease disclosures. Relying on these disclosures is difficult if the tenant does not have a complete copy of their current lease (and past leases if the current lease is a short renewal).
A lot of important documents are currently stored on landlord portals and e-sign systems. Tenants should not rely on the landlord keeping these sources available after they move out. Download all your important documents immediately and save them in a safe place.
Document problems with the unit
Document all problems with an apartment as soon as they are noticed and do so comprehensively. Breaking a lease can cost a lot less if the tenant is able to demonstrate a significant habitability problem with the unit. For example, pictures and videos of a rat infestation will go a long way toward convincing a landlord not to fight when your lawyer sends a lease termination notice. We have reviewed countless matters where tenants tell us about significant issues—rodents or a sewer backing up—but don’t have any pictures or other evidence. Avoid the “he-said, she-said” and take pictures and video.
Additionally, as a general word of advice, make sure to document the condition of any unit you move into before moving in your possessions. This is especially true if there are significant items of pre-existing damage. A large portion of my practice is security deposit law, and a move-in picture of pre-existing damage dramatically increases the chances of settling a case.
Negotiate with a prospective employer
Employers know that many employees are tenants, and though remote work has mitigated this problem to an extent, tenants often terminate their lease early to take a new job in a different city. A good way to reduce the cost of breaking a lease is to negotiate moving assistance with a new employer. Employers often offer some moving expenses, but generous employers may also offer a couple of months’ rent to help break a lease. I have even seen a few cases where a new employer completely bought out a tenant’s lease to bring a valuable employee on board as soon as possible.
Find replacement tenants
In Chicago and suburban Cook County, a tenant usually has the right to sublease their unit under reasonable terms (i.e. credit score, background check, length of sublease). However, subleasing is a horrible idea because it makes the original tenant the subtenant’s landlord. The original tenant also remains responsible for unpaid rent and property damage caused by the subtenant. As a tenants’ rights lawyer, I seldom speak in absolutes, but I can’t imagine a situation where I would advise a tenant to sublease due to the high risk.
In contrast to subleasing, most landlords allow a tenant to re-let the unit. That is, the old tenant does the work of finding a new tenant, the landlord directly signs a lease with the new tenant, and the old tenant is released from all obligations. This technique is especially effective at reducing the cost of breaking a lease if the original tenant knows a couple of months in advance that they will be moving out.
Even if the landlord will not allow the tenant to re-let, finding qualified tenants and sending them to the landlord is an excellent way to demonstrate that the landlord could have mitigated damages if they were willing.
Lease buy outs
Recently, some landlords have begun to place buy-out clauses in their leases. That is, a right to end a lease early if the tenant satisfies certain terms. These clauses are generally an attempt by large landlords to convince tenants that the landlord is giving them a good deal even though the clauses tend to be very expensive, often much more expensive than hiring a lawyer to terminate the lease. They also give the landlord the opportunity to “double dip” on rent by collecting a penalty from the old tenant and then collecting rent from a new tenant immediately after the old one moves out.
These clauses vary in cost, notice, and effect. I have reviewed over a thousand leases, and the most common buy-out clause I see requires two months of notice to the landlord plus an additional two or three months of rent as a penalty for breaking the lease. Thus, the cost to break a $2,000-a-month lease would be $8,000 to $10,000 if the tenant did not plan to live in the unit any longer. If the tenant planned to stay in the unit during the notice period (which often isn’t the case), the cost is smaller, typically $4,000 to $6,000.
Of course, buy-out clauses vary, and some do not even release the tenant from unpaid rent until a new tenant is found. The tenant is, in effect, paying the landlord thousands of dollars to provide the services the landlord is already required to provide.
Always consult a lawyer before exercising a buy-out clause. Many leases can be broken at a lower cost, and even if the buy-out is the best choice, tenants need professional guidance to understand the terms and make sure the clause works in the ways the tenant believes it does.
Summary of the Cost to Break a Lease in Chicagoland
The cost of breaking a lease in the Chicagoland area is difficult to determine without an individualized analysis of the tenant’s situation and possible grounds for breaking the lease. At most, the cost of terminating a lease is all the rent the landlord loses, plus reasonable marketing expenses. The landlord must take reasonable action to find a new tenant and thus reduce the amount of lost rent. Typically, this maximum cost ranges from 2 to 5 months of rent, depending on a variety of factors, the most important of which is the time of year when the lease is broken.
Working with a qualified tenants’ rights lawyer is strongly recommended. This allows tenants to explore techniques that could help them achieve a more affordable lease termination and protect them from unexpected adverse consequences. Click here to schedule a call with our intake team to learn more.