Breaking a lease in NC can carry several consequences for a tenant. It may mean the tenant might:
- Have trouble renting their next rental unit. Landlords only rent to tenants they can trust. But when there is a history of a tenant breaking leases early, even if it happened once, the tenant could come across as a red flag to potential landlords.
- Experience difficulties accessing new loans or rental contracts. Any unpaid rent (debt) can severely hurt a tenant’s credit score making it incredibly difficult for them to access loans and secure a lease for a rental unit in the future.
- Be at risk of a lawsuit. A lease agreement is a contractual agreement that runs for a specified period. Landlords may want to seek legal redress, especially if the tenant stops paying rent as required by the lease.
- Be liable for paying hefty fees. Breaking a rental agreement often comes with a fine, typically equal to the rent of two months’ rent. But in the absence of a termination clause, a landlord may also be able to hold your tenant liable for all their rent obligation for the remaining lease term. This could be a significant amount of money.
But not all reasons for breaking a lease attract penalties for a tenant. There are certain circumstances that provide legal justification for a tenant to break a lease in North Carolina without pay. This can allow them to break free from their contractual lease obligations without them facing any financial ruin. The reasons are as follows.
WHEN BREAKING A LEASE AGREEMENT IS LEGALLY JUSTIFIED
According to landlord-tenant law, a tenant can legally break a lease in North Carolina in a handful of scenarios.
1. An Early Termination Clause
Having an early termination policy in a lease can help save both the property owners and their tenants from all the complicated process that comes with finding a new tenant. As such, consider having the clause in your lease from the get-go.
When writing the early termination clause in your lease, make sure to address the following things if tenant breaks the lease:
- Minimum written notice that a tenant must provide prior to requesting an early lease termination. The termination notice can range from anywhere between 30 and 60 days.
- Proper notice must be written and signed by both parties
- Tenant must pay an early lease termination fee, which is typically two months’ worth of a rent period.
- Tenant must pay rent, utility fees, and any other remaining charges for the rental unit prior to moving out and breaking the agreement
Ideally, work with a lawyer or an experienced property manager to draw up a solid early termination clause for the lease, to ensure you are legally justified. And once it’s drawn up, make sure to go through it with new tenants prior to lease signing.
2. Active Military Duty
North Carolina Tenants who are Servicemembers are protected by the Servicemembers Civil Relief Act (SCRA) when they wish to break their lease early and leave the rental unit for starting active duty in military. In North Carolina, Servicemembers are members who belong to any of the following military cadres.
- Armed forces
- Activated National Guard
- Commissioned corps of the Public Health Service
- Commissioned corps of the National Oceanic and Atmospheric Administration
The protection of the act begins on the date the tenant enters active military service and ends thirty to ninety days after they get discharged.
3. Uninhabitable Rental Property
A lease in North Carolina must adhere to specific health and safety codes that provide basic standards for rentals. If a landlord can’t meet those standards, their tenant may be able to exercise any of the following rights.
- Break the lease without penalty
- Report the landlord to a relevant government agency
In some other states, tenants may also be able to withhold rent or make the repairs themselves and deduct the cost from rent. This is, however, not the case for North Carolina law.
The following are examples of conditions that make a unit uninhabitable.
- Lack of drinkable water
- Unsafe flues or chimneys
- Unsafe roofs or ceilings
- Lack of an operable bathtub or shower
- Lack of an operable toilet
- Unsafe flooring or steps
- Pest infestation resulting from structural defects
- Inoperable window locks and broken windows
- Inadequate drainage contributing to mold or mosquito infestation
- Lack of operable heating facilities during the cold season
- Landlord Harassment
A tenant may also be able to break from their lease in North Carolina due to harassment. The following are common examples.
- Refusing to accept a rent payment from your tenant
- Trying to illegally evict your tenant. For example, by falsifying violations to get a tenant to vacate the home.
- Sexually harassing their tenants. For instance, by making inappropriate comments about their appearance every time a landlord sees them.
- Imposing an illegal rent increase. North Carolina doesn’t have a rent control law in place. However, unless a landlord states this in the lease agreement, making their tenant pay a rent increase before their next rent period could be considered harassment.
- Purposely creating conditions that deny your tenant the right to peace and quiet enjoyment
- Landlord fails to perform needed or required maintenance within a reasonable period
- Withholding amenities that your tenant is entitled to
- Landlord repeatedly violates privacy
Whereas North Carolina doesn’t have a statute on landlord entry, it’s still paramount that landlords provide it in the lease agreements for legal justification to their tenants. Because, if a landlord doesn’t and makes repeated entries, their tenant could sue them for landlord harassment.
4. Victim of Domestic Violence
A victim of domestic violence has special rental provisions. And among these rental provisions is the right to terminate the lease early. According to NCGS § 42-45.1, tenants who are domestic violence victims only need to provide a 30-day written notice to terminate their lease.
Landlords are also entitled to verify claims of domestic violence as per NCGS § 42-42.2.
LANDLORD’S DUTY TO FIND A NEW TENANT IN NORTH CAROLINA
A North Carolina landlord has the duty to find a replacement tenant and sign a new rental lease. They must re-rent the unit left vacant by a tenant and return their security deposit — no matter the reason for leaving. (Isbey v. Crews, 284 S.E.2d 534 (N.C. Ct. App. 1981)).
BOTTOM LINE
If you're a landlord and own a rental property in North Carolina, it’s important to be familiar with the local laws. If you still have questions, feel free to get in touch with our team at KRS Property Management! We can help you navigate the law and manage your rental property. We also offer a FREE rental unit pricing analysis.
Disclaimer: This content isn’t a substitute for professional legal advice. Also, laws may change and this post may not be updated at the time you read it. For expert legal advice, please get in touch with us.