North Carolina Lease Agreements
Generally accepted lease agreement terms in North Carolina include the following:
Parties to the contract. This is the legal document, not the oral contract; and as such the lease must be signed by all parties (listed as their legal names herein) for it to be effective -so if one party is named as "Bill Smith" and another "William Smith" the lease may be rendered moot.
Property. If it is not fully described here, it does not become part of the lease. It can be a full description of the address (unit number, street number, etc.) or can be described as "the Landlord’s property". If the property is being rented furnished the respective furnishings should be listed with their approximate value in the lease.
Rent. The exact amount as well as when and how it should be paid is specified. This could mean the 1st of the month, the last day of the month, etc. Rent payment should also specify whether the payment method is bank draft/ACH/electronic check, or whether it can be paid via a third party like Venmo, Cashapp, etc. The lease should also be clear regarding where the rent should be paid, such as in person at the leasing office, by mail to a specific address, by third party via app, etc .
Lease Term. While many leases are forever, they can be shorter and some prohibited by local law. Once the term is over the lease can be terminated by either party providing written notice in accordance with the lease or the law (whichever is longer), but cannot be terminated in retaliation unless otherwise agreed. At will tenancies typically require 30 days notice from one or the other party.
Tenant obligations. This may also describe the landlord’s obligations, but in a non-exclusive way. It may designate a public area for notice purposes, as well as specifying in general that tenants are responsible for keeping the part of the premises under their control clean and trash free. If the premises are multi-level tenants are often required to maintain any common areas and stairwells outside of their unit. Tenants are often required to report issues at the property to the landlord, as well as to promptly pay any costs associated with their breach of the lease. The lease will often specify that the landlord has a right to enter and that the tenant cannot get rid of or improve upon anything in the unit without first getting permission. Pet leases and car leases are sometimes separate documents.
Lawful Reasons to Break a Lease
As a general rule one must have a legal reason to terminate any contract binding that person to the contract terms. A tenant’s lease is a binding contract between the tenant and the landlord, and usually contains terms that favor the landlord over the tenant. However, certain circumstances may actually be grounds to terminate the lease agreement (legally called "breaking a lease"). The general legal reasons to terminate a lease in North Carolina include:
Uninhabitable Conditions
"Habitability" is a legal term meaning that rented premises must meet basic safety and maintenance requirements. If the conditions of the premises are not up to basic safety and health standards, a tenant may have grounds to terminate the lease early. In North Carolina, this includes conditions such as:
Landlord Harassment
Another legal reason for breaking a lease is landlord harassment. A landlord cannot remove windows or locks in an effort to force a tenant to move out, nor can a landlord refuse to fix broken plumbing or heating systems. If the landlord does this type of thing, it can be seen as harassment and grounds for breaking a lease.
Military Duty
A lease can usually be legally broken without consequence if the tenant is in the military and sent on duty more than 70 miles away. Military orders are generally used as proof of the duty and that it was in excess of the 70 mile distance.
Tenant Rights and Legal Protections
A tenant may have the legal right to break a lease for several reasons, including the presence of lead paint in a home built before 1978. If there is a breach of the warranty of habitability, then the tenant may be protected against "constructive eviction." In North Carolina, a tenant is entitled to the covenant of quiet enjoyment guaranteed by North Carolina common law. This covenant contains an implied warranty of habitability which obligates a landlord to maintain residential housing units in habitable condition. If the landlord fails to comply with his or her duty to repair, the tenant may be entitled to a rent abatement, or as a possible defense to any breach of lease action brought by the landlord.
In North Carolina, a tenant may also terminate a residential rental agreement if the following factors are present: Under N.C. Gen. Stat. ยง 42-45, it shall be the duty of every landlord to provide to each tenant who lives in a rental property where identity theft service may be a risk, written notice which: Whether it is reasonable or not for a prospective tenant to rely on the existence of identity theft service provided by the landlord or property manager, is a question for the jury in a breach of contract or unfair or deceptive trade practice lawsuit. It is unclear what damages a tenant might be entitled to for the landlord’s failure to provide notice of identity theft protection.
In addition to the tenants’ protection under various statutes, the Federal Fair Housing Act (FHA) affords remedies to protect against discrimination in the sale, rental, or financing of dwellings based on race, color, religion, sex, disability, familial status, and national origin. The FHA applies to single-family homes where the number of dwellings or rental properties is owned by a person. If the dwelling has four or less rental units and is owner-occupied, if the unit is rented or sold by the owner without the use of an associated broker, the FHA does not apply.
Similar to North Carolina law, federal law under the Fair Housing Act requires landlords to make accommodations in rules, policies, practices, or services when needed because of a disability. The landlord must make exceptions to any "no pet policy" to permit the resident to keep a service animal. In addition, under the FHA, a housing provider is required to allow tenants with disabilities to make reasonable modifications or renovations if necessary to the use and enjoyment of the premises. A "reasonable accommodation" is modification to meet the special needs of a person with a disability.
Legally Breaking a Lease
Once you are clear that your reason for terminating the lease is permitted or is valid under North Carolina law, there are specific steps you will need to take to legally break the lease:
- Notify the landlord in writing that you wish to terminate the lease. Most leases have some sort of notice provisions. If a lease requires "written notice" it is acceptable for the tenant to provide the landlord with an email or a letter letting the landlord know that he/she is terminating the lease.
- Give the landlord the opportunity to mitigate its damages. Provide the landlord with notice that you are vacating premises and allow the landlord time to mitigate his damages by re-leasing the premises. Again, most leases have specific provisions on how notices should be given.
- Prepare the premises to be reasonable re-leased. Under no circumstance should you expect the landlord to hold over until the end of the lease if you have a reason to break the lease.
- Respond to any application or screening process the new tenant must go through like you would for any other lease you applied for.
- When the new tenant signs a lease and pays the first month’s rent on time, the former tenant should give the keys to the landlord, end his lease obligations and be free from penalties.
Penalties for Breaking a Lease Lawfully
It is critical to remember that a landlord could potentially sue a tenant for damages if the tenant breaks a lease without a legally acceptable reason. These damages can often include:
a) Paying the entire amount of unpaid rent due under the lease.
b) The cost of locating another tenant to rent the property. However, these damages will not exceed the rent that was due under the lease period .
c) Reasonable attorney fees and costs as identified in the lease.
The exception to these damages is if a leased property is too dangerous to occupy. Under these conditions, a damaged property can allow a tenant to get out of a lease without paying damages. But this exception should always be examined closely because it is always better for the parties to reach an agreement about breaking a lease than to go to court over a dispute.
Addressing Lease Conflicts
Disputes over lease agreements can arise, and in North Carolina, you have various avenues to resolve these problems.
Other than the limited circumstances set forth above (death, uninhabitability, or continuation of a war), my office does not recommend breaking a lease. Either you’ve agreed to do something and you need to pay someone else what you owe for breaking your promise, or it was an agreement in error and can be voided in court. If you sign a lease it is binding on everyone that signs it, and you are required to follow the terms of that agreement unless agreed to otherwise in writing.
One way to possibly avoid having to pay early termination fees is to mitigate damages. Mitigating damages means taking reasonable steps in an effort to lessen the impact of your lease termination on your landlord. If you can show that your landlord did nothing to try and find your replacement tenant, the law views this unreasonably.
If you find someone to take over the lease early, a Letter of Lease Assignments is used. In this instance, the new tenant would take over the apartment lease and pay rent directly to the landlord. If this is done properly, the original tenant is released from the lease and is no longer liable for any damages or issues that arise after the date of release.
Another way to resolve a dispute is mediation. It involves a neutral third-party mediator who digs into the particulars of the dispute. The mediator doesn’t make any decisions but encourages the parties to resolve the issue in a collaborative manner and to come to a compromise. Mediation doesn’t involve a judge and isn’t legally binding, so it’s less legally risky for both parties.
If an agreement can’t be reached through mediation, a small claims court may be needed to settle the dispute. There is a cost for filing with the court, either as a plaintiff or defendant, and the court’s decision is binding.
If a ruling has been made in small claims court, you are able to appeal the decision to the court of appeals further in the process. There is a required procedure: The decision must be "final and dispositive," meaning there can’t be any questions the judge still hasn’t settled.
There’s a presumption in North Carolina that a person is bound to the contracts they sign, a lease being a type of contract. There are a few examples of when a lease can be broken in North Carolina, including death, uninhabitability of the premises, or continuing occurrences of war.
Obtaining Legal Guidance
When contemplating breaking a lease agreement, it is always in your best interest to seek legal advice and clarification on the situation. An experienced attorney can evaluate the remaining time left on your lease and the specific reasons you are trying to break the lease, whether in the middle of term or prior to signing. Purchasing and signing a lease is a large commitment. It is likely that you do not understand the full ramifications of the law in your specific state. A lawyer can help explain the "good faith" negotiations of breaking a lease and how to go about terminating it. There are multiple nuances to lease agreements in North Carolina including security deposit regulations, what is included in the premises , and the expectations of the lessor and lessee. Taking the time to go over the lease with an attorney will help you; it can save you thousands of dollars or even get you out of the contract all together.
If your landlord is unwilling to negotiate or you have exhausted every option, it may be necessary to breach your lease. Breaching your lease agreement does not have to end in ruin and litigation, nor does it mean you will lose your security deposit. To have the best fighting chance of ending your lease agreement in a favorable situation, it is highly recommended to contact an attorney. A lawyer understands the intricacies of the law and can better guide you in ending the lease agreement than a simple review of online real estate terminology can.