Housing is a crisis in California. Not only does the United States fall 3.8 million houses short of homes for the number of families needing housing, but California tops the list of states with high housing demands and has the largest housing shortage in the country. It would take an estimated 1 million more homes to house all of the state’s residents. For this reason, property owners with rental properties take lease-breaking very seriously. Breaking a lease before it ends in California typically results in high penalties.
Because the family residence is part of community property in a marriage according to California’s community property law, it becomes part of the fair and equitable division of property in a divorce — even when spouses only rent the space. But regardless of which spouse is awarded the home in the divorce settlement, a landlord is almost certain to expect the couple to honor the lease agreement.
What if Both of Our Names are on the Lease but We are Divorcing?
The question of what to do with a lease agreement when getting divorced in California can be complex and much depends on whether or not one person wishes to remain in the home or if a judge awards retention of the marital home to one party in the divorce. Options for dealing with the lease agreement may include the following:
- Working together until the lease expires with one party remaining in the home with the other contributing toward rent until the lease ends
- Ask the landlord if you can sublet the home
- Have one party remain in the home and take over the rent payments with the other spouse’s name removed from the lease agreement
- Check your lease agreement for an “early out” clause. Some leases allow renters to opt out early with a two-month rent payment to give the landlord time to find new tenants. In rare instances, a lease may include an out clause for divorce or other major life changes
- Find out the cost of breaking the lease and agree with your spouse to split the penalty expense equally
If you and your spouse agree for one party to remain in the home and the judge awards the residence to that party, ask the landlord to remove the other spouse’s name from the lease agreement or wait until the lease expires and renew only in the name of the party remaining in the home. Expect the landlord to check the credit of the person remaining in the home to be sure they still qualify for the lease under their new income status.
What are the Possible Consequences for Breaking a Lease
In some circumstances, divorcing couples may be forced to break their lease agreement. For instance, if neither couple chooses to remain in the home or cannot afford to remain in the home due to the change in their financial circumstances after the divorce becomes final and assets and debts are divided. When this happens, there could be consequences such as the following:
- The property owner could file a lawsuit demanding you pay off the remaining balance of the lease agreement
- Breaking a lease agreement could negatively impact your future ability to qualify for rentals since they typically require references from past landlords
- The landlord could charge penalty fees in the form of charges for advertising for new tenants and any difference in rent payments throughout the term limit of your original lease agreement if the landlord was forced to lower the monthly rent in order to fill the vacancy
It’s always best to work with your family law attorney to work out a legal agreement with the landlord for the most cost-effective solution to breaking a lease agreement or signing it over to the other party in a divorce.