PROPERTY MANAGEMENT BLOG

Breaking a Lease in NC—Know the Laws

System - Tuesday, May 18, 2021

A lease binds both the landlord and the tenant for a certain period of time, usually one year. During this time, both parties have certain rights and responsibilities that they must adhere to. 

Breaking a lease is never ideal, but sometimes it's unavoidable. Your tenant could be a service member who has been deployed, or they may have received change of station orders. They could also be a victim of domestic violence.

And what’s the state of your North Carolina rental property? Have you been responding to tenant maintenance requests quickly? If not, it’s also possible that the tenant could break the lease without punishment because you’ve been negligent.

As you can see, the reasons for breaking a lease could be many and varied. For this reason, many landlords decide to enlist the help of a professional local property management company to handle such matters on their behalf.

The following is everything you need to know about breaking a lease in North Carolina. 

When Can Tenants in North Carolina Break Their Leases?

Generally speaking, a tenant must continue paying rent for the entire duration of the lease regardless of whether they are living there or not. 

However, a few exceptions exist. They are as follows:

1. An early lease termination clause exists. 

You could include specific terms that allow a tenant break their lease in exchange for a penalty fee. 

early termination clause

The penalty could be the equivalent of 2 months’ rent. If the monthly rent is $1,500, you could require tenants to pay a penalty of $3,000 when looking to terminate their lease. 

Also, you may want tenants using this clause to provide you sufficient notice. 30 days notice is typical. 

2. Your tenant is beginning active military duty. 

If your tenant enters active military service after signing the lease, they have a right to terminate the lease under federal law. 

This is as per the War and National Defense Servicemembers Civil Relief Act, 50 App. U.S.C.A. § § 501

active military duty

The Act protects members of the “uniformed services.” This includes the following service members: 

  • The activated National Guard.

  • Commissioned corps of the Public Health Service.

  • Commissioned corps of the national Oceanic and Atmospheric Administration.

  • Armed forces.

The tenant must give you a written notice of their intent to end their lease for military reasons. 

You may also require that they accompany the notice with a copy of orders from their commanding officer. 

With that being said the lease won't terminate right away. The earliest it can terminate is 30 days after the next rent period begins. 

3. The unit violates North Carolina health or safety codes. 

As a landlord, it’s your responsibility to ensure your rental property adheres to local and state housing codes. If your rental doesn’t meet those codes, your tenant could exercise one of the multiple rights that North Carolina's landlord-tenant law gives them. 

One of these rights is to “repair and deduct.” In this case, your tenants can choose to hire someone to repair the unit and deduct the costs of the repairs from the rent. 

The other option your tenant has is to report you to relevant authorities, such as the North Carolina Health Department

The third option your tenant has is to terminate their lease without further obligations to the lease. 

The following are some of the conditions that can impact a rental’s habitability.

  • Pest infestation

  • Broken windows

  • Unsafe wiring

  • Lack of operable locks

  • Unsafe flues or chimneys

  • Unsafe flooring or steps

4. You have harassed or violated your tenant’s privacy rights. 

If your actions are serious enough, a tenant could report you for harassing them. The following are actions that a court could consider to be landlord harassment:

  • Refusing a rent payment.

  • Imposing an illegal rent increase.

  • Creating excess noise that disrupts the tenant’s quiet and peaceful enjoyment of their rented space.

  • Failing to perform requested repairs or maintenance in a timely fashion.

  • Withholding amenities a tenant is entitled to.

  • Entering the tenant’s dwelling unit illegally.

landlord tenant law

And while your tenant is entitled to privacy, notice of entry laws are absent from North Carolina's landlord tenant law. 

This means that you don’t have to notify your tenant prior to entering their rented premises. 

5. The tenant is a victim of domestic violence. 

Victims of domestic violence in North Carolina have special rental provisions for their protection. 

The tenant may terminate their lease within 30 days given they have provided proof of Domestic Violence status. 

When are tenants not legally justified to break their leases in North Carolina? 

The following reasons are generally not sufficient reasons for tenants to break their leases. 

Consequently, a tenant has no legal protection against penalties that may arise for not honoring the lease in these circumstances:

  • Breaking the lease to move into a new home. 

  • Breaking the lease to move in with a boyfriend or girlfriend.

  • Terminating the lease to upgrade or downgrade.

  • Breaking the lease to move closer to family. 

  • Breaking the lease to relocate to a new job or school. 

Does the landlord have a duty to find a replacement tenant in North Carolina? 

Even without a legal justification, the tenant may still be off the hook for paying all due rent under the lease. 

That’s because as a landlord you have a duty to make reasonable efforts to find a replacement tenant, according to North Carolina's landlord tenant law

As a result, your tenants may not need to pay much. They may only need to pay rent for the duration the unit was vacant. 

However, in re-renting the unit, the landlord doesn’t have to relax their screening standards. For example, there's no need to rent to a tenant that doesn’t have a good credit score. 

With that being said, should you not find a replacement tenant, the tenant will still be liable for all the rent due under the lease. 

Disclaimer: This blog post is a helpful overview of breaking leases in North Carolina, but it isn't legal advice and should not be interpreted as such.

Do you still need help? If so, hiring expert help may be in your best interest. Mark Thomas Properties is an experienced property management company operating in Durham, NC. Get in touch today!