Choosing the right lease term

Lease term (duration) and lease breakage are two really important clauses in a lease agreement. Pay particular attention to these, when renting an apartment in America.

A lease is a legally binding contract between the tenant and landlord. Lease term is the predefined period of time for which that contract stands. Laws in almost every state of the US favor the landlord, if a tenant tries to 'break' the lease, i.e. curtail the original lease duration.

Most leases are signed for one year at a time, with an opportunity to renew. Be wary of signing a lease for longer than 12 months. Even if you're certain you're going to stay in a location, why commit yourself upfront? Unforeseen emergencies can, and do come up (a job loss, a medical situation, a family need). Negotiating a lease breakage at that time will only add to your stress.

Here are some tips and guidance from our readers on when to sign a longer lease and when to go in for a shorter one.


  • If you're in a stable job (e.g. with the government), go for a 12 month lease.
  • If rents are very volatile in your area, go for a longer lease. This will help you lock-in the rent amount for a longer period of time.
  • If limiting the monthly rent to as low a number as possible is important for you, you might need to go for a longer lease. Rents for longer leases are generally lower than shorter leases because the landlord saves time, effort and money on finding a new tenant, should you vacate after a short time.
  • Many landlords incentivize a 12 month lease. A common incentive is to offer a 13 month lease, with one month's rent free - usually the first or last month. If these incentives work for you, do go ahead and take advantage of them.
GOING FOR A SHORTER LEASE (6 months, 3 months, even month-to-month)

Shorter leases are usually more expensive than 12 month leases. The tendency is, therefore, to automatically opt for a 12 or 13 month lease. However, lease breakage terms can get brutal. Common breakage terms include 1 to 2 months additional rent plus a 30 day notice to vacate early. You also have to return any incentives already availed (like a month's rent free). In some cases, you may forfeit your security deposit as well. All in all, it is cheaper to go for a shorter lease (even with slightly higher rents), if there is any uncertainity on your lease duartion.

You must consider a shorter lease term in the following situations:

  • Your job is unstable (e.g. your company is contemplating layoffs)
  • Your job is stable but location is unstable (i.e. you may be transferred at short notice)
  • You are not sure you like your current apartment and want to trade-up at some point to a bigger apartment, a townhome or a single-family home.
  • You are not sure you like the current locality and may want to change soon
  • You have a life event coming up (like marriage or birth of a child)
  • The lease breakage terms are punitive (e.g. you have to pay for the full lease duration irrespective of whether you vacate early or not. Don't be surprised - such terms are also out there)
Click here for location-wise options on companies and apartment complexes that entertain short term leases or alternatively, provide economical extended hotel stays.

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