OK so I have been renting this townhouse for a year now. The lease ran out on Sept 1, we then switch to month to month. Recently they have been doing some work on the house. Which includes redoing the paneling and the windows. They did the trim for the windows but have yet to do the inside. Now with no window seals or framing we have no blinds in our house. Due to the recent weather we have had a lot of rain and water has been seeping into the house. It has also been over 3 weeks since they did the outside work on the windows.
I call my landlord to tell her about the windows, she didn't seem to concerned. Then she goes to say "I know this may seem like an inconvinience but you won't have to worry about it for much longer. We are going to redo the lease on that house and not allow pets on the premise, and you will get notice on the 1st of Oct and you will have 30 days to vacate."
So now to my current situation, me and my wife have found a new place that we can move into on the first so we can maybe try and not stay here any longer. I told my landlord that we don't want to stay for oct and she says if we leave without giving 30 day notice we will get fined $1K.
OK, so what can I do? Can I somehow get out of this bind or maybe get prorate or something. Oh also if we stay here for oct they will be doing siding on the house, window seals maybe... and carpet from what she says... do I really have to be subject to this ary?

... if we stay here for oct they will be doing siding on the house, window seals maybe......and carpet from what she says...do i really have to be subject to this ary?

No, you don't (absent something in the lease giving them the right to re-model the house while you are living in it). So tell the LL no; you will not let them in to do the carpets, etc. if they are going to insist on October's rent.

I don't understand why you let them do the prior work. It might have been termed constructive eviction, which would have allowed you to leave without notice, but you appear to have waived that. Perhaps it would still fly, considering the rain seepage.

What is this $1 K "penalty"? Is that your monthly rent? Move out and see if they can recover it despite not being in a position to immediately rent out the premises. A judge may very well rule against them.

They can't "fine" you. Then can, however require that you give proper notice to vacate and can withhold your security to compensate for that.

I agree with AK, though, I would move and take my chances in court.

Take lots of pictures.
Did you put down a security deposit?
Are you SURE you have the new apartment, with pets allowed, and no reference from this landlord?