A Landlord’s Guide to Early Lease Termination
In any lease agreement signed between a landlord and a tenant, the agreed, fixed period of occupancy will be specified therein.
Although the landlord and tenant may have every intention of allowing the lease to continue for the period specified, sometimes situations arise to prevent or change this and breaking a lease is not uncommon.
The landlord may wish to recover possession or the tenant may be forced to move out earlier if certain circumstances arise. And, so, the question of how to terminate a lease early often comes up.
Therefore, let’s have a good at some of the key issues to be considered in the event of early termination of a lease:
Firstly, establish the reasons for early termination
Fundamentally, the reasons to early terminate can be separated into landlord and tenant related issues. The landlord may want to:
- sell the property and the buyer wants to have vacant possession without the encumbrance of a tenant;
- undertake extensive decoration and/or remodelling or renovations or repairs to the property, and which require it to be vacant for a certain period of time;
- live there him- or her- self
On the other hand, the landlord may wish to early terminate the lease as the tenant:
- has failed to pay rent and meet other financial obligations in the lease agreement, despite appropriate warnings and notice periods;
- is failing to meet his repair and maintenance obligations which may mean that the property is becoming uninhabitable, with possible health and safety and liability consequences for the landlord;
- is breaching other lease conditions such as keeping a pet when this is expressly not allowed, disturbing neighbours with excessive noise, damaging the property, using the property for an unauthorised use, or participating in illegal activities on or near the premises.
Then, review the lease agreement
Carefully go through the terms and conditions in the lease signed by both the landlord and tenant. You need to establish exactly what language has/has not been included in the clauses of the agreement as this will form the basis for your next actions.
The provisions in the lease for any early termination can also be grouped into two parts:
- Default:
Refers to the failure (by the tenant) to comply with the terms and conditions of a signed lease. Often, written warnings are given by the landlord to the tenant to “cure” the default before early termination due to default can proceed.
In the case the default is not cured, the due legal process will have to be followed in order to enforce early termination, probably requiring statutory notice periods. It’s also necessary to record all relevant correspondence leading up to and during the termination process. In some cases, the matter may end up in civil court.
- Express or special conditions in the lease
If, in advance of granting a lease to a tenant a landlord plans that the property may be sold, extensively renovated or may, one day, become his/her residence, then such provisions can be written into the agreement. This will include how much notice is required to terminate the lease.
It’s in the best interests of a landlord to include as many contingencies as possible, as the more opportunities there are to early terminate a lease, the more flexibility there will be in the future.
Always take advice from an experienced professional
If you are thinking about an early termination of an existing lease or want to make such provision in a new lease to give you more options, just give us a call at Emerald Management and Realty. We’re specialists in working with and advising clients about leasing matters.
It’s easy to arrange an appointment to meet or you can contact us via email about your lease issues or other real estate related matters.
We look forward to meeting up!
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