Both landlords and the tenants should enter into a lease termination agreement to protect their own interests. The relationship terminates upon the expiration of the contract unless they both concur to an extension. The language of this agreement also defines the procedures for terminating the contract. The law requires both parties to follow the terms of the agreement throughout the term of the lease.

Lease Termination Agreements

What is a termination of lease agreement?

When two parties enter into an agreement, they will be legally bound to the terms of that agreement. There are cases when the tenant, after signing the contract, would have to leave the rented property for different reasons. In the same way, the landlord can terminate the contract under specific circumstances.

In both cases, the parties should abide by the laws of the state and the specifications mentioned in the lease before providing a rental termination letter or notice. This is when a lease termination agreement comes into play. Since the lease is an agreement, it binds the tenant to the duration of the lease.

The tenant must pay the rent throughout the entire lease period. But there are exemptions to this rule, specifically if it’s the landlord who violates or breaks the lease. States have their own rules about lease termination letters. Some may even provide outrageous reasons to their landlords to break their contracts to get them to agree.

If it’s the landlord who violates the terms of the lease, especially when it comes to safety and health codes, the tenant may leave the premises even without giving prior notice or giving an early lease termination letter. In legal language, this is “constructive eviction” because the rental property isn’t liveable and the tenant gets evicted from the rental property.

However, if the tenant terminates his lease with no good reason, then the landlord can sue him for damages. The landlord has a legal right to give a rental termination letter if the tenant violates the lease’s terms or broke any laws.

Tenant violations must have enough significance for the landlord to terminate the lease. This may include non-payment or late payment, having a pet despite a rule against keeping pets in the property, and more. As for violations of law, an example would be the sale of drugs within the premises. This justifies the landlord’s move to implement a lease termination agreement

To start the proceedings, the landlord or tenant must first provide a lease termination letter to the tenant. This makes it clear that the lease will get terminated. The terms of the early lease termination letter can differ depending on state laws so are the requirements on the delivery of the letter. In some cases, the tenant will still get time to rectify his violation while in others, the notice states that the tenant should leave the premises immediately or risk getting evicted.

Early Lease Termination Letters

Important parts of a lease termination agreement

A lease termination agreement can just be a simple contract if both parties agree that the lease will get terminated. This releases the tenant from all responsibilities. This usually happens when something comes up like a change in employment where the tenant needs to relocate, a medical issue, a devastating breakup, and more.

Tenants can talk to their landlords to let them break the lease. They can do this verbally or through a rental termination letter. Should the landlord agree, the tenant should get the landlord’s approval in writing in case of any disputes in the future. Here are the important parts to include in a lease termination agreement:

  • The basic terms
    The lease termination agreement, also referred to as a termination agreement that was mutually agreed-upon or simply an early termination agreement, should completely release the person from their duties as the leaseholder. The basic terms should include:
    Start date and end date of the lease
    The address of the rental property.
    The name of the landlord.
    The rent amount paid each month.
    The amount of the security deposit.
    A lease addendum or lease modification clause that states the date of the lease’s cancellation.
  • Mutual release clause
    In the interest of both the tenant and the landlord, a lease termination agreement should include a clause that releases both parties from any type of liability to each other. Here is an example of a standard clause for mutual release:
    “Each party hereto releases the other party hereto from all demands, claims, damages, liabilities, rights, and causes of action of any nature whatsoever, whether at equity or law, unknown or known, unsuspected or suspected, related or incidental to the Premises or the Lease and which first come out of occurrences and transactions on and after the date of termination.”
    It should also clearly emphasize that the landlord won’t hold the tenant responsible for any additional rent payments or fees after the termination date.
  • Considerations
    The agreement must also include all of the fees that the tenant paid or agreed to pay in exchange for their release from the lease. Keep in mind that no documents can prevent lawsuits.
    It will, therefore, be very beneficial for the tenant and landlord to sign a lease termination agreement to ensure that they are both in agreement about the date when the tenant should move out, the condition of the unit, the return of the tenant’s security deposit, and payment of other fees.

Lease Cancellation Letters

How do you write a lease termination letter?

There is a need for a lease termination agreement when a rental or lease agreement between a tenant and landlord ends. There are two ways of ending an agreement where both parties can avoid their obligations:

  • If only one of the parties involved wants to end the lease agreement, either party should send a lease termination letter to the other.
  • If both parties concur to the termination, the tenant and landlord sign a termination agreement that they mutually agreed upon.

An early lease termination letter usually includes the following elements:

  • Landlord: the name of the person who owns the rented property.
  • Tenant: the name of the person who rents the property and gives payments to the landlord.
  • Original rental or lease agreement: this should include the start date and end date of the lease.
  • Vacate date: the date when the tenant should move out of the property.
  • Forwarding address: the address where the landlord will send notices or the security deposit in the future.
  • Reason for termination: a short explanation for terminating the lease agreement.

Rental Termination Letters

How much is a lease termination fee?

The rules of breaking a lease can vary for every lease and the rental laws that govern the same. For either party who gets involved in the termination, make sure to read the lease agreement for the terms regarding departure. In most cases, the tenant has the choice to pay a fee for early termination. In such a case, the tenant may have to pay 1 to 2 months’ rent for them to get out of the lease agreement.

Regardless of whether or not the tenant pays early termination fee, most lease agreements include a clause where the tenant should give the landlord a minimum of 30 days’ notice when planning to move out.

Should the tenant fail to give this proper notice to the landlord, he may have to pay the rent for the remaining months, especially when that the landlord cannot get a replacement. However, if either party finds a suitable replacement tenant, the tenant won’t have to pay for the remaining months’ rent.

Lease Termination Agreement Examples

Good reasons for breaking your lease

Most reasons for breaking or terminating a lease are in good faith or for good reason. There are many reasons that can legally get tenants off the hook for having to pay rent and these include:

  • When the property is no longer a healthy or safe place to live in.
  • When the landlord failed to keep the unit in good condition and refuses to fix the essential items such as electrical issues, broken plumbing, and more.
  • When the tenant experiences personal hardships, employment issues, and the like and the lease agreement includes an early termination clause.
  • When the tenant must leave because of military orders.

There are also different ways tenants can break their lease without having to pay high fees:

  • Finding a replacement tenant
    The landlord must look for a new tenant after the current tenant has given notice about breaking his lease. In many cases, the landlord may ask the current tenant to search for his own replacement. Should the landlord and the tenant fail to find a replacement, by law the tenant should pay rent.
  • Subletting
    This happens when the tenant who signed the original lease agreement can find another tenant to pay the rent each month. This new tenant is the “subtenant.” Before having the unit sublet, the current tenant should first check the lease agreement to check whether or not he can sublet. Unfortunately, most landlords don’t permit subletting.
  • Negotiating with the landlord
    Tenants can also speak with their landlords. After all, they are people too and may understand the tenant’s predicament. If the tenant has treated his landlord with respect during his stay, his landlord may agree to look for a new tenant and allow the tenant to break the lease with no penalty.
TemplateLab May 20th, 2020