Lease Termination Agreement

When a tenant and a landlord sign a lease agreement, the hope is that the tenancy will run its full course with healthy communication, timely rent payments, and few issues along the way. 

However, as with anything in the rental industry, there are exceptional circumstances that warrant the termination of a lease, initiated by either the tenant or the landlord. This article covers the lease termination process and how to use a lease termination agreement.  

What is a Lease Termination Agreement? 

A lease termination agreement is a mutual agreement, generally between a landlord and a resident of a rental property, to terminate a lease or rental agreement previously signed by both parties on a specified date. 

The agreement must be signed by both the tenant and the landlord and specifies the date by which the tenant forfeits any right to the residence and must vacate the property. Note that this lease termination date is regulated by law in different states, and it is generally required that tenants are given thirty days from the issuance of the letter to vacate the property. Be sure to review your state and local laws to ensure that an updated lease termination date is legally compliant and gives a tenant ample time to move out after you’ve sent written notice. 

When is a Lease Termination Agreement Used? 

Early lease termination can happen in a number of circumstances. For example, a tenant may want to terminate their lease due to a bad roommate situation, or maybe they’ve landed a job in another state and need to move there. 

Landlords have reasons to terminate leases as well. If you are selling or renovating the property, for instance, you can terminate a lease early if it is permitted by state/local law and you have included a clause to that effect in your initial lease. The tenant should be made aware of these stipulations when they are signing their initial lease. As with any other reason, the tenant should get at least 30 days’ notice to move out of the property. 

Who is Involved in a Lease Termination Agreement? 

The only two parties involved in an early lease termination agreement are the landlord and the tenant(s) of the property. In fact, lease termination agreements are a way to ensure that any potential conflict does not emerge that would involve other parties, as would be the case in a legal dispute or the eviction process.  

What is Included in a Lease Termination Agreement? 

An early termination of lease agreement should include a clear delineation of the two relevant parties. Both the landlord and the tenant should be clearly identified at the top of a lease termination agreement, in addition to the address of the residence in question. It is important to be as explicit and specific as possible in a legal document to avoid confusion or further legal challenges down the line.  

Including an updated lease termination date is also imperative. As previously mentioned, this date must be compliant with legal regulations, which typically specify a thirty-day window but may be longer depending on what the original lease stated. 

Lease termination agreements also include and establish a lease termination fee (if required by the original lease) and the amount of the tenant’s security deposit being returned upon termination.  

As this agreement is a legal document, it ends with a space for both parties to provide their printed names and signatures.   

Lease Termination Agreement FAQs 

What are My Next Steps as A Landlord? 

Landlords have several responsibilities when it comes to issuing lease termination letters or agreements. One of the most important is to include an early termination of lease clause in your initial lease agreements for all new tenants. That way, an unexpected situation like wanting to sell or renovate the property makes the termination process smoother.  

Landlords are also responsible for complying with all state and local laws for lease termination and reviewing updates to these laws, or new ones, as necessary. As mentioned above, this includes giving tenants the appropriate number of days to move out and honoring the original lease in certain cases. 

Can A Tenant Terminate a Lease? 

If a tenant has a reasonable cause to terminate their lease early, they can be the one to issue the termination notice. In fact, either party can draft an early lease termination letter and send it to the other party for agreement. 

An early termination of lease agreement by tenant may occur, for instance, when a tenant has lost their job and is experiencing financial hardship. You may choose to include a financial hardship clause in your lease agreement, or work with the tenant to try and set up a co-signer or an alternate pay schedule, if the tenant has been effective and cooperative in the past.  

The Servicemembers Civil Relief Act protects any active military members from penalties if their service compels them to move, meaning that they are allowed to initiate an early termination. In this instance, the tenant must provide a landlord thirty days’ notice and official proof of their relocation orders.  

Conclusion 

Terminating a lease agreement early can be a complicated process that often results from unexpected circumstances. Using Innago’s free lease termination agreement will help ensure that one of the most essential steps in the process is done easily and correctly. Be sure that you are protecting your business and your investments by studying and adhering to state and local landlord tenant laws related to lease termination. 

 

Innago does not provide legal advice. This article is for educational purposes only and may not include the most up-to-date information. We recommend you consult with professional counsel if you have legal questions regarding your compliance with relevant laws.