Lease Termination Notice: A How To
In a perfect world there would never be a need to terminate a lease, but this world is far from perfect and it becomes necessary more often than you would think. In most cases, some type of lease termination notice is necessary, especially if there is a chance of legal action or collections over the lease termination. There are four basic areas of lease termination, whether we’re talking about an apartment rental, car lease or whatever is being leased; the type and wording of the lease termination notice will depend somewhat on which area applies:
Termination Allowed For In The Lease
A lease is a contract between parties; as long as it is reasonable and legal, parties can agree to whatever they like – including circumstances under which the lease contract can be terminated. This can be as simple as just requiring a lease termination notice of so many days from either party, or it can be complicated – requiring several things to happen before either party can terminate. The point is to read through your lease thoroughly; even if you find a section which outlines a way to terminate the lease, read the entire lease. There may be other sections which come into play – they could limit the termination section to the first six months of the lease as a random example. Be sure to follow the requirements in the contract for lease termination exactly, and document everything. Normally the termination notice has to be in writing. If you mail it, be sure to keep a copy and mail it with some form of proof of delivery (like certified mail). Click here for a sample and more information.
Termination Because the Other Party Has Breached
A contract requires performance by both parties; if the other party is not living up to their end of the bargain, it may be possible for you to terminate the lease; however, don’t assume just because they haven’t done everything the way you think the lease calls for that you can just terminate the lease. For example, if the landlord won’t fix a cabinet door that has fallen off (and the lease says such a thing is their responsibility to fix), that you can terminate. In most states there is a method where you can give notice and eventually do the repair yourself if the landlord won’t fix it and then deduct it from the rent, but you can’t terminate the lease. Even if the landlord won’t fix something serious, like the heat, most states still have a process you have to go through before you can terminate the lease. Normally you are required to give written notice of the problem and so many days to fix it, before you can actually give the lease termination notice. This applies in general to all leases; breaking a contract is a serious matter and can only be done for what lawyers call “material” breach (a technical breach which does no harm is seldom going to be grounds for lease termination). If you feel the other party isn’t living up to their end of the bargain, you want to give them proper notice of such, and document everything before you reach the point of a notice terminating your lease. The simple reason is the other side may not agree that you have the right to terminate, and the whole question may end up in front of a judge. If so, the judge is going to primarily be concerned with whether you gave proper notice, and if you can prove the other party breached the contract materially. Click here for more information and a sample termination notice.
Termination Simply Because The Lease Is Coming to an End
In most cases when a lease gets to its end date, it simply ends. However, many housing rental contracts will require notice that you are not going to renew the lease, or otherwise they commit you to a month-to-month renewal. Property managers need to know somewhat ahead of time if they are going to have a vacancy, for example. Typically these clauses require a 30-day notice before the end of your lease if you are going to be leaving at the end of the lease, or otherwise commit you to an additional month under a month-to-month renewal. So check your lease to be sure it doesn’t require notice that you are terminating at the end of the lease. If it does, a simple lease termination letter saying that you won’t be renewing should suffice. Follow any notice requirements in your lease (address to deliver to, so many days before end of lease). It’s easy to forget this type of lease termination notice; it’s best to put something in your calendar at the beginning of the lease to make sure you don’t forget.
Termination Because You Are Breaking the Lease
Either you can’t afford it, you’ve had a job change or loss, or something else has changed to where you aren’t going to be able to fulfill the lease. You normally can’t simply walk away from it, of course – you signed a contract. You want to understand beforehand what you might be in for – read your lease carefully for acceleration clauses and liquidated damages clauses. An acceleration clause means that if you breach the lease, the lessor can charge you for all the payments that would be due in the future. If you lease a motorcycle for 48 months, for example, and after making payments for 24 months you break the lease, if there is an acceleration clause you could suddenly owe all at once the other 24 payments which remain. Liquidated damages are amounts which are agreed upon in advance which are intended to reflect the cost to the lessor because you have breached the lease. If you lease a house for two years and leave after one, there is cost to the landlord of advertising and showing the new property, doing background checks, etc. It is not uncommon for a house lease to call for the deposit to be liquidated damages if you materially breach the lease. This can all be pretty bad, but there are reasons to still give a lease termination notice even when you are the one breaking the lease. You may be able to negotiate a better ending than called for in the lease, for example. For more details on how to break a lease, check out this site. A most critical reason for giving notice of the lease termination is to create a requirement that the lessor mitigate any damages. Normally this is thought of in housing leases, but it can apply elsewhere. If you lease a house for 12 months and break your lease after 6, you are normally still responsible for the rest of the payments (for some reason many tenants think they aren’t responsible after they leave or are evicted, but of course they still are because it’s a contract). However, the landlord is normally responsible to make a reasonable effort to find a new renter. Once they do, then you are no longer responsible for payments after that point (in other words the landlord can’t double-dip and collect rent from both you and the new tenant).
Even if you are the one breaking the lease, the earlier you can give the lease termination letter or notice the better from the standpoint of the lessor knowing they should start trying to find someone else to lease and thus mitigate your damages. If you can let the landlord, for example, know a month before you have to move that you are breaking the lease, they may be able to arrange for someone to be ready to take the unit as soon as you are gone, getting you off the hook for the rest of the lease payments. Click here for sample termination notice and more information.