The lease termination agreement

The statutory period of notice is stipulated in every rental agreement. It is usually three months, but a shorter period can also be agreed. Sometimes, however, it becomes necessary for the tenant or landlord to get out of the existing contract earlier. In such cases, a lease termination agreement can then be negotiated. In order to avoid later trouble, everything should be laid down as precisely as possible in it.

When is a lease termination agreement a good idea?

In many situations, a lease termination agreement can be the best solution for all parties involved. For example, a tenant may need a new house or apartment at short notice due to a change of job or other life circumstances, thus saving double rent payments. Even in the event of a death, such a contract can ease an already difficult situation for the relatives. Or if there are several main tenants, but only one party wants to get out of the tenancy.

For landlords, too, there are some scenarios in which the early end of the lease is a good idea. For example, if he now wants to live in the property himself, but the notice period is too long for him – in the case of termination for personal use, this can last 12 months or even longer. A lease termination agreement can also be helpful in the case of a basic renovation or the sale of the property.

What should be included in the lease termination agreement?

The prerequisite for a lease termination agreement is that both parties, i.e. tenant and landlord, agree – it is not possible to unilaterally terminate the lease via this route. The contents include, among other things, the names of the contracting parties, the address, the exact designation and the termination date of the tenancy, as well as additional agreements, such as on minor repairs in the apartment. To avoid problems later, the information should be as accurate as possible. For example, you have to make sure that the contracting parties are identical to the people in the lease and clearly describe what rental property is involved. This may sound obvious for any contract, but careless mistakes have often resulted in repercussions.

Is there compensation?

On the tenant’s side, there is no right to compensation from the landlord. However, it is advisable for the landlord to offer consideration – such as payment of the moving costs. This way, the tenant is more likely to agree to a termination agreement.

On the other hand, the landlord can demand compensation if the termination agreement was initiated by the tenant. After all, he sometimes loses several months of rental income. But here, too, there is room for maneuver in negotiating the contract. The tenant could, for example, directly arrange for a new tenant for his apartment.