Whether a lease termination is at the request of the landlord or the tenant, as the landlord, it will be to your advantage to draft an appropriate lease termination agreement. This protects your interests, and guarantees that you and your tenant have a clear understanding of the implications of the lease termination.
Here are some of the stipulations that should go into your lease termination agreement:
1. The effective date of the lease termination. This gives both parties a clear understanding of when the tenant must vacate the premises.
2. The termination payment. If you require your tenant to pay a fee for terminating the lease agreement, such as a month’s rent or forfeiture of the security deposit, state this in your lease termination agreement.
3. Mutual releases. If you are not penalizing the tenant for leaving early, state this in your agreement. This section should also clearly state that both parties agree to release each other from the terms of the written lease agreement.
4. Authority. This statement confirms that both parties have the authority to enter into the agreement.
5. Condition of property. This section can be used to clarify what type of damages, if any, are considered normal wear and tear, and which damages will be deducted from the security deposit. If you are concerned that the security deposit will not be enough to cover damages, especially if you are evicting a tenant, state what kind of responsibility the tenant will bear in fixing the property.
6. Whole agreement. This clause states that both parties agree to all the terms and stipulations in the agreement. This ensures that neither party can state that they were unaware of any terms within the agreement, and provides legal protection for the landlord and the tenant.
7. Date of delivery. The date that the premises will be delivered to the landlord must be included.
8. Signatures. Both parties must sign and date the lease termination agreement to show their acceptance of the agreement, and that there are no separate terms or conditions not included in the agreement. You may also require a witness to the signing, or require that the agreement be signed in the presence of a notary public.
Using a written lease termination agreement with your tenants is just common sense. The agreement helps ensure that both parties are comfortable with the terms of breaking the lease and any implications this may have.
Even if you do not have a written lease agreement, you should still insist that your tenant sign a written termination of your verbal lease. This can reduce confusion and provide a clearer understanding and legal recourse, should your tenant contest any of the terms you’re attempting to enforce.