Termination of a fixed-term lease agreement. Guide.
How complicated is it to terminate a fixed-term lease? About the dates and methods of terminating contracts, the rights of the tenant and the landlord.
Early termination of a fixed-term lease is often a complicated and quite stressful process. When one of the parties to such a contract, which was concluded for a fixed period, wants to terminate it earlier, a serious conflict often arises. We are experts who support clients on a daily basis in resolving such disputes. That's why we decided to share some of the knowledge and experience we have acquired - we invite you to read the guide we have prepared.
Let's establish the facts - first, the landlord and the tenant agreed on something different. Now, due to different needs, it is time for one of the parties to withdraw from the contract. However, the possibility of terminating a lease concluded for a fixed period is usually very limited. In the worst case, the tenant will be obliged to pay rent until the end of the contract. In turn, the landlord may be obliged to pay truly enormous compensation. Unless there is a way to terminate such a contract.
Finding a possible effective way to terminate the lease agreement early is a challenge
Tenants or landlords who want to terminate a fixed-term lease agreement early are people or companies that face a major obstacle. The most common and greatest disadvantages of such a situation include high stress, formalities, compensation and contractual penalties. The worst thing, however, is the uncertainty that lasts until the very end of such a dispute - which I guarantee exists on both sides. Both parties are not sure whether it will be possible to end the lease agreement at all, how long it will be possible to maintain it, or what condition the premises will remain in. And therefore – how much will each of them ultimately cost?
The very nature of such a temporary contract implies that there is no notice period other than the period remaining until the end of the contract. As a rule, the contract is valid until the end of the period for which it was concluded. It can be said purely theoretically that the right to terminate a contract concluded for a fixed period simply does not exist. There is no such thing as statutory notice periods for terminating a lease if it was concluded for a fixed period. However, they do exist numerous exceptions to these general rules. These exceptions are described below - in an accessible question and answer format.
When we are a party that would like the lease agreement to end, it is crucial to define the reasons why this lease agreement (concluded for a fixed period) must be terminated. Correctly defining these causes will allow you to consider whether the costs associated with solving the problem will outweigh the benefits. To put it simply: it is good to first consider whether the game is really worth the candle.
Can a fixed-term lease agreement be terminated? What are the consequences of terminating the contract early? What to do if the contract does not contain a notice period?
The answer to this question depends on the reason for the termination. Such questions arise when we want to terminate the lease agreement earlier than previously planned. The problem is that there are already signatures under the contract.
Termination of a lease concluded for a fixed period may prove difficult if the other party does not show a certain amount of good will. Therefore, in order to become at least partially independent from this issue, it is best to first analyze the provisions of the lease agreement concluded for a fixed period - to verify whether and what contractual clauses enabling early termination of the lease were included there.
A lease agreement for a fixed period may, as a rule, be terminated only in the cases specified in the agreement or in the provisions of the Civil Code. Sometimes in cases provided for in the legislation on tenants' rights, if it is a tenancy agreement.
Stress and uncertainty arise when it is necessary to terminate a fixed-term lease. Penalty for breaking a fixed-term lease agreement. And usually due – compensation.
Tenants who want to terminate fixed-term lease contracts are usually (and rightly so) afraid of high compensation and contractual penalties. These may go far beyond a single rent or a deposit or deposit submitted to the landlord. We have often seen how tenants were ultimately forced to pay compensation amounting to several dozen monthly fees that they had previously paid when executing the contract.
The situation is similar with landlords - when they want to terminate a lease concluded for a fixed period, they must:
a) terminate the contract in a manner consistent with the law
b) the tenant's belief that the lease agreement has been terminated
c) regaining the premises
d) recover it in as good a condition as possible
e) minimize the risk of having to pay compensation to the tenant
Trust professionals - when you have a problem, hire lawyers specializing in resolving lease agreements
Thanks to professional legal and negotiation assistance, the process of early termination of a fixed-term lease agreement usually turns out to be much simpler and less stressful.
Of course, we are not miracle workers. It is often a game for people with strong nerves and no serious player can guarantee anyone's effectiveness. However, with our help, tenants usually manage to avoid high contractual penalties and compensation.
In turn, landlords using professional legal assistance can reduce the risks related to compensation or related to tenants moving out.
You can, of course, use the services of any law firm. There are a dozen or so lawyers on this market who are well specialized in terminating contracts concluded for a fixed period.
It is worth remembering that early termination of the lease agreement may be justified by various circumstances. These may be circumstances arising from contracts, as well as those arising from law and case law. In short, you need to consider all the possibilities that are accepted by the courts. And remember that legal provisions often - but not always - take precedence over the provisions of the lease agreement.
Take advantage of professional help today - they are available lawyers specializing in lease agreements.
The worst thing you can do is delay, experience shows that the sooner you involve professionals, the greater the chance that you will achieve positive results. It is easy to expose your intentions, making it impossible for even a professional to provide appropriate help.
Below we present a detailed guide that allows you to assess whether there is a chance of terminating a lease concluded for a fixed period. This guide will hopefully help you understand all aspects of the process. But sooner or later, probably - we invite you to visit anyway contact.
The most important questions and answers
- How can I terminate a fixed-term lease agreement?
- How to terminate a lease agreement early? How to convince the landlord?
- Can a lease agreement have no notice period? What if there is no notice period in the fixed-term lease agreement?
- When can a landlord terminate a fixed-term lease agreement?
- Can a fixed-term lease agreement be terminated earlier? How to break a lease agreement faster? Can I cancel the lease agreement?
- What is the penalty for breaking a fixed-term lease agreement?
- Can a fixed-term lease agreement be terminated by mutual consent?
- What happens after the end of the fixed-term lease agreement?
- Can I terminate an apartment lease agreement for a fixed period?
- Is there a penalty for breaking the apartment lease agreement?
- How to terminate a fixed-term occasional lease agreement?
- Can a lease agreement have no notice period?
- How to calculate the month of notice to terminate a lease agreement?
- Can I withdraw from a signed lease agreement?
1. How can you terminate a fixed-term lease agreement?
Terminating a lease agreement concluded for a fixed period is a process that may be complicated due to strict legal regulations and contractual provisions. As a rule, the contract has been concluded for a given period, and the rent is usually payable monthly.
The most important first step is to carefully analyze the contract to understand what conditions must be met before the contract can be terminated before its due date. Each contract contains a unique catalog of reasons enabling its termination. There is no uniform template for a fixed-term lease agreement. In many cases, the contract contains detailed provisions regarding the possibility of early termination or hints as to the grounds on which it can be based.
Key Steps:
- Identify your own reasons for termination. Determine whether there are good reasons to terminate the contract early, such as a material breach of the contract by one of the parties. Or whether you are potentially able to find such reasons.
- Consult a lawyer or other highly experienced person in this area. Rent is payable monthly, so the sooner the better. You can also make a lot of mistakes. Experienced Law Firm will help you analyze the contract and find the best solutions. There are people who have terminated dozens or hundreds of such contracts. In situations where larger amounts are involved, it is usually worth taking advantage of their experience.
2. How to terminate the lease agreement ahead of time? How to convince the landlord?
Termination of the lease agreement early may be possible if the contract provides for such an option or if both parties agree to it. In some cases, courts may also find that early termination is justified due to special circumstances. However, courts rule this way very rarely, because that is not the purpose of fixed-term contracts.
It is best to reach an agreement regarding early termination of the contract - even if, as we often complain, it is foreign to our culture and nature. In the case of lease agreements, amicable termination is a sign of maturity, not stupidity. And so – in ours Chancellery we have a lot of experience in bringing such stories to a happy ending.
Termination options:
- Agreement of the parties – The best way to terminate a lease agreement early is to obtain consent from both parties to end it. This may include negotiations regarding the terms of premature termination of the lease, such as refund of the deposit, settlement of arrears, etc.
- Breach of contract terms – You need to consider whether one of the parties is violating the terms of the contract, which sometimes gives the other party the opportunity to terminate such a contract, even if it was concluded for a fixed period.
- Special circumstances – In certain cases, which we call extraordinary, courts may consider early termination of a lease agreement – even one concluded for a fixed period – as justified. However, this is shaky ground and you have to be very confident in your arguments. In addition, the evidence must be prepared perfectly.
- Finding a new, reliable tenant.
3. Can a lease agreement have no notice period? What if there is no notice period in the fixed-term lease agreement?
It's good that there isn't - because such a provision in temporary contracts is often considered invalid. This is what the regulations say Civil Code. If a fixed-term lease agreement does not contain a provision on the notice period depending on specific circumstances, in the case of a fixed-term lease, it generally cannot be terminated before the expiry of the term.
The most important exception is that both parties consent to such termination of the contract, or there are provisions of the contract enabling its termination on specific events, or exceptional, special circumstances occur.
Possibilities in this case:
- Negotiations with the landlord or tenant – The other party may try to negotiate an early termination of the contract. Such negotiations, if conducted between professionals, usually bring positive results.
- Court termination of the contract – In rare, exceptional circumstances, the court may consider early termination of the contract justified.
- Finding a new tenant. Very often, landlords are more willing to terminate the contract and, despite their initial position that it is impossible to terminate the contract, they agree to a solution that will involve them continuing to pay the rent. That is, concluding an assignment agreement under which other entities (or an entity) on the part of the tenant enter into the lease of the premises. Typically, landlords are primarily interested in renting the property and the benefits associated with it. However, at the same time, they usually make their consent conditional on whether the current tenant will be replaced by someone reliable in their leased property. This also seems completely understandable.
4. Termination of the lease agreement concluded for a specified period of time by the lessor. When and can the landlord terminate the lease?
There is a big difference here from contracts for an indefinite period, which can be terminated by the landlord almost always when they concern commercial lease contracts - i.e. when the matter concerns the termination of a commercial premises lease contract. Or almost never when the subject of the lease is a residential premises.
The landlord may terminate a fixed-term lease agreement only in strictly defined cases that are included in the agreement or result from legal provisions. Or court decisions.
Examples of situations in which the landlord can usually terminate the contract:
- Breach of contract terms – If the tenant does not comply with the terms of the contract, such as paying rent on time, improper use of the premises, exposing it to damage, etc. For such a solution to be effective, the landlord must do it in a manner consistent with the law and the provisions of the contract. The former usually have priority.
5. Can a fixed-term lease agreement be terminated earlier? How break the lease agreement sooner? Can I cancel the lease agreement?
Yes and no. Termination of a fixed-term lease agreement is usually possible earlier, but this almost always requires meeting certain conditions contained in the agreement. If the parties introduce such a possibility, they must make it conditional on the occurrence of a future event.
If, at the time of concluding the contract, the parties to the contract did not provide for such a possibility, the termination of the premises lease agreement for a fixed period usually requires the consent of both parties. Or finding an exception in the Civil Code, possibly in tenant laws or case law. Sometimes there may also be a gap in the contract. Early termination of a fixed-term lease is a risky activity, unless it is strongly based on legal provisions or contract provisions.
So what can a tenant or landlord do if they want to break the contract? Ways to terminate the lease early:
- Agreement of the parties – The best and simplest solution to a lease agreement is always the agreement of the parties. Although sometimes it seems impossible or very distant, an experienced lawyer usually knows how to finalize such an agreement. Read: negotiate. And what arguments to use to convince the other side. Very often he sat on the other side of the table, thanks to which he better understood the needs and intentions of his "opponent". Although it is about finding common interests, it usually leads to the mutual termination of the lease agreement. Often overlooked by lawyers and their clients, the ability to understand the needs of the other party and conduct negotiations can be much more important than all the provisions of the Civil Code.
- Breach of contract terms – If one party violates the terms of the contract, in some cases the other party may demand its termination. However, this is again a risky activity and requires high precision. It's easy to lose such a case later. Many of such provisions have no legal force.
- Special circumstances – Courts may order early termination of the contract in special circumstances, as stipulated in the Civil Code – but courts very rarely agree to this. Therefore, we go to court only if necessary, usually choosing an amicable option or finding provisions that are a bit deeper in the lease agreements.
6. What is the penalty for breaking a fixed-term lease agreement?
The penalty for breaking a fixed-term lease agreement depends on the provisions of the agreement itself. In many cases, lease agreements contain clauses regarding contractual penalties for early termination. Some of them are important, others are not - unfortunately this must be examined by a lawyer. The second most important issue is the liability for damages of the party who prematurely terminates such a fixed-term lease agreement. Terminating a fixed-term lease agreement usually costs some money.
The most common penalties for early termination of the contract are:
- Penalty: A fixed amount that the other party must pay for early termination of the contract. This may be a one-off fee that covers the landlord's losses. It is good for the party breaking the contract if the provision introducing such a contractual penalty does not contain provisions on the possibility of claiming additional compensation. This is because then we are dealing with a known cost - lump sum compensation. That is, the so-called compensation due for breaking a fixed-term lease agreement. Of course, this decision must still be valid, which is also not obvious. It is also worth remembering that even compensation for early termination of the lease can usually be negotiated.
- Liability for lost rent: First of all, the tenant may be obliged to pay rent for the period in which the premises remain unoccupied after the tenant has moved out early. However, the landlord is of course obliged to make every effort to find a new tenant as soon as possible. However, it may not be that easy, and the premises may, for example, require renovation. It may also turn out that the only tenant found will pay a lower rent. Therefore, there have been cases in which such compensation awarded by the court was equivalent to, for example, two years' rent.
- Coverage of repair costs: If a tenant vacates the premises and leaves it in a poor condition, they may be liable for repairs or renovation costs.
7. Can a fixed-term lease agreement be terminated by mutual consent?
Yes, a fixed-term lease agreement can be terminated by mutual consent of the parties. This is the simplest and most often the cheapest way to terminate the contract. In this case, both parties must agree to end the contract and ideally agree on the terms of this termination. This may include:
– Appropriate settlement of overdue payments: The tenant usually has to pay the agreed part or all of the arrears owed to the landlord.
– Refund of deposit: The Landlord may keep or return the Tenant's deposit.
– Delivery and acceptance protocol: It is good if the parties agree on the condition the premises should remain in. And then, when they pass, they will prepare a report that will confirm the condition of the premises at the time of its return.
An agreement is almost always beneficial to both parties because it avoids conflicts and potential costs associated with court proceedings.
8. What happens after the end of the fixed-term lease agreement?
At the end of a fixed-term lease, the tenant should usually vacate the premises and return it to the landlord in the condition specified in the contract. Key post-contract activities include:
– Delivery and acceptance protocol: Conducting a report that will confirm the condition of the premises at the time of its return.
– Refund of deposit: The landlord should return the deposit to the tenant, provided there are no arrears or damage to the premises.
– Settlement of all receivables: The tenant must settle all rent arrears and other fees owed to the landlord.
If the contract was for a fixed period and was not extended, the tenant has no right to remain in the premises after its end. The landlord has the right to regain the premises and rent it to a new tenant. Unless it doesn't get done at all and the tenant still rents the premises. Then we can deal with the so-called a tacit extension of the lease provided for in the regulations Civil Code.
9. Can I terminate an apartment lease agreement for a fixed period?
In such a case, terminating a fixed-term lease agreement is sometimes possible, but usually requires meeting certain conditions contained in the agreement. You should carefully analyze the content of the contract to check whether it provides for the possibility of early termination of the apartment lease and under what conditions. Sometimes the possibility of terminating an apartment lease agreement concluded for a fixed period also results from legal provisions.
Steps to terminate the contract:
– Analyzing the contract: Check whether the contract contains any early termination clauses.
– Negotiations with the landlord: Obtaining the landlord's consent to terminate the contract early.
– Consult a lawyer: It is worth consulting a lawyer specializing in real estate lease matters at the very beginning. He will help you analyze the contract and advise you on the best solution, or conduct negotiations with the landlord. Why not treat a lawyer's help as a last resort? It is easy to make his work more difficult or even prevent him from completing the task with his previous movements.
10. Is there a penalty for breaking the apartment lease agreement?
The penalty for breaking an apartment lease agreement may result from contractual provisions. In such situations, compensation is also due, which in almost every case results from the provisions of law. Examples of penalties for early termination include:
– Penalty: A fixed amount that the tenant must pay to the landlord for early termination.
– Liability for lost rent: The tenant may be obliged to pay rent for the period during which the premises remain unoccupied after the tenant has moved out early. Sometimes this takes the form of many months of compensation. Moreover, such liability results from legal provisions.
– Repair and renewal costs: If a tenant vacates the premises and leaves it in a poor condition, they may be required to cover the costs of repairs or renovation of the premises.
11. How to terminate a fixed-term occasional lease agreement?
You can terminate an occasional fixed-term rental agreement on similar terms as a standard fixed-term rental agreement. With this slight difference that the provisions of tenancy law apply even more to it.
12. How to calculate the month of notice to terminate a lease agreement?
Regardless of whether we are dealing with an indefinite-term or fixed-term contract, the notice period for a lease agreement is usually counted the same. From the first day of the month following the month in which the notice of termination was submitted. Typically, this deadline is also counted at the end of the calendar month.
Example:
– If the notice of termination is submitted in mid-January, the notice period will begin on January 31. And, for example, with a two-month notice period, it will last until March 31.
Of course, it is rare - but it happens that the parties agreed otherwise. Just like you shouldn't pay attention to the fact that they arrange to pick up the keys a day or two earlier or later. Of course, if it is done with their mutual consent.
13. Can I withdraw from a signed lease agreement?
Withdrawing from a signed lease agreement, i.e. one that has not yet entered into force, is an issue worth considering. There are lawyers who see certain opportunities in such cases. However, there are those who take the view that it is impossible to terminate such a contract. Much depends on individually assessed circumstances.
If you need help terminating a fixed-term lease agreement, contact with ours Law Firm. Thanks to our knowledge and experience, we will help you find the best solution and avoid unnecessary problems.