Creating an Effective Lease Contract Termination Letter
The Basics of Lease Termination Letters
The termination of a lease agreement comes with many considerations—those specified in the lease, statutory requirements, and particulars based on the circumstances of the parties and their relationship. Those requirements are mostly self-evident and recognizable to landlords and tenants alike once it is apparent that a lease relationship is coming to an end.
However, instead of automatically terminating a lease based on the terms of the lease itself, some landlords and tenants decide to execute a written termination agreement. A lease termination letter can help clarify any issues and make a clean break of the relationship. A termination letter is not always required , but in many circumstances, it can be very useful. Its benefits usually outweigh any downsides.
Because termination by a letter is most common for commercial leases, it is important to remember that many commercial leases require the parties to meet certain conditions. Employers have different needs, and as such, the lease termination approach is often customized to their business circumstances. The language to be used in the letter, therefore, should be considered carefully.
Key Components of a Lease Termination Letter
The lease termination letter is a legal document used to terminate a rental agreement between landlords and tenants. Essential components of a lease termination letter include the date on which the letter is created, which typically precedes both the termination date and the date on which the letter is delivered to the tenant. This date is crucial because it is used to calculate the notice period required prior to your intended termination date; terms of notice vary by state, so review your local law to ensure that you provide sufficient notice. Other key components are the names of the landlord and tenant, as well as the effective termination date and a reason for termination, if any.
Commonly Used Lease Termination Reasons
Tenants might be very surprised when they comprehend the plethora of reasons why a lease might be terminated. A tenant might have to leave a specific location to accommodate the job she has always wanted, or her landlord might even be relocating so he can acquire work elsewhere. In other instances, a tenant might have trouble paying her bills due to sudden job loss, and if the lease remains intact for the tenant, she may be homeless in no time. Landlords may break a lease too but they will usually have a valid reason, such as initiating repairs that cannot wait until the lease is completed, or a seller needing to terminate the lease because he has sold his property.
What a landlord must keep in mind is that there can be several rules regarding a lease termination in his state. If the tenant is being too noisy or causing problems, the landlord might be able to break the lease if the tenant does not stop. However, if the landlord failed to enforce the rules upon other tenants who also broke them, there may be an issue. For this reason, it is crucial that if you are aware of a problem, you enforce the rules right away or the court may be on the side of the tenant.
Other reasons a landlord might terminate a lease contract include if the tenant is not paying their rent on time and is not coming up with the back rent owed or if the tenant is willing to relocate to a new property that he will purchase. If a tenant is behind in his rent and lease termination is imminent, having the lease agreement as back-up will assist in proving the agreement was broken.
Some other reasons that tenants may terminate a lease are if a tenant is forced to move for a new job or if they are having difficulty paying rent. As each case of terminating a lease is unique, it is important to find out legal reasons that will qualify in your area if you have been too late in paying rent, if your job is ending, or if the property you are renting is no longer appropriate for you and your family.
Legal Aspects to Consider When Terminating a Lease
The legal aspects surrounding lease agreement termination depend on the specific terms of the lease—terms that detail how much notice tenants are required to provide and outline any additional stipulations for lease termination.
Notice periods
Lease agreements almost always contain a notice period provision that sets out exactly how much notice a tenant must provide the landlord before moving out or breaking the lease. In general, this provision varies by jurisdiction, with most places requiring a month’s notice. If no notice period is stipulated in the lease agreement, many states require thirty days’ notice. The notice period is relevant from a contractual standpoint as well as a practical one: the person who wants to break the lease will obviously want to give the required notice as the first step in following the lease agreement. (Almost all lease agreements require that the tenant formally inform the landlord of his or her intention to vacate before moving out.) However, being cognizant of notice requirements is also relevant in terms of potential liability. If the tenant provides insufficient notice and it’s a lease that stipulates that each party is only liable for the rental amount of the months for which they’re residing in the rental property, the tenant could be liable to pay for the full amount of the next month’s rent in addition to the portion of the rent owed up to the termination date.
Lease agreement clauses
As previously stated, lease agreements generally include additional stipulations that outline how a tenant can and cannot legally break the lease. For example, some lease agreements require that if a lease is broken and the landlord chooses to continue renting the property out to a new tenant, the original tenant must pay the rent from the date he or she breaks the lease until the date a new tenant moves into the property. However, most lease agreements also stipulate that the tenant is responsible for "best efforts" to find a new tenant to take over the remainder of the lease.
Penalties for breaking the lease (or moving out early)
The penalties for breaking a residential lease generally parallel a tenant’s contractual obligations to pay damages up to the cost of the remainder of the lease. That means that courts will hold the tenant accountable for breach of contract if he or she breaks the lease before its end date. However, most places consider "best efforts" by the landlord to find a new tenant and replace the old tenant to be a mitigating factor. The landlord may not receive the full remaining value of the lease if he or she is able to find a new tenant, and is often unable to find replacement tenants at all. In some cases, tenants who leave the apartment in good condition are allowed to break the lease without penalty. For example, most lease agreements allow for tenants to terminate the lease without penalty if the tenant receives orders for military duty or is called into active duty. Other lease agreements contain an addendum that allows the tenant to terminate the lease early if the tenant works with the landlord to find a new tenant who takes over the lease.
How to Write Your Letter by Following Steps
To write a termination letter for a lease that gets your landlord’s attention and clearly states your intentions, follow these steps.
1. List the proper address.
At the top of your letter, include the date and address of the owner or landlord. Include any other addresses you believe are appropriate, such as the leasing office of the both tenant and landlord and any other relevant parties.
2. If possible, use their full name.
The ideal situation is to have the exact name of the lessor (such as commercial real estate company name) to whom you are writing the letter. Some owners or management companies request that the full legal name of the signer be used instead of the most common usage. For example, a landlord would likely request you use "Jonathan B. Landlord" instead of "Jack Landlord" and perhaps even instead of "Jay Landlord."
3. Leave out any sentiments.
Use a simple , direct and unemotional approach. Do not explain your situation or recount the history of the problem. Focus instead on informing your landlord of your decision.
4. Write a specific subject line.
The next step is to provide a clear, concise subject line. For example, "Notice of Termination of Lease For the Lease at 1234 Main Street." This will immediately inform the recipient of the letter’s purpose.
5. Reference the rental agreement.
In the first paragraph, allow the landlord to identify the lease by either the date it was signed or the address of the rental property. Depending on the situation, you might want to indicate how the landlord should respond, such as "by return mail." The basic written notification should also include a provision for the return of your security deposit and clean-up of the premises, if necessary.
6. Use a template.
Using a template to create a termination letter for a lease will allow you to use the format we have provided and give you a solid idea of what information to include.
Examples of Lease Termination Letters
Below are sample templates for lease termination letters. Note that the language may need to be tailored to your particular situation.
Right-to-terminate leases
If you are exercising a right-to-terminate lease, the following template may be used for a commercial lease termination letter:
Month, day & year
John Tenant Address
Tenant’s Company Name
1010 Cloud St Suite 201
City, State & Zip
Dear John Tenant,
Pursuant to the terms of our lease, I am writing to formally advise you that your tenancy is hereby terminated. Your access to my property shall cease by Month, day & year.
If you have any questions, please reach out to me.
Thanks,
Management
Landlord Name, Landlord Title
Company LLC
Complete Address Here
Lease Violations
If you are terminating a lease due to violations of the agreement, the following template may be used for a commercial lease termination letter:
Month, day & year
John Tenant Address
Tenant’s Company Name
1010 Cloud St Suite 201
City, State & Zip
Dear John Tenant,
Pursuant to our lease agreement, the following provisions have been violated:
[List Violated Provisions Here]
In response to these violations, and after ten (10) days from the date of this letter, your tenancy at our property will be terminated. Your access to all areas on the property will be prohibited.
Over the next five (5) days, you must provide access to the property for the purposes of inspection and a final walkthrough.
Should you have any questions, please reach out to me.
Thanks,
Management
Landlord Name, Landlord Title
Company LLC
Complete Address Here
Mutual Termination
If both you and the tenant mutually agree to termination, the following template may be used for a commercial lease termination letter:
Month, day & year
John Tenant Address
Tenant’s Company Name
1010 Cloud St Suite 201
City, State & Zip
Dear John Tenant,
As discussed on Month, day, year, both parties agree to the termination of our lease agreement. The mutual effort is greatly appreciated and, as agreed, Month, day& year will be your last day at our property.
On that day, our team will be giving you access to comply with final walk-through and any extra procedures that need to be executed.
In the event of a damage cost or other unforeseen issues that may arise, we will be in contact with you.
In the meantime, if you have any questions, please reach out to me.
Thanks,
Management
Landlord Name, Landlord Title
Company LLC
Complete Address Here
Dealing With Disputes and Negotiation
When attempting to terminate a lease contract, disputes or negotiations may arise with the landlord. Here are some strategies for handling such situations with effective communication:
- Document Everything – All communications, from the initial notice of termination through to any discussions or negotiations with landlords, should be carefully documented. Written records, including emails and messages exchanged, provide a useful paper trail in the event of a dispute.
- Open the Lines of Written Communication – In the interest of maintaining a professional relationship, all attempts to communicate with the landlord should be conducted in writing (e.g. email, provided that this form of communication is acceptable to the landlord) . If all attempts to communicate are in writing, this also provides you with a means to document the communications.
- Be Professional – Effective communications seek to avoid unnecessary conflict. Whenever possible, try to keep communications with the landlord focused on the legal doctrines involved. Negotiations should be reasonable and based on sound logic and facts in the case.
- Seek Legal Advice – Where necessary, seek specialized legal advice on your rights under the specific circumstances. A qualified attorney may be brought into the situation to assist in the termination process and mitigate any damages that may be claimed by the landlord as a result of the termination action.