A tenancy agreement early termination clause is a clause in a rental agreement that allows tenants to end their lease before the end of the term. This clause is useful for tenants who need to move out of their rental property before the lease ends due to unforeseeable circumstances such as job loss, relocation, or personal emergencies.
If you are a landlord, it is essential to include an early termination clause in your tenancy agreement to protect yourself from potential loss of revenue. However, the clause should be drafted carefully to ensure that it is fair to both parties.
Here are some key points to consider when drafting an early termination clause:
1. Notice period
The notice period is the length of time the tenant must give you before they end the lease. A reasonable notice period is typically 30 days, but it can be longer depending on the circumstances.
2. Termination fee
A termination fee is a fee payable by the tenant if they terminate the lease early. The amount of this fee should be stated clearly in the clause to avoid any confusion.
3. Grounds for terminating the lease
The early termination clause should specify the reasons why the tenant can terminate the lease early. Typically, these reasons include military deployment, job loss, relocation, or personal emergencies.
4. Security deposit
The security deposit is a sum of money paid by the tenant to cover any damages to the property. The early termination clause should specify whether the security deposit will be refunded if the tenant terminates the lease early or if it will be forfeited.
5. Mitigation of damages
The early termination clause should state that the tenant is responsible for mitigating any damages by finding a replacement tenant before terminating the lease. This will help to minimize your loss of revenue.
In conclusion, an early termination clause is an essential provision in a tenancy agreement. It protects both the landlord and the tenant from potential losses. As a landlord, you should ensure that the clause is drafted carefully and fairly to avoid any misunderstandings or disputes with your tenants. If you are unsure about how to draft an early termination clause, it is advisable to seek legal advice or consult with a professional property management company.