Understanding Lease Breaks
Helping tenants understand their responsibilities as well as their rights over fixed term leases could prevent potentially expensive misunderstandings down the track.
Terminating a fixed-term lease early is an area notoriously fraught with difficulty, so it's worth ensuring both parties are aware of their rights and responsibilities should the need arise.
Legislation aimed at protecting both landlords and tenants is in place across all states and territories, but both landlords and tenants might find it worthwhile to gain an understanding of exactly how the law applies in each local jurisdiction.
Among some widely-held
1. Simply giving notice can automatically terminate a fixed-term tenancy agreement.
2. Getting another tenant in before vacating a property absolves the tenant of responsibility to his or her agreement.
3. A co-tenant getting behind in their share of rental payments, or even walking out, has no effect as long as the agreement holder continues to pay their share of the rent on time.
If a tenant wishes to terminate a fixed-term lease early, they should contact their property manager as far in advance as possible to discuss the reasons for early termination, and the possible ramifications.
The property manager will no doubt insist on receiving written advice and advise that their landlord may be entitled to compensation for any losses suffered as a result of early termination.
Compensation might include:
Rental payments until the fixed agreement ends or a new tenant moves in;
Advertising costs incurred in finding a new tenant; and/or
re-letting costs charged by an agent to the owner.
A successful claim for compensation would also depend on the landlord being able to prove that any losses were as a result of the termination, and not by any other factors.
For example, if the agreement is ended just before its expiry date, then a landlord may not be able to pass on the full costs of re-letting, as those expenses would have been incurred shortly in any case.
As tenancy regulations differ from state to state, landlords and tenants must check the relevant legislation to ensure their actions are lawful in respect to fixed-term tenancies.