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Lease termination agreement



WHEREAS, [Landlord.CompanyName or Landlord.FirstName Landlord.LastName] (“Landlord”) has pursuant to a Lease Agreement dated [Insert Date] (“Lease Agreement”) between the Landlord and [Tenant.ComanyName or Tenant.FirstName Tenant.LastName] (“Tenant”) leased landed property located at [Insert Property Address] (“Property”) to the Tenant.

WHEREAS, pursuant to the terms of the Lease Agreement, the term of the lease for the Property is due to end on [Insert End of Lease Date] (“Termination Date”).

WHEREAS, the Landlord and the Tenant have mutually reached an agreement for the early termination of the Lease Agreement and have agreed that the lease term for the Property shall now terminate on [Insert New Lease End Date] (“Early Termination Date”) subject to the terms and conditions of this Agreement.

WHEREAS, the Landlord and the Tenant enter into this Lease Termination Agreement (“Agreement”) for the purpose of establishing their respective rights and obligations in relation to the early termination of the Lease Agreement.

IN CONSIDERATION of the mutual covenants and promises, the Landlord and the Tenant (individually, each a “Party” and collectively, the “Parties”) covenant and agree as follows:

1. Repossession of Property by Landlord 

Subject to the terms and conditions of this Agreement, the Tenant shall unconditionally return the Property to the Landlord and allow the Landlord to take possession of the Property on or before the Early Termination Date. The repossession of the Property by the Landlord shall be conditional on: a) the Property being returned to the Landlord in substantially the same condition as it was at the commencement of the Lease Agreement fair wear and tear excepted; b) the Property shall be cleared of all the Tenant’s property, possessions and removable items, including all debris and rubbish; c) unless otherwise agreed in this Agreement, any alterations and improvements made by the Tenant to the Property being removed and the Property being reinstated substantially to the condition the Property was in at the commencement of the Lease Agreement; d) all utilities to the Property being reinstated to their status at the commencement of the Lease Agreement: and e) the Tenant shall remove any hazardous substances and/or material on the Property and shall resolve any issues that may fall within the jurisdiction of the Environment Protection Agency.

2. Termination of the Lease

Subject to the terms and conditions of this Agreement, the Landlord and the Tenant mutually agree that all their respective rights, obligations and duties pursuant to the Lease Agreement shall be deemed to be terminated with effect from the Early Termination Date provided always that the following obligations and duties of the Parties shall not be deemed terminated: a) the Tenant’s obligations and duties pursuant to Clause 1; b) any liability of the Tenant that is incurred on or before the Early Termination Date arising out of the Tenant’s possession of the Property pursuant to the Lease Agreement; c) the Tenant’s obligation to make any repairs necessary as a result of the removal of the Tenant’s fixtures from the Property and any other damage caused during the removal; d) The termination of the Lease Agreement shall not absolve the Tenant  of any obligation to pay any taxes, rent and expenses in relation to the Property the liability for which arises on or prior to the Early Termination Date.

3. Lease Termination Fee

In consideration of the Landlord’s agreement to the early termination of the Lease Agreement, the Tenant hereby agrees without condition and without reservation to pay to the Landlord a non-refundable early termination fee (“Lease Termination Fee”) of [$Insert Amount]. The Lease Termination Fee shall be payable to the Landlord on or before the Early Termination Date.

4. Conditions Precedent to Early Termination

The early termination of the Lease Agreement and the validity of this Agreement and the rights, duties and obligations arising hereunder shall at all times be conditional on the fulfilment of the following conditions precedent on or before the Early Termination Date:

1.     Performance of all terms and conditions of this Agreement by the Parties;

2.     Payment of the Early Termination Fee by the Tenant to the Landlord by the required date;

3.     [Condition 3]

4.     [Condition 4]

5.     [Condition 5]

5. Tenant’s Deposit

5.1   The Tenant hereby agrees that the Landlord shall continue to hold the Tenant’s security deposit pursuant to the Lease Agreement of [$Enter Deposit Amount] (“Deposit”) until such time that the Tenant has fulfilled all obligations and commitments pursuant to Clause 1 (“Rectification Works”).

5.2   The Tenant shall provide the Landlord a written certification that the Tenant has fulfilled all Rectification Works within [Insert Days] of the Early Termination Date. On receipt of such notification from the Tenant, the Landlords shall make such inspection as is necessary to verify the Tenant’s claim within [Enter Days] days.

5.3   If the Landlord is in concurrence with the Tenant at all the Rectification Works have been satisfactorily completed, the Landlord shall refund the Deposit to the Tenant without deduction within [Enter Days] of the inspection referenced in Clause 5.2.

5.4   If the Landlord is of the view that the Tenant has not completed the Rectification Works and/or that such work does not meet an acceptable standard, the Landlord may: a) give the Tenant an extension of time to remedy the situation following which the process in Clause 5.2 and Clause 5.3 will be followed; or b) the Landlord may at its absolute discretion  elect to perform the Rectification Works and the Landlord may apply part or all of the Deposit to meet the cost of completing the Rectification Works or upgrading it to the required standard. Any balance Deposit shall be returned to the Tenant within [Enter Days] of the rectification work being completed.

5.5   If the Landlord elects perform the Rectification Works pursuant to Clause 5.4 b) and the Deposit is insufficient to meet he cost, the Tenant here agrees to cover the entire cost the Rectification Works within [Enter Days] of receiving confirming invoices relating to the Rectification Work.

6. Mutual Release

6.1   Where the Tenant has fulfilled all obligations arising pursuant to this Agreement, the Landlord agrees to release, discharge and waive any claims against Tenant arising out of or in any way connected with the Lease Agreement or this Agreement through to the Early Termination Date.

6.2   Where the Landlord has fulfilled all obligations arising pursuant to this Agreement, the Tenant agrees to release, discharge and waive any claims against the Landlord arising out of or in any way connected with the Lease Agreement or this Agreement through to the Early Termination Date. 

7. Warranties

The Tenant makes the following warranties and undertakings to the Landlord:

7.1   The Tenant warrants that it has not assigned any part of its rights, obligations and duties pursuant to the Lease Agreement to any other party.

7.2   The Tenant undertakes to the Landlord that the Tenant shall not take any actions which may prevent the Landlord from enjoying quiet possession of the Property at any time after the Early Termination Date.

8. Indemnity and Limitation of Liability  

8.1   The Tenant hereby agrees to indemnify and hold harmless the Landlord from and against any claim, damage, liability, loss, cost or expense (including reasonable attorney’s fees) from any party arising, directly or indirectly out of: a) a failure on the part of the Tenant to perform any of the obligations referenced in this Agreement; and b) an inaccuracy or breach of any warranties, undertakings or representations made by the Tenant and shall extend to legal actions of whatever nature arising out of such actions.

8.2   The liability of the Landlord pursuant to this Agreement shall at all times be limited to value of the Early Termination Fee actually received by the Landlord from the Tenant. The Landlord shall not be liable for indirect or consequential damages arising from any breach of contract.

9. Entire Agreement  

This Agreement sets out the entire agreement and understanding between the Parties relating to the subject matter of this Agreement. There are no other conditions, promises, representations or undertakings between the Parties whether oral or written.

10. Severability 

The Parties agree that if any provision of this Agreement becomes invalid or unenforceable for any reason: a) the offending provision shall be removed; and b) the remaining provisions of this Agreement shall be unaffected and continue to be valid and enforceable for all purposes.

11. Amendment

Any amendment to this Agreement must be mutually consented to by the Parties in writing.

12. Waivers

A waiver of a breach of any term of this Agreement or of a default by any Party shall not constitute or be deemed to be a waiver of any other breach or default that may already have occurred, or which may occur. Unless consideration has been received, any such waiver shall not prevent the Party making the waiver from subsequently requiring compliance with the waived obligation or default.

13. Delays, Indulgences and Omissions  

A delay or indulgence or omission in exercising any right, power or remedy shall not be construed as a waiver.

 14. Notices  

Any notice pursuant to this Agreement shall be in writing and may be sent by: (a) regular mail to the other Party at the address stated in this Agreement and shall be effective 2 days from the date of dispatch; or (b) if permitted in the jurisdiction, by email or other means of written/printed/displayed digital means of communication and such notice shall be deemed to be effective 24 hours after dispatch.

15. Successors  

The provisions of this Agreement shall be binding on the respective successors and assigns and legal representatives of the Parties. 

16. Force Majeure

The Parties shall not be liable to each other for any loss or damage that may arise out of a delay in the performance or non-performance of the obligations of either Party pursuant to the terms of this Agreement where the cause of the delay or non-performance is due to causes beyond the control of the Parties, including pandemic, epidemic, tempest, storm, flood, fire, sabotage, riots, civil unrest, acts and policies of any Federal or State government and/or their Agencies, power grid failure and Acts of God.

17. Independent Parties  

Except for the relationship of Landlord and Tenant, the Parties are independent to each other for all purposes representing and pursuing their own independent interests. Nothing in this Agreement shall be interpreted as giving rise to any thing that would suggest a relationship between the Parties other than that of Landlord and Tenant. 

18. Costs

The Parties agree that they shall each bear their own respective costs for the preparation and negotiation of this Agreement.

19. Applicable Law   

This Agreement or any part of it shall be governed by, construed, and interpreted in accordance with the laws of the State of [State] and shall be subject to the exclusive jurisdiction of the federal and state courts located in [County], [State].

User Note:  Before committing to the Agreement the Tenant should have a clear plan on how and when any rectification work that needs to be done on the Property will be completed. This applies particularly, where damage occurs during the removal process. A contingency plan should be put in place to deal with such events.

The removal process itself should be planned well ahead of time and adequate provision made for transportation and manpower. To avoid a cleanup bill which will be deducted from the Deposit, the Tenant should ensure that all rubbish is removed from the Property and, unless agreed otherwise with the Landlord, the Property should be reinstated into the condition it was handed over to the Tenant at the beginning of the Lease Agreement.

The Landlord should be proactive and provide the Tenant with a list of specific items that they require to be addressed before taking repossession of the Property. This will assist to avoid unnecessary delays in the repossession process and will assist the Landlord to quickly relet the Property.

The User Note is intended for guidance only and does not in any way constitute legal advice and Users should treat it accordingly.

Template does not constitute any form of legal advice, and the User is at all times encouraged to request external specific legal advice in respect of the execution of legal documents.
Lease termination agreement

A lease termination agreement is required if you and your tenant agree to terminate the contract before the original termination date.

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Lease termination agreements can be a lifesaver for both landlords and tenants alike. Whether you're a renter looking to move out early or a property owner needing to reclaim your space, understanding the ins and outs of lease termination agreements is crucial. 

What is a lease termination agreement?

A lease termination agreement is a legally binding document that outlines the terms and conditions under which a lease will be terminated before its original end date. This agreement serves as a mutual understanding between the landlord and tenant regarding the early termination of the lease, including any associated fees or obligations.

Key components of a lease termination agreement

  • Parties Involved: Identify the landlord and tenant by name and address.
  • Property Details: Provide a detailed description of the leased property, including the address and unit number.
  • Termination Date: Specify the date on which the lease will officially end.
  • Early Termination Fee: Outline any fees or penalties for terminating the lease early.
  • Condition of the Property: Clarify the tenant's responsibilities for returning the property to its original condition.
  • Security Deposit: Detail the process for returning the security deposit to the tenant.
  • Mutual Release Clause: Include a clause stating that both parties release each other from further obligations under the lease.
  • Signatures: Require signatures from both the landlord and tenant to indicate their agreement to the terms of the termination.

Benefits of a lease termination agreement

  • Flexibility: Provides an option for tenants and landlords to end a lease early without resorting to legal disputes.
  • Clear Terms: Clearly outlines the rights and responsibilities of both parties, reducing the likelihood of misunderstandings.
  • Saves Time and Money: Avoid costly litigation or arbitration proceedings.
  • Preserve Relationships: Allows tenants and landlords to part ways amicably, preserving their professional relationships for the future.

Imagine Sarah, a young professional, receives a job offer in another city and needs to relocate within a month. She's worried about breaking her lease early and facing hefty penalties. 

However, after discussing her situation with her landlord, they agreed to draft a lease termination agreement that allows Sarah to move out early without incurring additional fees. Thanks to the flexibility of the lease termination agreement, Sarah can focus on her new job without the stress of navigating a complicated rental situation. Way to go, Sarah! 

Top 5 tips for successful lease terminations

  1. Communicate Early: If you anticipate terminating your lease early, discuss your options with your landlord as soon as possible.
  2. Review the lease agreement: Familiarize yourself with the terms of your lease agreement, including any clauses related to early termination.
  3. Negotiate Wisely: Approach lease termination discussions with an open mind and be willing to compromise to reach a mutually beneficial agreement.
  4. Get Everything in Writing: Document all agreements and arrangements in writing to avoid misunderstandings later.
  5. Seek Legal Advice if Necessary: If you need clarification on your rights or obligations under the lease, consider consulting a real estate attorney for guidance.

Lease termination agreements are valuable tools for landlords and tenants navigating the complexities of early lease terminations. You can smoothly transition out of your rental properties by understanding the critical components of these agreements, following expert tips for successful negotiations, and using our free lease termination template. 

Store all your contracts in one centralized hub 

Contractbook offers an efficient and user-friendly platform for managing lease termination agreements and a wide range of other contracts. With Contractbook, users can easily create, store, and access lease termination agreements, streamlining the process and saving valuable time. 

The platform makes it simple to customize agreements to suit specific needs and preferences, while robust storage capabilities ensure that all documents are securely stored and easily retrievable whenever needed. Additionally, Contractbook's advanced features enable users to track the status of agreements, set reminders for key dates, and collaborate seamlessly with other parties involved in the termination process. 

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