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February 2016

Breaking the Lease

What is meant by “breaking the lease”?

A “lease Break” means that the Tenant will be vacating the premises before the Lease end date.

Another easy way to explain a lease break is this:

A lease is just like any other contract it’s a promise between two parties, the owner, and the tenant. The owner promises to provide the premises for a certain time (amongst other things), and the Tenant promises to pay the rent and look after the premises during that time. Where the Tenant is leaving early, the Tenant is breaking a promise and accordingly, the other party to the contract – the owner- is entitled to be compensated. 

The cost to the Tenant breaking the lease is the compensation to the Owner, and Fees involved with finding a new replacement Tenant.

In the eyes of the Law, the “compensation” the owner receives is the rent the owner would’ve gotten had the Tenant stayed. Note that the Owner is only entitled to receive this compensation if the Owner is attempting to “Mitigate Loss” or in ordinary words, make a reasonable effort at finding a replacement Tenant. This duty to find a replacement Tenant, also applies to the party who’s breaking their promise – the Tenants. Being very co-operative in allowing inspections, and keeping the place as well presented is very helpful in finding a replacement Tenant.

Secondly, if the Tenant fails to look after the yard or pool (for example), the owner can arrange for this, and be compensated by the Tenant for the costs.

The Tenant’s enter into an agreement with the managing agent to find a replacement. This means paying the reasonable Fees of the managing agent including advertising. Read more on property management options.

Break Lease Fees

In summary, the Fees payable by the Tenant are best explained by example…in the case, assuming the rent is, say $350 per week:

► 1 x Weeks rent + GST = $350 + 10% = $385 This is your break lease Fee 

► Advertising = $99 Internet, For Rent sign, Window cards etc.. 

► Smoke Alarm Check = $55 This is compulsory under the Residential Tenancies Act 

The Fees in this example total = $539

The Tenant can also do other advertising (say in the local Newspaper), conduct their own Open for Inspections, and tell their friends!

Needless to say, breaking a lease is a stressful time for the Tenant, the Owner, and the agent in the middle.

EXCELLENT communication is vital!

If you have any questions regarding breaking a lease, feel free to phone our office.