This week I seem to be getting a recurring question about terminating a lease early. A few people (tenants) have asked how they can get out of their fixed term leases. The leases I have been asked about are all one year leases with more than six months remaining in the term. What can a tenant do if they are no longer able to remain in the unit?
Before you get to the standard answers of subletting and assigning it is worthwhile to approach the landlord and set out the problem and the need to vacate the rental unit. A landlord's reaction may indeed be helpful and the landlord might agree to let you out of your lease early. Some reasons why they might agree: 1) A higher rent could be obtained from a new tenant, 2) Renovation plans, 3) Getting a new longer lease committment from a new tenant, 4) and just possibly--the landlord is kind hearted and willing to help out.
How might a landlord agree to early termination? The terms of negotiating a termination will need to address the interests of both Landlord and Tenant. The Landlord's interests include not losing rental income and having a quality tenant in the unit (and not some crazy subletter that upsets the whole building etc.). The Tenant's interests include ending the lease as soon as possible, identifiying the extent of the future rent liability, and avoiding litigation with the landlord.
These interests can often be adequately addressed by working out a notice period notwithstanding the fixed term nature of the lease. A landlord may very well agree to let a tenant out of a fixed term lease on 60 days notice with the proviso that if the unit is re-rented early then the rent obligation would cease. A tenant may agree to 60 days--more or less--in exchange for liability being capped at that amount. Whether the time period agreed to is 60 days, 30 days, or any period more or less, will be informed by the ease with which the rental unit can be re-rented. If there are lots of prospective tenants looking the notice period will be shorter and if the rental market is weak then one could expect the time period to be longer.
The main point that I'm making here is that there is nothing in the Residential Tenancies Act that prevents a landlord and tenant from agreeing to terminate a fixed term lease sooner and on terms that are satisfactory to them. Perhaps the only caveat would be that the agreement could not be more severe than the lease obligation being terminated.
If a landlord and tenant agree to terminate a fixed term tenancy sooner, or indeed if they agree to terminate any tenancy, including a month to month tenancy, on terms that are less than those required by the Residential Tenancies Act, that agreement should be done in writinng. The Ontario Landlord and Tenant Board provides landlords and tenants with a Form to record the agreement. That Form is Form N11. While it is not an absolute requirement that this Form is used, it is highly recommended that parties make use of the Form as this form incorporates the necessary elements of an agreement and the form represents a clear expression of the intentions of the parties.
Michael K. E. Thiele
Ottawa, Ontario, Canada
Tuesday, 19 March 2013
Agreement to Terminate a Tenancy--Ending a Lease Early
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