Work, family, and personal circumstances in general change all the time. Losing a job, having to transfer to another location, needing to care for a sick family member in another town amongst other events can turn life upside down in an instant. So, with life being as it is, it’s fair to assume that a tenant may on occasion request the early termination of a lease before its expiry date.
In this feature we’re going to explore some of the considerations for both tenant and landlord when faced with a request to terminate a lease early. Tenants need to be aware that simply requesting the early termination isn’t necessarily going to lead to a successful outcome. Like most events in life, positive cooperation usually results in positive outcomes. To that end it’s important that both tenants and landlords are aware of the law around tenancy terminations and be prepared to work with the rental agency to achieve a mutually acceptable outcome.
The Queensland General Tenancy Agreement (Standard Term 7) outlines procedures when a tenant wishes to terminate a lease before its expiry date. We recommend checking out the full details here but for the moment let’s focus on the following excerpt from the standard terms:
“Costs apply to the early ending of fixed term agreement.
(1) This clause applies if-
(a) This agreement is a fixed term agreement and
(b) The tenant terminates it before the term ends in a way not permitted under the Act.
(2) The tenant must pay the reasonable costs incurred by the lessor in re-letting the premises.”
So, what does that mean in general terms?
Put simply, if the tenant can’t terminate the lease in a way permitted under the Act, they’ll be required to pay compensation to cover the owner’s reasonable costs for re-letting the property, in addition to the normal weekly rental amount until a new tenant is found. Therefore, tenants need to be aware of potential financial costs when requesting an early termination irrespective of how genuine or reasonable the circumstances surrounding it.
From the landlord’s perspective, a fixed term agreement (lease) gives them the security of knowing they have rental income locked in for a specified period. If a tenant vacated the premises without paying reasonable costs, then the property owner could experience significant financial losses until a new tenant is found.
So, we again come back to the point that open and transparent communication with proper planning can help minimise costs.
Another consideration is the return of the rental bond that would have been lodged with the Residential Tenancies Authority (RTA) at the start of the tenancy. The RTA holds the bond until the tenant vacates and a thorough Exit Property Inspection and Report is completed. The entry condition report is been completed at the start of the tenancy and is designed to allow the property owner and tenant to record any existing damage as well as the overall condition (state of repair) of the property and its fixtures, features, furnishings (if applicable) and any included appliances. The entry condition report is used for houses, units, townhouses, villas and other such residential premises. Any matters requiring attention at the conclusion of the tenancy are discussed giving the tenant time to rectify the problems before the bond is refunded. (See our feature article from May 2019 for more information on the entry condition report.)
If any disputes arise during the process of terminating a tenancy early, either party can seek assistance through the Queensland Civil and Administrative Tribunal (QCAT).
In wrapping up this discussion it’s important to state that simply deciding to leave a tenancy early does not abrogate a tenant’s responsibility to continue paying rent but negotiating in good faith can often achieve an outcome that is acceptable to everyone!
This feature is intended to provide general information around the early termination of a residential tenancy (lease) before its expiry date and is not intended to be professional legal advice. The Ray White Toowoomba property management team led by Director Peta Ford are focused on tailoring solutions to meet the needs of landlords and tenants alike.
NB: This publication and others displayed on the web and social media covers real estate, property market, finance and legal related issues in a general way. It is intended for general information purposes only and should not be regarded as professional financial or legal advice. Ray White Property Management recommends obtaining professional legal and/or finance advice before taking any action on the basis of the information presented in this publication.
Written and Published by www.presentprofessionally.com.au