A lease agreement, as the name suggests, is the legal document that binds two parties to an agreement for the use of a property. It sets out the rights and obligations of the tenant and landlord, as well as the terms of the lease.
But did you know that when you sign a contract, you don't necessarily have to fulfill it until the end? Or that you are not obliged to renew it? Don't worry, we're not talking about terminating the contract on the spot, calling the landlord to say you're leaving and won't be paying any more. There are rules you have to follow and, of course, duties you have towards your landlord. The same applies if you are the landlord.
To help you better understand this process, here we explain how, why, and when you can terminate a lease agreement.
Is it possible to terminate a lease?
Yes, any lease can be terminated. And by either party, but of course following certain legal rules. To terminate a lease before the established end date, you must be aware of certain deadlines, especially those for communicating your intention.
There are two basic rules for terminating the contract:
- Written notice by registered letter (see the point below for more details about the letter);
- Sending prior notice of termination of the contract in accordance with the legal deadline.
What are valid reasons for terminating a lease agreement?
From the tenant's perspective, there is not necessarily a list of reasons that must be included in a letter of termination. It is sufficient to comply with the notice period established by law to terminate the agreement correctly.
On the other hand, there are rules for justifying a termination letter on the landlord's side. Currently, there are three valid reasons for a property owner to terminate a contract:
- Need for the property for their own residence or for a first-degree descendant (children);
- Need for structural restoration work that requires the property to be vacated, or that is equivalent to at least 25% of the value of the property, or that serves to prevent future demolition of the property;
- Rent payments in arrears, exceeding three months (letter to initiate eviction proceedings).
How far in advance should I send the contract termination notice?
The deadlines for sending the contract termination notice vary depending on the type of contract established, namely the stipulated duration. Therefore, the dates you should take into account are those indicated in Articles 1097 and 1098 of Law No. 31/2012 of August 14:
For tenants:
- 1/3 of the initial term specified in the contract – contracts with a term of less than six months;
- 60 days (2 months) – contracts with a term of six months or more and less than one year;
- 90 days (3 months) – contracts with a duration of one year or more and less than 6 years;
- 120 days (4 months) – contracts with a duration of 6 years or more
For landlords:
If you are a landlord, please note that the deadlines for giving notice of termination of the contract are considerably longer than those for tenants. For landlords, the deadlines are:
- 1/3 of the initial term specified in the contract – contracts with a duration of less than six months;
- 60 days (2 months) – contracts with a duration of six months or more and less than one year;
- 120 days (4 months) – contracts with a duration of one year or more and less than six years;
- 240 days (8 months) – contracts with a duration of more than six years.
How to write a letter of termination of a lease agreement
A letter of termination of a lease agreement must be very clear in its intention to terminate the agreement. Therefore, it is important that the text is clear and that the sender's identification is clear and unambiguous. In addition, it is important that it contains the reasons for the termination so that both parties are protected throughout the process.
These are the points that must be included in the letter:
- Date of sending the letter/communication;
- Letter addressed to the landlord or tenant;
- Proper identification of both parties involved in the contract;
- Indication that it is a termination letter – you can and should mention that, under the law, you are sending it within the deadline for termination;
- The address of the property that is currently in the lease agreement;
- Reasons for terminating the agreement.
The expected date of vacating the property.
Very important: when you send the registered letter terminating the agreement, always keep a copy of the letter and the registration paper, to serve as proof if necessary.
Is the security deposit refunded when the contract is terminated?
Yes. If the property shows no signs of damage and everything is in accordance with the rules established in the original contract, the landlord is legally obliged to refund the security deposit to the tenant.
Source: Idealista/news