Lease Contract Break Clause: What It Is and How It Works
A lease contract break clause is a provision in a lease agreement that allows either the landlord or tenant to terminate the lease before the end of the agreed term. This can be beneficial for both parties as it provides flexibility and allows for changes in circumstances.
Landlords may include a break clause in their lease agreements as a way to protect themselves from bad tenants, or if they are planning to sell the property in the near future. On the other hand, tenants may want a break clause as a safety net in case they need to move out due to a change in job, family circumstances, or other reasons.
The specifics of a break clause can vary depending on the terms of the lease agreement. Typically, a break clause will specify a time frame during which the lease can be terminated and any fees or penalties that may apply. For example, a break clause may allow for the lease to be terminated after six months with two months’ notice, and a fee of one month’s rent.
It is important to understand the terms of a break clause before signing a lease agreement as there may be limitations or restrictions. For example, some break clauses may only be exercisable after a certain amount of time has elapsed, or may not be available if the tenant has breached any of the other terms of the lease agreement.
If you are a landlord, it is important to weigh the benefits of a break clause against the risks. While a break clause may provide flexibility in finding a new tenant or selling the property, it may also result in unexpected vacancies and lost income.
Similarly, tenants should carefully consider whether a break clause is necessary for their circumstances, and be prepared to pay any fees or penalties associated with exercising the clause.
In summary, a lease contract break clause can provide both landlords and tenants with flexibility and protection in a lease agreement. However, it is important to fully understand the terms and any associated fees or penalties before signing the lease agreement.