Freeing yourself from the chains of a lease agreement entails a murky legal process. There are a lot of legalities which can be confusing to laypeople. The entire process entails intimate understanding of the law and knowledge of the existing lease which will guide you in drafting a Lease Termination Agreement that is satisfactory to both the lessee and the property owner. Here we’ll take a closer look at how lease termination agreement works. Basically, termination of lease agreement is a legally binding document that states the fact that the existing lease is being cancelled prior to its expiration date and sets the terms following the termination. In many cases, the final agreement includes lease termination fees as well as other terms and conditions contained in the lease agreement.
Take note that each state has its own sets of laws and rules regulating lease termination agreements. When drafting a termination of lease agreement or any other legal document, for that matter, you have to make sure that you are working in accordance with the law. This necessitates that you read and understand the laws in your jurisdiction so that you can come up with a legally binding agreement. Furthermore, knowledge of the law can help you streamline the process. A legally sound agreement also averts any possible legal charges against you.
The first part of the Lease Termination Agreement lays out the general terms and conditions agreed upon in the original lease. Important details about the contracting parties will need to be outlined in this section. This will include the legal names of the landlord and the tenant as it appears in the agreement, the duration or expiration date of the original lease, and any other relevant information that is stated in the original contract.
The next part of the agreement will state that the existing lease has been cancelled. It must also outline the reasons for the termination of agreement. Usually, this part is more challenging and complicated in the drafting of the agreement since there are two contending views of the circumstance – that of the tenant and the landlord. But normally, the landlord and the tenant will have a mutual understanding of why the termination will need to be drafted in the first place. It is a good business practice to first bring the issue in perspective before finally executing a termination agreement. On the other hand, a heavily disputatious tenant-landlord relationship will not likely meet halfway and come up with an agreement. Often than not, they will bring the case up in court to finally clear out the matters.
The last part of the Lease Termination Agreement contains the obligations of the contracting parties, for example, any termination fees that have to be settled for the termination to become effective. Since this section pertains to financial matters, you have to be extra careful in writing the provisions or you can be disputed. Even one mistake can lead to forfeiture of the termination fees.