break lease fee
📖 What is break lease fee? Meaning and definition
When a tenant enters into a fixed-term tenancy, they agree to rent the property for a specific period. If the tenant decides to leave before this period is over, they are considered to be 'breaking the lease'. In such situations, the landlord may require the tenant to pay a 'break lease fee' to cover costs associated with the early termination.
This fee is often part of an agreement, such as a Fixed Term Break Agreement, which outlines the tenant's obligations when ending the tenancy early. Besides the break lease fee, tenants may also be responsible for paying rent until a new tenant is found for the property, or until the original fixed term would have ended, whichever comes first.
The purpose of the break lease fee, along with continued rent payments, is to compensate the landlord for financial losses incurred due to the early termination. These losses can include the period the property remains vacant and administrative costs involved in finding a replacement tenant. The landlord is generally expected to mitigate their losses by actively seeking a new tenant.
Tribunal decisions show that break lease fees are sometimes awarded alongside other costs like rent arrears, cleaning fees, or compensation for damages, when a tenant ends a fixed-term tenancy early. The specific amount of the fee can vary and is often determined by agreement between the landlord and tenant, or by the Tenancy Tribunal.
📋 Requirements
- The tenancy must be a fixed-term agreement.
- The tenant must end the tenancy earlier than the agreed end date.
- There may be a specific agreement, such as a Fixed Term Break Agreement, outlining the fee.
- The landlord must seek to mitigate their losses by finding a new tenant.
📝 Procedure
- Tenant requests to end the fixed-term tenancy early.
- Landlord advises the tenant of the implications of breaking the lease early, including potential costs.
- Landlord and tenant may agree on terms, possibly through a Fixed Term Break Agreement, which includes the break lease fee.
- Landlord advertises the property to find a new tenant.
- Tenant pays the break lease fee and potentially rent until a new tenant commences their tenancy.
💡 Examples
- A tenant on a fixed-term lease for 12 months decides to move out after 6 months and agrees to pay a break lease fee of $652, in addition to rent until a new tenant is secured.
- A landlord allows a tenant to end their fixed-term lease early if they sign an agreement to pay a break lease fee and continue paying rent until a replacement tenant is found.
- After a tenant moves out of a fixed-term tenancy in March, the landlord seeks a break lease fee and rent arrears until a new tenancy begins in mid-March of the following year.
- A Tenancy Tribunal orders a tenant to pay a break lease fee as part of a total award that also includes rent arrears and costs for cleaning and damages.
❓ Frequently asked questions
What is a break lease fee?
It's a fee a tenant might have to pay if they end a fixed-term tenancy agreement before the official end date. It's often part of an agreement made with the landlord to allow for early termination.
When do I have to pay a break lease fee?
You might have to pay it if you're on a fixed-term tenancy and you decide to move out before the agreed end date. This fee is typically discussed and agreed upon with your landlord when you request to end the tenancy early.
Will I still have to pay rent if I pay a break lease fee?
Yes, often you will still be responsible for paying rent until a new tenant is found for the property, in addition to the break lease fee. The landlord is expected to actively look for a new tenant to minimise your costs.
How much is a break lease fee?
The amount can vary. It's often agreed upon between you and your landlord, or it can be determined by the Tenancy Tribunal if there's a dispute. The cases show fees like $652 being awarded.
What if my landlord doesn't try to find a new tenant?
Landlords have a duty to mitigate their losses, meaning they should make reasonable efforts to find a new tenant quickly. If they don't, you might not be liable for rent for the entire period until the original end date.
Can a break lease fee be combined with other charges?
Yes, Tenancy Tribunal decisions show that a break lease fee can be part of a larger claim by the landlord, which may also include rent arrears, cleaning costs, or compensation for damages.