Moving out can be complex

Aug 19 2008 by Iain Laing, The Journal

WHAT are the options for a tenant who still has years left on his lease, but wishes to vacate the premises?

Assignment

Most leases let the tenant assign (ie transfer the rest of the lease to someone else) with the landlord’s consent (subject to suitable references for the new tenant).

Assigning the lease is not the end of the tenant’s liability. Any well advised landlord will require that the outgoing tenant guarantees the obligations of the new tenant. So the outgoing tenant may find himself on the hook to the landlord once more if the new tenant does not pay rent.

Subletting

The tenant could sublet all or part of the premises to someone else. Most leases allow subletting of whole (and some allow subletting of part) with a landlord’s consent. Subletting may be less appealing to the tenant as he remains directly liable to the landlord to pay rent and observe the obligations in his lease.

In addition, the lease may only allow the tenant to sublet at the same rent that he is paying to the landlord (which might be very high). The tenant may want to sublet at a lower rent and make up the difference to the landlord himself. He might struggle to find a subtenant willing to pay a high rent if his lease does not allow this.

Surrender

If the tenant cannot pay the rent, or just wants to leave the premises, he can offer to surrender the lease to the landlord. If the landlord agrees, then both parties sign a document confirming this, the tenant returns the keys and vacates the premises.

The landlord could refuse and insist the lease continues. He may ask the tenant to pay a lump sum in return for accepting the surrender.

Non-payment of rent

A tenant desperate to end his lease could simply not pay rent and hope the landlord takes court action to terminate the lease. This is not the best option for landlord or tenant,.

Recommendations

A smart tenant should note the difficulties in getting out of his lease early and consider employing an agent to negotiate. He could take a shorter lease or negotiate a break clause so he could end the lease early.

Sarah Burke is a solicitor in the property department at Dickinson Dees LLP.