For the month of October 2017, Asia Law Network is collaborating with 99.co to bring great property-related legal content to readers of their blog written by Asia Law Network Premium Lawyers. In the last article in this series, Jeshua Srijit Shashedaran from Netto & Magin LLC talks about tenants and landlords breaking leases early in Singapore.
Many tenants may decide to end tenancy early for many reasons
If properly managed through good communication and a well-written tenancy agreement, landlords and their tenants should not have many problems with each other, since the most likely areas of friction would have been covered under the terms and conditions of the rental contract. However, in some cases, when disputes between both parties have come to a head, it may become necessary for an early termination of tenancy.
You may have to forfeit your security deposit if you break your lease early
If you break your lease, you may have to forfeit your security deposit which is typically a deposit which you pay your landlord when you sign your tenancy agreement with your landlord. It is typically equal to one or more months of rental. The security deposit protects the landlord if the tenant breaks or violates the terms of the lease or rental agreement and may also be used to cover damage to the property, cleaning and other contingencies.
Under normal circumstances where you terminate your contract as agreed in your agreement, the landlord must return your security deposit (less any applicable and necessary deductions as mentioned above). If you break your lease early, your landlord may withhold this lease from you and may even demand additional compensation.
Let the landlord know early if you have to break your lease
You should notify the landlord in advance if you wish to end the tenancy earlier than what is stated in the contract. This will give your landlord time to make plans for your transition out of the property. This notice period should ideally correspond with the duration of the tenancy period and how frequently the tenant pays rent. For instance, if the tenant pays rent on a monthly basis, then a reasonable notice period should be one month.
If you plan to surrender your lease, you should seek the written consent of your landlord. Do note that as the landlord is not obliged to accept your surrender of the lease, the landlord may request for monetary compensation from you.
Some landlords may request for a security deposit (equivalent to an additional month’s rent) in order to deter tenants from prematurely terminating the tenancy agreement. This security deposit also serves the function of paying for any damages caused by the tenant that may happen during the duration of the tenancy.
Clearly lay out the penalties in the situation you need to terminate your lease early in your tenancy agreement
A savvy renter will spend some time scrutinizing a tenancy agreement and negotiating with the landlord to clearly spell out what will happen should you need to terminate the lease early rather than just accepting the tenancy agreement as is presented to you.
Some lessees may have to terminate their leases prematurely due to unforeseen circumstances (sudden financial difficulties etc) and when they do so, some lessors may threaten these lessees with hefty penalties (or the threat of litigation) and cause them to worry unnecessarily. Having provisions in the tenancy agreement to deal with an early termination of lease (by stating the penalties clearly) would be beneficial as it reduces ambiguity and makes it easier for both parties to deal with the early termination when it happens amicably and expediently.
Consider adding clauses in your tenancy agreement if you think you might be sent overseas for work
But if you suspect that you are likely to be sent overseas for work, and you’re looking for a rental opportunity that is longer than 12 months, it’s advisable that you incorporate a “Diplomatic and Reimbursement Clause” into your tenancy agreement from the start. For example, if you are expecting an overseas posting, or if you are an expatriate in Singapore who might get called back to your home country at short notice.
This “Diplomatic and Reimbursement Clause” allows you to terminate the lease prematurely in the event that you have to leave Singapore for work, subject to a minimum notice period. But in turn, should you exercise this clause in the future, the landlord may demand that you reimburse a prorated part of the rental agent’s commission (if applicable).
If this isn’t a part of your tenancy agreement, you might consider negotiating an early termination with your landlord. This is not an ideal situation for your landlord, so you might want to empathize with the situation and may even offer to find a replacement tenant to take over your lease if this is agreeable to the landlord.
Your landlord may decide to end the lease early too!
Similarly, landlords are also entitled to prematurely terminate the tenancy agreement – even though it’s relatively uncommon for landlords to do so. Broadly speaking, there are two situations where this may happen.
Firstly, the landlord might wish to terminate the original tenancy agreement for his or her own reasons (with no fault on the part of the Tenant). In such a situation, unless the landlord had previously incorporated an early termination clause within the original tenancy agreement, it’s still within the legal rights of the tenant to reside in the property until the end of the lease. That’s why the onus would be on the landlord to make sure that the tenant is properly compensated for the early termination of tenancy. If the tenant is not properly compensated, and a wrongful eviction occurs, the tenant could have strong grounds to pursue a case with the Small Claims Tribunal – provided that the original lease is two years or less in length.
Secondly, they may choose to terminate the lease early if the tenant has breached the terms of the tenancy agreement – e.g. failure to pay rent. Given that the tenant has been unable to fulfill their specific obligation in the tenancy agreement to pay rent, the landlord can choose a range of options to compel the tenant to pay rent – and this includes forfeiting the agreement and re-entering the property to evict the tenant.
What happens if a tenant refuses to move out when a landlord decides to terminate the lease? Eviction.
In the second situation outlined above, this act of forfeiture means that the landlord will seek to take possession of the property if the tenant refuses to return the property. The landlord can do this by either returning to the property and taking away the ability for the tenant to enter the premises (by changing the locks etc), or the landlord can go through the Courts to take possession of the property.
As a general rule, forfeiture is a measure of last resort, and will only be invoked if the tenant refuses to pay rent despite being given multiple chances to do so.
However, in order to exercise this option, it’s important that the landlord clearly states the right of re-entry and forfeiture in the tenancy agreement. But before the landlord has decided on forfeiture, he may proceed with the following steps:
- Formally demand the tenant to leave the premises before he may re-enter the property.
- If the tenant refuses to leave, then the landlord may engage the services of a lawyer to commence legal proceedings to take possession of the property.
- In Singapore law, one such legal option is for the landlord to apply for, and invoke a writ of distress under the Distress Act. This writ allows the landlord to claim up to 12 months’ worth of arrears prior to the invocation of the writ of distress.
- With this writ, the landlord may apply for the Court bailiff to seize whatever moveable goods and property currently in the premises – such that, if sold, it would be sufficient to cover for the arrears owed to the landlord.
- The tenant will then receive a notice of seizure of goods, an inventoried list of the items seized by the bailiff, and a copy of the writ of distress. Upon receipt of these documents, the tenant has five days to pay off whatever money that is owed to the landlord. Otherwise, the landlord may then choose to sell off the goods seized from the tenant in order to recover the amount owed to him.
- If all other options are ineffective, then he may pursue the option of forfeiture.
- Under Section 18 of the Conveyancing and Law of Property Act, the landlord must also serve notice to the tenant stating the details and nature of the breach of contract, the form and amount of compensation expected by the landlord, and the subsequent course of action that is expected of the tenant (to remedy the breach within a stipulated date- must be reasonable).
- However, the tenant may also request that the Courts grant them additional time to alleviate the forfeiture of property. Given that forfeiture is a relatively harsh legal option, the Courts generally grant the tenant an additional four weeks to settle their affairs.
- But if the tenant is still unable to pay up the arrears owed to the landlord, then the Courts may issue a writ of possession, and a bailiff will be sent to repossess the property for the landlord.
If a tenant is of the view that there are no grounds for the landlord to seek a repossession of property, the tenant may apply to court for relief against forfeiture. The Court would then consider if there was a breach of condition, covenant or stipulation in the lease, if there was notice given to remedy the breach, if the breach has been remedied and the conduct of the parties.
FAQ about breaking a lease early
Question #1: Can a tenant terminate the lease early if the landlord refuses to repair the property? What recourse is available?
This depends on the repairs needed and the terms of the tenancy agreement. If the landlord does not repair an essential feature of the property (which the landlord has to repair), you are able to repair and claim from the landlord thereafter. If the repairs needed are so substantial that if it were not done, you cannot be expected to live in the property, and the landlord refuses to do the repairs, you may be able to accept the landlord’s repudiation of the tenancy agreement and claim for damages from the landlord.
It is best that the tenancy agreement makes provisions for the kind of repairs that have to be made by the Tenant and the Landlord respectively.
Question #2: Can I refuse to pay rent in the event the landlord breaches his covenants?
Yes and No.
The obligation to pay rent and the landlord’s obligations under the agreement are independent. This means that a tenant cannot reduce or refuse to pay rent for the landlord’s breach of a specific condition or covenant. However, the tenant may recover damages or expenses incurred by the landlord for the landlord’s breach separately.
There is also a possibility for an equitable set off if the covenants are interdependent (ie: set off repair cost from rent due).
It’s important to note that there is no one Singaporean statute that governs landlord and tenant relationships in its entirety (especially when it comes to the issue of prematurely terminating a tenancy agreement). A lease is a contract. Having mutually agreed-upon set of terms to deal with an event of early termination of the tenancy agreement would lead to lesser problems at the occurrence of such an event.
If the Landlord passes away during the tenancy agreement, the legal representative of the deceased landlord steps into the shoes of the landlord. The tenancy agreement is not at an end but continues till its expiry. Any premature termination of tenancy by the legal representative of would entitle the tenant to claim for compensation from the estate of the deceased landlord.
Have a question on tenancy?
If you have a question about how to terminate your tenancy contract earlier than originally stipulated, you can get a quick consult with Jeshua or any or our practicing lawyers. With Quick Consult, you can check out in minutes and for a transparent, flat fee of S$49, the lawyers will call you back on the phone within 1-2 days to answer your questions and give you legal advice.
This article is written by Srijit Jeshua from Netto & Magin LLC and Tang Chee Seng of Asia Law Network.
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This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. If you require any advice or information, please speak to practicing lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Interstellar Group Pte. Ltd. accepts or assumes responsibility, or has any liability, to any person in respect of this article.