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Tenant reneging on lease renewal

28 Aug 2013

What happens if a tenant’s lease for the year has expired (in the original contract it stated that he had an option to renew the lease for a further year, with a negotiated increase) and he says he’ll be renewing the contract but decides to cancel it after a few months? 

The fact that the tenant may not have signed an official lease agreement document does not make the agreement any less valid, says Bauer.

Michael Bauer, managing director of IHPC estate agents, says this does happen from time to time and any communication going back and forth between the landlord and tenant should be put into writing. Even if the confirmation of the agreement is via email, that is still legal and binding, he says. 

If the tenant says he would renew his lease, this is seen to be a contract as there was an offer and an acceptance of the offer. Therefore, even though the tenant might have changed his mind he is still, in effect, held by the agreement via email or telephone to stay on for an additional year. 

The fact that he may not have signed an official lease agreement document does not make the agreement any less valid, says Bauer. 

By agreeing to extend the lease initially, a valid extension to the lease has resulted and the landlord has accepted that the tenant is staying on and made plans accordingly. 

Bauer says the tenant will have, if he still wants to cancel, to pay a reasonable cancellation fee (which is usually a month’s rent because that is how long it would take to find another tenant under normal circumstances) and give 20 business days’ notice to the landlord.  

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