Lease termination fee: How to calculate?
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Are you thinking about moving and are unsure how to calculate the fine for terminating your lease ? Citas explains exactly how to do the calculation.
1 - Have your contract in hand
The first and most important point is to have your contract in hand !
Although there are some rules, many things can be freely agreed upon between landlord and tenant, so have your contract on hand to calculate the rental termination fee!
2- Check the contract expiration date
Ready.
Now you need to check if the contract is valid. See if it is still within the initially agreed term or if it is already running for an indefinite period.
Contracts usually last 30 months. With that in mind, if you have been living in the same place for more than 2 and a half years, it is quite possible that it is already running for an indefinite period.
And that's great!
This means that there is no fine for terminating the lease, as long as you notify the landlord at least 30 days in advance that you intend to leave the property.
That was easy.
But if he hasn't won yet, how do you calculate it?
3 - Calculate the proportional rental termination fine
The standard early departure fine is 3 months' rent, but by law it must be proportional.
This means that, for example, if you leave with one month left on the contract, the amount due will not be the full amount of the 3 rents, after all, you respected almost the entire agreed term!
But how to calculate the proportional?
It's very simple.
Divide the total amount of the fine by the total term of the contract. This way you will know how much each month counts towards the total amount of the fine.
Now count the number of months left until the agreed deadline. With these two numbers in hand, just multiply one by the other and that's it! You now know what the fine due would be, proportional to the time left until the end of the contract.
4 - Exceptions to payment of fines
Now, there are some exceptions! Many contracts provide for a waiver of fines after a certain period. This waiver usually occurs after 12 months. But this is not a rule nor is it in the law , it is just a contractual benefit that the landlord can offer the tenant.
The calculation remains exactly the same as we explained. If, for example, your contract gave you exemption from fines after 12 months and you decide to leave in month 15, there is no fine! Remember that if you leave within the period in which the fine is due, the calculation remains the same: 3 rents, divided by the total term of the contract, multiplied by the number of months left until the end of the contract.
Great! Don't forget that in some contracts, even if you pay the fine for early departure, you still need to give advance notice. You need to give at least 30 days' notice of your departure. If you don't give notice, you may be charged up to 1 month's extra rent!
5 - And when the fine is not due?
There is only one case in which this fine, even if it is in the contract, cannot be charged:
When an employee is relocated by the company he works for.
That is, if you are moving because your company decided to place you in another state, for example, you are exempt from the fine.
This happens because the law understands that it was not your choice but rather your boss's obligation.
In these cases, it will be necessary to present documentation proving this relocation.
And be careful! It is not valid if you receive a job offer from another company in another city. In this case, the law understands that it was your personal choice. It is only valid if the same company that hires you today asks you to take a position somewhere else!
Now that you know everything about how to calculate the fine for terminating a lease, how about taking a look at the apartments we have available? Maybe one of them looks just like your new home ;)