Early Termination of Tenancy Agreement

[dreamroof]

I am entering a 12-month tenancy agreement with the help of an agency. On close reading of the agreement, it seems to be a rewording of the standard HDB tenancy agreement to include clauses that will protect the agency's interest in two ways:

1. in the event of termination, it is spelled out that neither the landlord nor the tenant can seek compensation from the agency for the commission of the unexpired terms of lease.
2. in the event that the tenancy is extended at the prevailing rate, the agency is entitled to receive further commission from the new transaction.

This practice seems to be common in most real estate agencies' standard tenancy agreement. I have no particular concern over the agency wanting to protect their own interest. However, there does not seems to have any clause to spell out the consequences of an early termination that was initiated by the tenant.

To make things worse, the agreements typically will state that if the tenancy agreement was terminated by the landlord prematurely, the landlord is obliged to refund the deposit as well as pay the tenant the rent due for the unexpired terms of lease. These tenancy agreements seem to protect the interest of the tenant more than it protects the landlords' interests.

I understand that agents typically will feel uncomfortable about discussing the consequences of breaking an agreement with the tenant but I believe that an agreement should minimally cover aspects of the agreement that is likely to create ambiguity or cause disputes.

As a "landlord", I tried to add in the following clause to state the consequences of early termination just to protect my initial investment into the furnishing of the unit:

"In the event of the tenant terminating the rental agreement before the expiry of the agreed tenancy, the tenant shall pay the full rental due for the unexpired terms of lease to the landlord."

However, the tenant's agent tried really had to make things difficult by saying that it is an unfair clause and insisted on adding in the following clause as a counter:

"In the event of the landlord terminating the rental before the expiry of the agreed tenancy, the landlord shall pay the full rental due for the unexpired term of the agreement to the tenant."

While the last clause seems redundant in the presence of the early statement regarding the sale of the property in the midst of the tenancy, it exposes the landlord to the risk of compounded loss if the sale of the HDB property was under circumstances beyond the landlord's control. For example, in a forced sale by the government due to en bloc or change in housing policy.

I attempted to amend the clause added by the tenant's agent, by including the caveat "except under circumstances mandated by the government, beyond the landlord's control."

What is your opinion?
Is it necessary to spell out the consequence of early termination even in the standard HDB tenancy agreement?
Is the landlord's added clause and caveat to the tenant's request unfair?
What should I do so that both the tenant and the landlord can enter an agreement that will take care of each other's interest yet not be sources of disputes in the future if things did not pan out well?

Thanks in advance,

dreamroof

[august]

my understanding is for a 2-yr TA, there is this diplomatic clause. For a 1-yr TA there is no diplomatic clause, which means the tenant is not supposed to break lease at all, and if tenant does so will be liable to pay landlord rent of the uncompleted tenancy period. Your agent and the tenant's agent should know this quite well. If the TA (for 1 yr lease) is not clear on this, as landlord i tell my agent to add a clause in stating this clearly.

i usually do not entertain the tenant's agent wanting to add their clause into the TA. So everything or tenant's requirements should be trashed out even before signing the LOI. Once u the landlord gets the LOI with the deposit, the ball is in your court and in your favour.

[acidic.straw]

I have never heard of the landlord having to pay the tenant the rent due for the unexpired terms of lease. For 1 year TA, tenant has no option to break lease and have to pay landlord for unexpired portion of tenancy. The standard template is just a guideline and as the landlord it is up to you to call the shots. If there is disagreement at the outset, it is best to find a new tenant or change your agent.

[Scary]

My tenant had recently terminated a 1 year TA. When I queried my agent on what are the recourse that I could take, the anwer was : there is nothing you can do except to take away the 1 month deposit. Was advise by my agent that even if there is a clause stating that the tenant is to repay the remaining months, it would be an uphill task as lawyers needs to be involved to bring the case to court to pursue the matter if tenant simply bo chap u (is this true?)

[acidic.straw]

My tenant had recently terminated a 1 year TA. When I queried my agent on what are the recourse that I could take, the anwer was : there is nothing you can do except to take away the 1 month deposit. Was advise by my agent that even if there is a clause stating that the tenant is to repay the remaining months, it would be an uphill task as lawyers needs to be involved to bring the case to court to pursue the matter if tenant simply bo chap u (is this true?)

It is true. The legal hassle is not worth it unless you have deep pockets and plenty of free time. Just take the 1-mth deposit and look for a new tenant.

[teddybear]

Not true. If the tenant is still residing in Singapore & want to dishonor the agreements, go sue the he'll ouf of him & claim the legal costs from him as well. Don' listen to agents bullshit as they always are double-headed.

My tenant had recently terminated a 1 year TA. When I queried my agent on what are the recourse that I could take, the anwer was : there is nothing you can do except to take away the 1 month deposit. Was advise by my agent that even if there is a clause stating that the tenant is to repay the remaining months, it would be an uphill task as lawyers needs to be involved to bring the case to court to pursue the matter if tenant simply bo chap u (is this true?)

[HP65]

Not true. If the tenant is still residing in Singapore & want to dishonor the agreements, go sue the he'll ouf of him & claim the legal costs from him as well. Don' listen to agents bullshit as they always are double-headed.

To add on, agents fear testifying in court as it takes away precious time, might affect their reputation in the industry, subject to CEA/ internal agency investigation and 'market practices' they do not wish to disclose.

Those clauses IMO are fair and you can always try arbitration as a start. Usually most disputes can be settled by then. Dun be pressured by agents who try to pull a fast 1 with you.

[revhappy]

Both HP65 and TeddyBear are sadists and typical owner mentality to milk poor tenants and loot them.

Before you even think of sueing the poor guy, whose deposit you are planning to take away for free, bear in mind, that you will not be able to rent out the house to anybody until the matter is settled. If you rent it out to someone else, then what is the logic of sueing him when you are getting rent from someone else?

The market is good now and rentals are horridly expensive so no sympathies to you owners. You can easily find another tenant and out of goodwill you should return the deposit to the poor tenant after cutting any outgoings due to additional agent fees etc.

Remember there is karma, what is sow is what you reap! You may feel happy keeping his deposit but if he curses you it will definitely bite you back somewhere down the line.

This piece of advice is for all the owners here who to love to just keep the deposit as if it is a free gift to you.

[dreamroof]

Thank you so much for the fast response and advice. My confidence in posting in this forum is well justified

I was a bit aghast with the state of things when I saw the tenancy agreement and the agent's reaction to my request. I thought that as "landlords" we should really have a better deal in terms of a fair protection of our interest in a binding contract. Wonder how we can make it more of a standard practice to state this? In the first place, is it necessary to include all these clauses or as suggested it is "understood"?

My reaction was also really due to a prior bad experience. My previous tenant broke the tenancy agreement with 3 months to go. This was an extension to the original contract and they gave one month notice. However, they did not do it through the diplomatic cause and I feel that my previous agent did not quite advice me adequately nor appropriately. They are still residing in Singapore.

He gave me the feeling that he just wanted a "peaceful" end to the arrangement. Now that I am working with a new agent, I found that I could have claimed much from the previous tenant on the count of abuse of the facilities provided.

[august]

Both HP65 and TeddyBear are sadists and typical local mentality to milk foreigners and loot them.

Before you even think of sueing the poor guy, whose deposit you are planning to take away for free, bear in mind, that you will not be able to rent out the house to anybody until the matter is settled. If you rent it out to someone else, then what is the logic of sueing him when you are getting rent from someone else?

The market is good now and rentals are horridly expensive so no sympathies to you owners. You can easily find another tenant and out of goodwill you should return the deposit to the poor foreigner after cutting any outgoings due to additional agent fees etc.

Remember there is karma, what is sow is what you reap! You may feel happy keeping his deposit but if he curses you it will definitely bite you back somewhere down the line.

This piece of advice is for all the owners here who to love to just keep the deposit as if it is a free gift to you.

what talking you? lol
the tenancy agreement is a piece of legal document in plain language, and parties to it are legally bound by terms of the agreement. Nothing complicated or abstract like karma.

[dreamroof]

Both HP65 and TeddyBear are sadists and typical mentality to milk poor tenants and loot them.

Before you even think of sueing the poor guy, whose deposit you are planning to take away for free, bear in mind, that you will not be able to rent out the house to anybody until the matter is settled. If you rent it out to someone else, then what is the logic of sueing him when you are getting rent from someone else?

The market is good now and rentals are horridly expensive so no sympathies to you owners. You can easily find another tenant and out of goodwill you should return the deposit to the poor tenant after cutting any outgoings due to additional agent fees etc.

Remember there is karma, what is sow is what you reap! You may feel happy keeping his deposit but if he curses you it will definitely bite you back somewhere down the line.

This piece of advice is for all the owners here who to love to just keep the deposit as if it is a free gift to you.

Agreed it will be mean of us to be opportunistic. However, there is another side to the story.

Sometimes, owners have to put in some money to strike up a tenancy agreement. For example, money to furnish the place as well as the agent fees. If the agreement is terminated prematurely, the initial outlay may not have been recovered in the first place. This is not a case to ask for profit but rather simply breaking even.

In addition, the loss of rental in the interim period can be significant. It may not be that easy to land the right tenant for the next agreement. Typically it will take at least one to two months to land the next tenant. At say $2500 a month, that will be a loss of income of $5000.

[revhappy]

what talking you? lol
the tenancy agreement is a piece of legal document in plain language, and parties to it are legally bound by terms of the agreement. Nothing complicated or abstract like karma.

I agree that it is a legal document. But legal documents are to protect your interests against someone doing injustice to you. But tell me in this case where is the injustice? The owner can easily get another tenant in the current market for higher rent in fact.

Tenancy agreements here are heavily tilted towards the owners and tenants have no choice.

You guys really deserve a big slowdown in the economy and prices crashing and then you will know what humanity is and what basic values are all about.

[revhappy]

Agreed it will be mean of us to be opportunistic. However, there is another side to the story.

Sometimes, owners have to put in some money to strike up a tenancy agreement. For example, money to furnish the place as well as the agent fees. If the agreement is terminated prematurely, the initial outlay may not have been recovered in the first place. This is not a case to ask for profit but rather simply breaking even.

In addition, the loss of rental in the interim period can be significant. It may not be that easy to land the right tenant for the next agreement. Typically it will take at least one to two months to land the next tenant. At say $2500 a month, that will be a loss of income of $5000.

Thats bullshit. It wont take 2 months to find a tenant.$2500 is rent for may be a 3+1 HDB or a 1 bedder studio and there are lots of FTs here who love to take up that kind of place and huge demand for it. I know the property rental market very well. Currently, if you place an ad in property guru, the house will be taken within a week.

Like I said you can deduct any outgoings due to additional agent fee etc and that is fair enough

[teddybear]

I go by the law, and what is agreed in the tenancy agreement by tenant. If tenant doesn't agree with the clauses in TA, why sign? Nobody put a gun to their head right?
If everybody talks like you and can disregard the law and agreement previously signed in agreement, what will the world becomes?
There are just too many horrible tenants, so you guys better be careful of your TA. My TA is always waterproof to protect my interests. Even if tenant exercise diplomatic clause, I have a clause to deduct pro-rated agent fees paid from deposit, otherwise, no diplomatic clause or only allow fixed lease. ha ha ha.

I agree that it is a legal document. But legal documents are to protect your interests against someone doing injustice to you. But tell me in this case where is the injustice? The owner can easily get another tenant in the current market for higher rent in fact.

Tenancy agreements here are heavily tilted towards the owners and tenants have no choice.

You guys really deserve a big slowdown in the economy and prices crashing and then you will know what humanity is and what basic values are all about.

[teddybear]

Why should landlords do so much extra work just because a tenant dishonor the contract they signed? I say, just follow legal procedures & exercise landlords rights.

Thats bullshit. It wont take 2 months to find a tenant.$2500 is rent for may be a 3+1 HDB or a 1 bedder studio and there are lots of FTs here who love to take up that kind of place and huge demand for it. I know the property rental market very well. Currently, if you place an ad in property guru, the house will be taken within a week.

Like I said you can deduct any outgoings due to additional agent fee etc and that is fair enough

[teddybear]

If you are the landlords:
1. Never allow such clause in your TA.
2. Ok as they help do negotiation & paperwork for you.

To be fair, state that the lease is for fixed term & both parties are legally binding to same compensation terms in case of early termination.

I am entering a 12-month tenancy agreement with the help of an agency. On close reading of the agreement, it seems to be a rewording of the standard HDB tenancy agreement to include clauses that will protect the agency's interest in two ways:

1. in the event of termination, it is spelled out that neither the landlord nor the tenant can seek compensation from the agency for the commission of the unexpired terms of lease.
2. in the event that the tenancy is extended at the prevailing rate, the agency is entitled to receive further commission from the new transaction.

This practice seems to be common in most real estate agencies' standard tenancy agreement. I have no particular concern over the agency wanting to protect their own interest. However, there does not seems to have any clause to spell out the consequences of an early termination that was initiated by the tenant.

To make things worse, the agreements typically will state that if the tenancy agreement was terminated by the landlord prematurely, the landlord is obliged to refund the deposit as well as pay the tenant the rent due for the unexpired terms of lease. These tenancy agreements seem to protect the interest of the tenant more than it protects the landlords' interests.

I understand that agents typically will feel uncomfortable about discussing the consequences of breaking an agreement with the tenant but I believe that an agreement should minimally cover aspects of the agreement that is likely to create ambiguity or cause disputes.

As a "landlord", I tried to add in the following clause to state the consequences of early termination just to protect my initial investment into the furnishing of the unit:

"In the event of the tenant terminating the rental agreement before the expiry of the agreed tenancy, the tenant shall pay the full rental due for the unexpired terms of lease to the landlord."

However, the tenant's agent tried really had to make things difficult by saying that it is an unfair clause and insisted on adding in the following clause as a counter:

"In the event of the landlord terminating the rental before the expiry of the agreed tenancy, the landlord shall pay the full rental due for the unexpired term of the agreement to the tenant."

While the last clause seems redundant in the presence of the early statement regarding the sale of the property in the midst of the tenancy, it exposes the landlord to the risk of compounded loss if the sale of the HDB property was under circumstances beyond the landlord's control. For example, in a forced sale by the government due to en bloc or change in housing policy.

I attempted to amend the clause added by the tenant's agent, by including the caveat "except under circumstances mandated by the government, beyond the landlord's control."

What is your opinion?
Is it necessary to spell out the consequence of early termination even in the standard HDB tenancy agreement?
Is the landlord's added clause and caveat to the tenant's request unfair?
What should I do so that both the tenant and the landlord can enter an agreement that will take care of each other's interest yet not be sources of disputes in the future if things did not pan out well?

Thanks in advance,

dreamroof

[Regulators]

Compensations for early termination is usually reciprocal, meaning whatever compensation the tenant gets if the landlord terminates prematurely, the landlord should get the same in the event the tenant terminates prematurely. There is nothing wrong with the tenant having that clause in the TA but as a landlord, you have to ensure that you get the same benefit upon early termination in the name of fairness.

[august]

I agree that it is a legal document. But legal documents are to protect your interests against someone doing injustice to you. But tell me in this case where is the injustice? The owner can easily get another tenant in the current market for higher rent in fact.

Tenancy agreements here are heavily tilted towards the owners and tenants have no choice.

You guys really deserve a big slowdown in the economy and prices crashing and then you will know what humanity is and what basic values are all about.

i wont say TA are tilted towards landlords and tenants have no choice. as said no one points a gun to tenant's head or force tenant to sign. It is just market cycle and there will be times when the market is not in landlords' favour and landlords have to bear significant financial risks and losses.

actually i am puzzled what your beef is about. parties to a legal agreement should exercise personal responsibility and integrity and abide by its terms, & not be flippant about it.

[devilplate]

very funny leh

landlords always lugi one la.....where got TA favors landlords one????

most of the time, tenants jus forfeit their deposit if they wana break lease....but for landlords....not so simple.....

[devilplate]

I go by the law, and what is agreed in the tenancy agreement by tenant. If tenant doesn't agree with the clauses in TA, why sign? Nobody put a gun to their head right?
If everybody talks like you and can disregard the law and agreement previously signed in agreement, what will the world becomes?
There are just too many horrible tenants, so you guys better be careful of your TA. My TA is always waterproof to protect my interests. Even if tenant exercise diplomatic clause, I have a clause to deduct pro-rated agent fees paid from deposit, otherwise, no diplomatic clause or only allow fixed lease. ha ha ha.

if tenant pack bag and go.....u aso at most makan 2mths deposit only mah rite....

[teddybear]

You think landlord can anyhow makan deposit mah? You still have to refund back to them, and end up paying agent fees for signing the tenancy that never get completed! Landlord alway end up worst off giving diplomatic clause! I prefer fixed lease, no back out.

if tenant pack bag and go.....u aso at most makan 2mths deposit only mah rite....

[amk]

RevHappy you must be a tenant are you ? Maybe you from Europe ?
Welcome to Singapore, or Asia for that matter. You need to get used to Asian context of housing values and traditions. I know in France as a tenant you can owe 1 yr rent and yet legally landlord still has no right to chase a tenant out. Good huh ?
In SG, rental contract is a business. Imagine commercial leasing. You lease out one floor of office space for 3yrs. And in the middle of it, you say " ok my business not doing well, I give u 3 month notice and I terminate the lease". Can u do that ? No you cannot. SG residential lease follows the same spirit. It's a business transaction. When you sign on a lease, you sign for a service contract. This is very different from European practice. Tis is not a "social" issue.
So get used to the business like leasing practices here. It's a simple business. Nothing karma or whatever. What is important is to be equitable.

[august]

RevHappy you must be a tenant are you ? Maybe you from Europe ?
Welcome to Singapore, or Asia for that matter. You need to get used to Asian context of housing values and traditions. I know in France as a tenant you can owe 1 yr rent and yet legally landlord still has no right to chase a tenant out. Good huh ?
In SG, rental contract is a business. Imagine commercial leasing. You lease out one floor of office space for 3yrs. And in the middle of it, you say " ok my business not doing well, I give u 3 month notice and I terminate the lease". Can u do that ? No you cannot. SG residential lease follows the same spirit. It's a business transaction. When you sign on a lease, you sign for a service contract. This is very different from European practice. Tis is not a "social" issue.
So get used to the business like leasing practices here. It's a simple business. Nothing karma or whatever. What is important is to be equitable.

it is rare of europeans to bring in karma.

[mcmlxxvi]

it is rare of europeans to bring in karma.

Got... Very famous somemore... The one who sang Karma karma karma karma karma-chameleon...

[HP65]

Both HP65 and TeddyBear are sadists and typical owner mentality to milk poor tenants and loot them.

Before you even think of sueing the poor guy, whose deposit you are planning to take away for free, bear in mind, that you will not be able to rent out the house to anybody until the matter is settled. If you rent it out to someone else, then what is the logic of sueing him when you are getting rent from someone else?

The market is good now and rentals are horridly expensive so no sympathies to you owners. You can easily find another tenant and out of goodwill you should return the deposit to the poor tenant after cutting any outgoings due to additional agent fees etc.

Remember there is karma, what is sow is what you reap! You may feel happy keeping his deposit but if he curses you it will definitely bite you back somewhere down the line.

This piece of advice is for all the owners here who to love to just keep the deposit as if it is a free gift to you.

I take offence with your call that I'm a sadist. If I'm a mean landlord, do you think my tenant would stay with me for 8 years and renewed 3x his tenancy with me? During 2007 when all my neighbours were calling/ renting out $7-8000 per month (similiar condition unit), I was renting it to him at $3500. When it was time for renewal, he voluntarily offered to increase the rent to $6000 which I did not bargain but accepted.

Please re-read the context of the thread-starter query. What he is asking to be inserted is fair protection for the landlord. In fact, tenant's agent love to ask for insertion of such unfair clauses that prejudice the interests of the landlord.

To argue that the landlord can find a replacement tenant, even at a higher rental is irrelevant. Landlord has to spend time again to meet agent to sign documents, re-vet tenants profile etc. These are intangibles that are not considered and its unfair to landlord if tenant unilaterally terminate a lease and just forfiet the 1-2 months deposit.

A friend of mine encountered a situation almost exactly like that whereby the tenant decided to terminate a 2 year lease after 3 months into the lease. He advertised and searched for a replacement tenant (which he found) at 20% higher rent and informed the landlord that he is ending the tenancy and even demanded that the landlord accept the termination and use the additional 20% to cover whatever penalities and fees to all the agents involved in the replacement tenancy. How absurd can the tenant be! Best of all, the tenant is a licensed property agent.

Anyway, like what teddy said, my friend sued the tenant and also lodged a complaint with CEA. Upon further investigation, some of the agents were also reprimanded by CEA as they were party to the scheme knowing full well the landlord interests weren't protected.

[revhappy]

I take offence with your call that I'm a sadist. If I'm a mean landlord, do you think my tenant would stay with me for 8 years and renewed 3x his tenancy with me? During 2007 when all my neighbours were calling/ renting out $7-8000 per month (similiar condition unit), I was renting it to him at $3500. When it was time for renewal, he voluntarily offered to increase the rent to $6000 which I did not bargain but accepted.

Please re-read the context of the thread-starter query. What he is asking to be inserted is fair protection for the landlord. In fact, tenant's agent love to ask for insertion of such unfair clauses that prejudice the interests of the landlord.

To argue that the landlord can find a replacement tenant, even at a higher rental is irrelevant. Landlord has to spend time again to meet agent to sign documents, re-vet tenants profile etc. These are intangibles that are not considered and its unfair to landlord if tenant unilaterally terminate a lease and just forfiet the 1-2 months deposit.

A friend of mine encountered a situation almost exactly like that whereby the tenant decided to terminate a 2 year lease after 3 months into the lease. He advertised and searched for a replacement tenant (which he found) at 20% higher rent and informed the landlord that he is ending the tenancy and even demanded that the landlord accept the termination and use the additional 20% to cover whatever penalities and fees to all the agents involved in the replacement tenancy. How absurd can the tenant be! Best of all, the tenant is a licensed property agent.

Anyway, like what teddy said, my friend sued the tenant and also lodged a complaint with CEA. Upon further investigation, some of the agents were also reprimanded by CEA as they were party to the scheme knowing full well the landlord interests weren't protected.

So if a tenant loses his job or has to leave Singapore due to family emergency or something, what do you expect? He should just pay the remaining lease term rent? He already found you another tenant at 20% higher rent, but no, you wont take it, why would you , when you can keep the deposit for free and have your agent find another tenant at may be 30% higher rent and then you happy, your agent also happy. Very nice

Tenants dont terminate leases, without a good reason, especially in a rising market. The tenant has more to lose than an owner.

[devilplate]

So if a tenant loses his job or has to leave Singapore due to family emergency or something, what do you expect? He should just pay the remaining lease term rent? He already found you another tenant at 20% higher rent, but no, you wont take it, why would you , when you can keep the deposit for free and have your agent find another tenant at may be 30% higher rent and then you happy, your agent also happy. Very nice.

Depends on the next tenant profile aso leh.....i wun accept if its a group of prc frens/gers for example.....but if tenant profile ok and rental is at least the same.....i will accept one....fren fren mah

[CyrusChang]

Friend is friend...business is business...all the T & C must be fair

[bullman]

From my experience, the landlord is always at the losing end. Most tenants are also smart and will only insist on paying 1 month deposit.

You can include fixed lease, no dip clause etc etc. If they wish to leave, they will just go, leaving your house empty, w/o you even knowing it. If they are nice, maybe they will lock the door for you.

In the event that they:
1) have left the country, its GG.
2) they are still in SG, you will need to track them down, get an arbitration, you cannot rent the unit in the meantime as the amount of damage/losses claimed needs to be documented. Will you do it?

[acidic.straw]

From my experience, the landlord is always at the losing end. Most tenants are also smart and will only insist on paying 1 month deposit.

You can include fixed lease, no dip clause etc etc. If they wish to leave, they will just go, leaving your house empty, w/o you even knowing it. If they are nice, maybe they will lock the door for you.

In the event that they:
1) have left the country, its GG.
2) they are still in SG, you will need to track them down, get an arbitration, you cannot rent the unit in the meantime as the amount of damage/losses claimed needs to be documented. Will you do it?

As I mentioned before, it is cheaper to keep the deposit and look for the next tenant. Yes, the T&C's are on your side and you can sue if you want but who needs the hassle and wasted time getting lawyers, court hearings etc...and no guarantee you can get back all the legal costs. Easier said than done.