Be aware of any gaps in the lease termination agreement

From Legal Practice: Omission of a Clause Regarding the Settlement of All Claims

Ms. Saša approached us with a problem concerning a seemingly minor omission that could, however, have far-reaching consequences. She had signed a lease termination agreement and thought she could put the small apartment she had left behind behind her and enjoy her new apartment with its large terrace and herb gardens.

However,when signing the agreement, she forgot to insist on a clause regarding the landlord’s potential future claims, specifically stating that all claims had been settled. This nearly backfired on her when the cunning landlord suddenly demanded retroactive payment of the final month’s rent—twice. We stood up for Ms. Saša and, thanks to circumstantial evidence, proved him to be lying, causing him to withdraw his claim entirely. It is therefore advisable to explicitly state in the agreement whether the rent is paid as of the termination date, for what period, whether there are any outstanding balances, and how they will be settled.

What should you be aware of when entering into an agreement to terminate an apartment lease?

You should enter into an agreement to terminate an apartment lease in writing. Since an apartment lease agreement must be in writing, it is safest to adhere to the same requirement when agreeing to terminate it. Second, a written agreement helps prevent misunderstandings and provides a clear legal document in the event of a dispute. The written form ensures that all terms, rights, and obligations are explicitly stated and that both parties have a clear understanding of their commitments.

• Identify the parties to the document correctly: Every contract should clearly identify both parties to the agreement—typically, the landlord is the person who makes the apartment available for use, and the tenant is the person who rents the apartment and uses it. It is important to include full names, addresses, and, if applicable, other contact information so that it is clear who the legal parties to the agreement are.
• Correctly identify the apartment covered by the agreement: The lease should precisely specify the property being rented, including the address and a description of the apartment (e.g., apartment number, location within the building, size, number of rooms, etc.). This will prevent any misunderstandings regarding the leased property.
• Include all rights of both parties in the written agreement: The agreement should address, in particular, the termination date of the lease, the date and method of handing over the apartment, the condition of the apartment, keys, utility bills, the return or offset of the security deposit, underpayments, overpayments, any damages, and an agreement on whether the parties’ mutual claims have been settled.

• Financial Terms: A very important part of the lease agreement is the provision regarding payments, including the amount of rent, payment deadlines, method of payment (e.g., bank transfer, cash), and the conditions for the return of the security deposit. The security deposit serves as collateral in case of any damage caused to the rented apartment or in the event that the tenant fails to fulfill their obligations, such as paying rent. The lease agreement should clearly specify the conditions and timeframe under which the security deposit will be refunded.

Don’t forget the handover report

At the end of the lease, the tenant must return the apartment to the landlord. If this does not happen on the specified lease termination date, the landlord may require the tenant to pay compensation equal to the agreed-upon rent until the apartment is actually returned.

Although the law does not require a handover report to be drawn up when the apartment is returned, it is highly advisable to do so. This document should include a description of the apartment’s condition at the time of handover, information on the readings of the electricity, water, and gas meters (if present), and a list of the apartment’s fixtures and fittings, including a description of their condition.

Both parties may also freely use photographs to document the condition of the apartment in detail at the time of handover. The landlord must provide the tenant with a utility bill within the statutory or agreed-upon timeframe. As a rule, this is not a document that must be ready on the very day the apartment is handed over.

The handover report saved our client, Ms. Eva, in this way. She terminated the lease and handed over the apartment in satisfactory condition. Naturally, she expected that everything was settled and that she would receive her security deposit back from the landlord. One day, however, she received a registered letter from her former landlord accusing her of damaging the apartment and informing her that he would not return her security deposit because he had used it to cover the damages.

Fortunately, Eva had a handover report that had been signed by the landlord’s mother when she took over the apartment, and it clearly showed that the apartment had been handed over in decent condition, aside from a few minor damages. This document saved her, and the landlord eventually returned the entire security deposit to Ms. Eva.

What if you don’t reach an agreement?

If the lease has ended and the tenant vacates the apartment in such a way that it is clear they do not intend to return, the apartment may be considered surrendered under the law. However, this is neither a common nor a safe way to terminate a lease. Simply moving out without an agreement or notice of termination does not always mean that the lease has been properly terminated.

In closing, we would like to remind landlords of an important warning. In a situation where no agreement is reached and the tenant refuses to vacate the apartment after a formal notice of termination, it is not reasonable to decide to break down the door and forcibly remove the tenant’s belongings and the tenant themselves. If the tenant does not voluntarily vacate the apartment after the lease has ended, the landlord should pursue legal action—typically a lawsuit for eviction—and only proceed with forced eviction based on an enforceable court order.

Are you dealing with issues related to a residential lease or its termination? We can help protect your rights as well.

Summary

An agreement to terminate a lease should be in writing and should clearly specify the date the lease ends, when and how the apartment will be handed over, and how any mutual claims between the landlord and tenant will be settled. It is advisable to explicitly state whether the rent has been paid, how utility bills will be settled, whether the security deposit will be returned, and whether either party has any additional claims. When handing over the apartment, it is advisable to draw up a handover report, documenting the condition of the apartment, its furnishings, the number of keys, and the meter readings. Ideally, you should also include photographic documentation. This will help prevent disputes over damage, outstanding payments, or the return of the security deposit. If the lease has ended and the tenant fails to vacate the apartment, the landlord should not take matters into their own hands, such as changing the locks or removing the tenant’s belongings. The proper procedure is to issue a notice to vacate and, if necessary, file a lawsuit for eviction. Furthermore, the tenant’s departure without an agreement or notice of termination does not necessarily mean that the lease has properly ended.