What would be a reasonable cancellation penalty when cancelling a lease agreement early?

[linkinpark]

Hey all, I need some help here please, I had a 12 month lease agreement which I had to terminate 2 months early, I gave my landlord almost 3 months notice before the early termination date to get a new tenant.

There was zero damage to the place on the handover inspection and my rental and utilities were paid on time every month. As far as I'm aware they did secure a new tenant that took over after I left.

What would be a reasonable cancellation penalty?

The landlord wants to charge 60% of a months rental as penalty. Is this fair or unreasonable?

It's been almost a month and the landlord has still not returned any of my deposit, which was one month's rental.

Thanks

 

[RedViking]

If there is another tenant. 0%.

You still have your contract?

Agents are snakes, so don't let them take chances. If it was not in the contract, they can not charge a cent.

Also they must return your deposit with interest.

 

[Caldo]

What does the agreement state about early notice?

Example: my agreement state R15000 payable for early termination.

 

[RedViking]

What does the agreement state about early notice?

Example: my agreement state R15000 payable for early termination.

And if YOU find another tenant?

 

[etwylite]

Generally held that the landlord must show actual costs incurred in securing new tenant (agent fees or ad costs etc) and or rental losses suffered for the time unoccupied and be able to substantiate via invoices etc. It can not simply be a percentage or arbitrary. Deposit must be returned within 7 days if the exit inspection raised no issues and 14 days if there were damages.

 

[linkinpark]

What does the agreement state about early notice?

Example: my agreement state R15000 payable for early termination.

Here's the clause from the lease agreement, the amount referenced as 1.29 is empty.
I had to convert from a PDF image to text , so some words might be off.

-----------------------------------
21. CANCELLATION OF THIS LEASE AGREEMENT BY THE TENANT BEFORE THE EXPIRY OF THE INITIAL PERIOD OR ANY FURTHER FIXED-TERM PERIOD

[Ask TPN: 166]

21.1. If the Tenant chooses to cancel this Lease Agreement prior to the expiry of the Initial
Period for a reason other than a Material Breach of this Lease Agreement by the Landlord, or the Tenant is transferred out of the country for occupational or diplomatic reasons, thereby causing this Lease Agreement to terminate prior to the expiry of the Initial Period, then the following will apply:
21.1.1. the Tenant shall give the Landlord at least 20 (Twenty) Business Days’ Written notice of such cancellation; and
21.1.2. the Landlord shall be entitled to recover any loss suffered by the Landlord as a result of such early cancellation of the Lease Agreement by charging the Tenant a reasonable cancellation penalty, which will be the equivalent of not less than
the amount stated in item 1.29.

21.2. The factors that will be considered when determining the reasonable cancellation penalty contemplated in clause 21.1.2 will include:
21.2.1.the amount of time left until the initial Period is due to terminate;
21.2.2.whether the Landlord is likely to find another tenant to replace the Tenant within a reasonable time, and
21.2.3.whether the Tenant agrees this is a fair and reasonable cancellation penalty.

21.3. If the Landlord or the Agent (as the case may be), by acting reasonably and diligently, is able to enter into a new lease agreement during the 20 (Twenty) Business Days’ notice period set out in clause 21.1.1, and the new lease agreement is for the same duration or a longer period than the remaining period of this Lease Agreement, then the Tenant shall only be liable for the reasonable advertising costs incurred by the Landlord in advertising the Premises and for any commission due to the Agent. The advertising costs and commission charged under this clause 21.3 may not be more than the reasonable cancellation penalty set out in item 1.29.
-----------------------------------

 

[Johnatan56]

You have your statement there, show cost of commission and advertising fee.

 

[Caldo]

Here's the clause from the lease agreement, the amount referenced as 1.29 is empty.
I had to convert from a PDF image to text , so some words might be off.

-----------------------------------
21. CANCELLATION OF THIS LEASE AGREEMENT BY THE TENANT BEFORE THE EXPIRY OF THE INITIAL PERIOD OR ANY FURTHER FIXED-TERM PERIOD

[Ask TPN: 166]

21.1. If the Tenant chooses to cancel this Lease Agreement prior to the expiry of the Initial
Period for a reason other than a Material Breach of this Lease Agreement by the Landlord, or the Tenant is transferred out of the country for occupational or diplomatic reasons, thereby causing this Lease Agreement to terminate prior to the expiry of the Initial Period, then the following will apply:
21.1.1. the Tenant shall give the Landlord at least 20 (Twenty) Business Days’ Written notice of such cancellation; and
21.1.2. the Landlord shall be entitled to recover any loss suffered by the Landlord as a result of such early cancellation of the Lease Agreement by charging the Tenant a reasonable cancellation penalty, which will be the equivalent of not less than
the amount stated in item 1.29.

21.2. The factors that will be considered when determining the reasonable cancellation penalty contemplated in clause 21.1.2 will include:
21.2.1.the amount of time left until the initial Period is due to terminate;
21.2.2.whether the Landlord is likely to find another tenant to replace the Tenant within a reasonable time, and
21.2.3.whether the Tenant agrees this is a fair and reasonable cancellation penalty.

21.3. If the Landlord or the Agent (as the case may be), by acting reasonably and diligently, is able to enter into a new lease agreement during the 20 (Twenty) Business Days’ notice period set out in clause 21.1.1, and the new lease agreement is for the same duration or a longer period than the remaining period of this Lease Agreement, then the Tenant shall only be liable for the reasonable advertising costs incurred by the Landlord in advertising the Premises and for any commission due to the Agent. The advertising costs and commission charged under this clause 21.3 may not be more than the reasonable cancellation penalty set out in item 1.29.
-----------------------------------

The fact that no termination amount is agreed is a problem.
However there are some clear considerations.
1. 20 business days notice - you have given 3 times more.
2. New tenants - most likely for more than the remaining period.

Effectively you should only be liable for agent commission and advertising cost.

You do have grounds for legal action, but it might be quicker and cheaper to just negotiate the 'reasonable amount' with the agent

 

[etwylite]

When did the landlord make the 60% offer and have you written back advising you don’t accept it?

 

[linkinpark]

When did the landlord make the 60% offer and have you written back advising you don’t accept it?

Generally held that the landlord must show actual costs incurred in securing new tenant (agent fees or ad costs etc) and or rental losses suffered for the time unoccupied and be able to substantiate via invoices etc. It can not simply be a percentage or arbitrary. Deposit must be returned within 7 days if the exit inspection raised no issues and 14 days if there were damages.

Apologies, there were 3 separate charges, I totalled it up to 60% of my rent of R13000. The charges are:
Two weeks lost rental due to early termination (no idea what he means by this) = R6250
He is charging the new tenant R12500, so he's charging me the difference for those 2 months = R500 X 2 = R1000
Agents commission pro-rata for the 2 months = R910 (I understand this charge and have no problem paying it)
Total = R8160 (so around 62%)

I found out about this on Thursday, I sent him an email asking for an explanation on these costs and he replies today saying its "contractual" and "fair" and "standard practice worldwide" and he's willing to drop the charges by R1000.

 

[thehuman]

The 6250 sounds fishy

 

[krycor]

Typically it's the standard deposit/1 month forfeit excluding damages. Sometimes they are willing to drop this to 0 if you have their next victim lined up and they do not have to spend money on advertising etc.

but yah.. usually it's you deposit gone.

 

[RandomGeek]

"standard practice worldwide" means fokkol in the South African context. And nothing can be "contractual" if it isn't clearly written in the contract. The guy (owner? agent?) doesn't sounds like a seasoned property professional to me

"It's been almost a month and the landlord has still not returned any of my deposit, which was one month's rental." Rental Housing Tribunal for that one

 

[The Darkness]

Yup, I'd take this straight to the RHT right away. I'd also let him know you're taking action on this. He needs to prove his losses and reference this against the contractual agreement. It's breaking the law for him to withhold your deposit, and it needs to be returned with interest accrued.

 

[etwylite]

If there is an agent involved, why are you dealing with the landlord? or is this just for finding the new tenant? In which instance you are entitled to see an invoice to support the amount.

Secondly what is the difference in your final exit date and the new tenant's start date? If it's the two weeks referenced then the loss would be fair and recoverable. If there was continuity of occupation then no loss would have accrued to the landlord and the penalty would be unfair.