Understanding Lease Termination: Grace Periods and Contractual Obligations

A lease agreement is a fixed-term agreement, whereby the tenant is allowed to rent property for a set term. A lease agreement is terminated at the end of the fixed term, such as six months or 12 months, or a lease may be terminated based upon reasons stated in the contract. For example, a landlord may terminate a residential lease contract if the tenant has violated certain terms in the agreement.

Signature

When the tenant in a lease agreement provides his signature, the tenant must abide by the terms and conditions in the lease contract. The contract is binding on both parties when the contract is signed. The terms and conditions in the contract include the obligations of both parties to the contract, such as the payment arrangements and any contract limitations and prohibitions.

Termination

Every lease agreement includes a start and a termination date. With most lease contracts, the tenant is required to return the possessions included in the lease contract by the termination date, such as the keys to an apartment. The lease contract may be terminated by either party prior to the termination date based upon mutual agreement. The contract may also stipulate whether the tenant or landlord can terminate a contract if the other party violates the terms and conditions in the agreement. Additionally, there may be local laws that allow the tenant to terminate a lease agreement based upon code violations.

Grace Period

Most lease contracts do not include a grace period to terminate the lease after the contract has been signed by both parties. However, most lease contracts stipulate a grace period that provides the tenant or renter a certain time frame to pay the rent. The grace period usually occurs after the day each rent payment is due. For instance, if the tenant is required to pay monthly rent on the first day of the month, the contract may include a five-day grace period to pay the rent without incurring any late charges. If payment is not received by the time the grace period expires, the landlord or owner of the property may seek action to terminate the lease contract.

Inspection

Because lease contracts are binding on the tenant when the contract is signed, it is beneficial to inspect the property and understand all the contract terms before signing it. Inspecting the property can allow prospective tenants to search for any problems that need to be fixed.