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Member Helpline Q&A
If the landlord and tenant agreed to delete the additional break fee term from the tenancy agreement prior to its execution, both the landlord and tenant still have certain obligations in the event that the tenant vacates the premises before the end of the fixed term agreement.
Prior to or upon signing the agreement, a tenant should be made aware of their obligations in a break lease situation before the end of the fixed term.
Where there is no additional break fee term in the tenancy agreement, a tenant’s obligation is to continue paying rent until a new tenant is found or the fixed term period ends, whichever occurs first.
In addition, a tenant may also be required to pay a percentage of the advertising and reletting costs incurred by the landlord in the re-leasing process. This, however, would depend upon the length of time remaining under the fixed term agreement, as the CTTT will often discount such re-letting costs if the break lease occurs towards the end of the fixed term.
The landlord also has an obligation to take all reasonable steps to mitigate the landlord’s loss, and would not be entitled to compensation for any loss that could have been avoided by taking steps to avoid it. This is the same duty which landlords had under the Residential Tenancies Act 1987.
To assist you in being able to explain these obligations to your tenants, we strongly recommend that you provide your tenants with a copy of NSW Fair Trading’s fact sheet entitled ‘Breaking a lease early’. This can be downloaded from Fair Trading’s website at www.fairtrading.nsw.gov.au
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