Every case is unique so we have to look at the circumstances why the tenants would like to break the lease and the terms in your tenancy agreement. Firstly, check if your tenancy agreement has a diplomatic clause and/or forfeiture clause. A diplomatic clause in a tenancy agreement where the landlord gives special permission to an expatriate tenant to terminate the tenancy before expiry in the event the tenant has to leave Singapore due to work assignment or layoff by the employer. A forfeiture clause means a breach of the covenant against assignment which may result in the termination of the tenancy. Assignment in this case refers a new tenant although the current tenant remains contractually bound to the landlord. In this case, you can sue the tenant for breach of covenant and where there is provision for forfeiture (for example, the tenant pockets the difference in rental amount).
If your tenant breaks the lease via a diplomatic clause, then you must return the 2-month deposit. Otherwise, you are entitled to forfeit the deposit. What you and your tenant can do is to do a novation whereby your tenant finds another tenant. In this case, a new contract is substituted for an existing contract by agreement of the parties. This can happen between the original parties themselves only and it may also happen between the original parties (existing tenant) and a third party (new tenant). Let's say your existing tenant still has 2 months more before your tenancy agreement expires, then the new tenant may take over the lease. If your existing tenant has been paying $2,500 and the new tenant takes over the lease at $2,400, your existing tenant has to pay the difference of $100 to you. Your existent tenant will have to pay for all marketing costs, agent's fee and so on.
Our advice is for both parties to resolve any issues in an amicable manner as breaking a lease will be a costly affair.
Hope this answers your question.
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In most cases, as long as there is a break lease case, the security deposit is usually forfeited, as long as there is no clause allowing premature termination of any sort or applicable diplomatic clause.
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Usually in a break lease situation, TA clause will indicate landlord has the right to forfeit the security deposit and tenant would also need to compensate the service fees payable to the agent from the landlord for the full term of lease.
But in some scenarios, landlord allow tenant to find a replacement that is acceptable in terms of price and lease and profile and thus , will not forfeit the security deposit as a new replacement tenant is taking over the lease.
There's always room for negotiation between both parties, your agent should be able to advise you on that.
Have a nice day.
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Apologies if my reply came late.
All tenancy agreements are as unique as the property itself therefore we have to look into the agreement. Forfeiture of security deposit may not be the rightful compensation.
1st, we need to establish if the tenant is lawfully breaking the lease, for e.g. leaving the country, change in company plans. the landlord may refer to the diplomatic clause stated. Assuming that there is a diplomatic clause in the agreement.
The tenant to pay the rent from current month (i suppose the tenant is breaking the lease before exercising diplomatic) to the month where the diplomatic clause is being exercised + notice period. Usually up to the 14th month of the lease (assuming the diplomatic clause stated 12+2). Afterwhich the landlord will refund the security deposit to the tenant. A handover form is then sign by both parties to discharge both parties from their respective liabilities.
Other compensations landlord may seek:
- The tenant to reimburse the service fee that landlord paid to agent prior to lease commencement. This will be the pro-rated amount base on the remaining outstanding lease period. For. e.g. remaining outstanding lease period is 11 months.Therefore the the prorated calculation will be service fee (GST included) paid multiply by 11/24. That will be the amount the tenant. Kindly note that the landlord can only pursue this compensation if it's mentioned in the TA.
If it's not lawful lease termiantion, then we will need look into the tenancy agreement (TA) if there's any mention on compensation mention if tenant breaks lease. The landlord may pursue the recovery of the whole 24 months and deposit. I also like to share that If the landlord chose to pursue this route, the landlord might just end up with the disappearance of the tenant, forfeiture of the security deposit and a empty property which require repair.
The other option which the landlord can explore is to allow the current tenant to find a replacement tenant. This process is a much tedious process. The landlord can engage the agent to manage all this. All costs involve in finding the replacement tenant is to be borne by the current tenant. The cost for marketing the property, service fee, any repair cost incurred while preparing the property for the next tenant, or maybe the difference between the current rent and new rent, etc.
Whichever route the landlord decides to pursue, my advise to have this resolve in an amicable manner where the tenant can leave in peace and orderly as definitely it's not their wish to break the lease. And the landlord can also take back the property and rent out the soonest possible again.
Edmund. Read More