What is a Fixed Term Lease Agreement?
What is a fixed term tenancy? What happens when your fixed term lease agreement expires? Get the full answers right here.
What is a Fixed Term Lease? - Definition and Features
Tenancy for years is another common label for a fixed term rental. However this name can be quite misleading because it doesn't have to go on for years. A tenancy for years can last for just one month if that is what the landlord and tenant agrees on.
This type of lease agreement has a specific starting and ending date which is decided by both the landlord and tenant.
While the average lease duration is 1 to 2 years, it doesn't have to be a long term arrangement - Even a 1 week tenancy can be considered as a fixed term as long as there is a pre-determined starting and ending date.
Before the lease ends, the landlord is generally not allowed to increase the rent unless the tenant agrees to it or certain conditions are met.
Instead of having an expiry date, some rental agreements have a stated condition which will end it. For example, you can have a fixed tenancy that will automatically end once you sell your rental property. However this type of tenancy is not valid in some countries so be sure to check before you get into one.
You're not allowed to terminate the lease agreement before the end date unless the party agrees to it or you have a valid legal reason.
What Happens at the End of Your Fixed Term Lease?
- Your tenant can choose to move out - If this happens, you'll need to
find a new tenant for your rental property. To avoid any vacancy losses, you should always confirm with your
tenant if he or she is staying on 1 to 2 months before your fixed term tenancy
ends.
- You and your tenant can renew your lease agreement with the same terms and conditions - Click here for an example of a lease renewal form.
- You and your tenant can ink a new rental agreement with different terms and conditions - You can switch to another tenancy type (e.g. month to month lease) or you can stick to a fixed term format.
- Your lease automatically becomes a periodic tenancy - In some countries
if you agree to let your tenant stay on without signing a new lease
agreement, your fixed term tenancy will be converted to a month to month lease.
- Your tenant continues staying on your property without permission - If your tenant refuses to leave at the end of the lease, then you'll be dealing with a sticky situation known as a tenancy at sufferance where you may have to file for an eviction to remove your tenant.
NEXT: Breaking a Fixed Term Lease Agreement
