In many cases, rental properties are leased under two-year contracts, but what happens if you want to terminate the lease during the contract period because of a move or another reason?In this article, we explain whether early termination of a rental lease is possible, when a penalty may apply, and what the termination process looks like.
Can you terminate a rental lease early?
In short, for most rental properties, early termination is possible even during the contract period as long as you comply with the notice period.
What is the notice period for termination?
The notice period for termination is the period during which you must notify the landlord or management company of your move-out date in advance.It is commonly one month, but it may be two months for high-demand properties, and 3 to 6 months for offices and commercial properties. Be sure to check your contract.
Reviewing the contract terms is essential
Depending on the contract terms, early termination may not be allowed, or a penalty may apply.For properties advertised with no upfront costs, you may still be charged cleaning fees at move-out or be subject to a penalty.
Will a penalty apply?
In many cases, no penalty applies
Even with a two-year contract, in the vast majority of cases no penalty applies even if you move out after just a few months or after one year.There is no need to limit your search to short-term lease properties.
What exceptions lead to a penalty?
If a penalty applies, it must be stated in both the important matters explanation and the lease agreement (under the Real Estate Transaction Business Act).If it is not stated in both, there is no payment obligation. If it is clearly stated, payment is required unless the amount is unreasonably excessive.
What is the typical termination process?
① Submit notice of termination
Once your move is decided, check your lease agreement and confirm whom to notify and by when.In general, you contact the management company or landlord at least one month in advance and submit a termination notice. The move-out date and inspection date are usually decided at the same time.
② Complete utility procedures
You should contact your electricity, gas, and water providers at least one week before moving out to cancel or transfer service.Do not forget to submit a mail forwarding request with the post office as well.
③ Attend the move-out inspection
You will check interior damage and dirt with the management company or landlord. Ordinary wear and tear and pre-existing damage are the landlord's responsibility, while damage caused intentionally or through negligence by the tenant is the tenant's responsibility. Keeping photo records of any damage or dirt that was already present when you moved in can help prevent disputes at move-out.
④ Confirm restoration costs
After the inspection, you will receive an estimate for restoration costs within a few days to several weeks. If you do not agree with the details or the amount, it is important to review and negotiate before giving your consent.
⑤ Receive the security deposit refund
After both parties agree, the remaining balance is refunded after restoration costs are deducted from the security deposit. Even for properties with no security deposit, restoration costs may still arise at move-out, so caution is necessary.
With condominium rental properties, disputes over restoration costs are more likely to occur, so it is also worth reviewing the key points to note about condominium rentals.
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Frequently Asked Questions (FAQ)
Q. Can I move out of a rental with a two-year lease after one year?
In most cases, yes. If you comply with the notice period for termination, usually one month in advance, you can terminate without a penalty.
Q. How long is the notice period for termination?
It is generally one month, but depending on the property and its use, it may be 2 to 6 months. Always confirm this in your contract.
Q. Where can I check whether there is a penalty?
It should be stated in both the important matters explanation and the lease agreement. If it is not stated, there is no payment obligation.
Q. Will I incur costs at move-out for a no-deposit property?
Yes. Even if there is no security deposit, restoration costs are still the tenant's responsibility. Cleaning fees at move-out are also common, so be sure to confirm this when signing the contract.
Q. What should I pay attention to during the move-out inspection?
Damage or dirt that was already present when you moved in is not the tenant's responsibility, so it is important to photograph and document it at move-in. If the inspection is handled carelessly, it can lead to disputes.
