• Exiting a lease contract within lock-in period

Taken a land on lease for a business project. Term 8 years with a lock-in period of 4 years starting January 2015. Security deposit of 245,000. Lease rent of 55,000 + taxes
Due to circumstances external to the lease contract, the project needs to be transferred to a different location.
There is no termination clause in the lease agreement except non-payment of rent for two months continuously. In such case, the lessor is entitled to terminate the lease upon giving a written notice of two months.
Can it be informed to the lessor that due to the potential inability to pay lease rent, the premises will be vacated within two months from the date of written notice? And that the lessor can deduct the two months' rent from the security deposit and forfeit the balance?
Asked 3 years ago in Property Law
Religion: Hindu

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15 Answers

You may issue a termination notice in writing stating the inability to continue with the lease of land. Then it will be on the sole discretion of the opposite party whether they entertain your request or abide with the terms of the lease.

Also please inform whether the lease entered was a registered lease or not.

Please fell free to further discuss the matter at

Arun V S
Advocate, Jaipur
55 Answers

4.0 on 5.0

If there is a lock in period of the lease the existence of a penalty on its earlier terminaion is most likely.

If there is no termination clause except on default clause then you can invoke this clause by not paying rent till the security deposit is fully exhausted.

Otherwise on your termination the landlord may forfeit the security deposit.

Devajyoti Barman
Advocate, Kolkata
22032 Answers
325 Consultations

5.0 on 5.0

In lease, the lease amount will be high as there will be no rent. In your case rent cum lease is confusing. However, if there is no other exit option, take the non payment route and send it in writing

Rajaganapathy Ganesan
Advocate, Chennai
1843 Answers
8 Consultations

4.9 on 5.0

Stop paying rent

2) let lessor terminate the lease for nonpayment of rent

3) if you want early termination lessor would not agree in view of lock in clause

4) lessor may also claim damages from you

Ajay Sethi
Advocate, Mumbai
80564 Answers
4945 Consultations

5.0 on 5.0

Hello,

Send a notice to the land lord for termination of the lease deed.

If he does not accept the same then after two months it will be considered as terminated.

Was it a registered lease deed?

Regards

Anilesh Tewari
Advocate, New Delhi
17860 Answers
318 Consultations

5.0 on 5.0

If you stop paying rent lessor can terminate lease

Let lessor terminate the lease for non payment of rent

It is necessary to peruse lease deed to advice further

Ajay Sethi
Advocate, Mumbai
80564 Answers
4945 Consultations

5.0 on 5.0

Forfeiture has to be expressly stated and cannot be implied. However, there is no repayment of lease in case of non repayment of rent. The lessor will try to secure his interest than yours. Therefore, speak to lessor that you have issues in business and can't pay. He will react which will help you to get a picture.

Rajaganapathy Ganesan
Advocate, Chennai
1843 Answers
8 Consultations

4.9 on 5.0

Hi,

As per your lease condition for vacating the property, please default in payment of the rent as per the lease condition and let him give you notice for the vacating the property as per the lease deed clauses.

Please respond to the notice and agree for the vacating the property and ask for the balance of your security deposit amount after deducting the max 3 months rent.

If he do not pay back the balance amount just file a money suit in the civil court including the interest for dealy at commercial rate, Legal charges for recovery and the damarage for the period of non payment.

Vimlesh Prasad Mishra
Advocate, Lucknow
6802 Answers
23 Consultations

4.9 on 5.0

Hi

1) It appears that you have commenced your 3rd year of lease rentals and about 23 more months are left under lock in clause.

2) In general a Lock -In Clause should mandatorily be accompanied by penalty,breach or compensation clause so as to define the extent of compensation.

3) The legal position is that the lease agreement should explicitly quantify the extent of damages to be paid in damages to be paid in breach of lock in period of the contract.

4) It appears that there is no penalty or damages or compensation is mentioned and so the courts will generally presume 2 months notice period is a just compensation for both sides.

5) Remedies in case of breach of a lock-in clause is same to that of the remedies for any other contractual breach i.e., damages and specific performance of the contract.

6) In your case, since you are planning to vacate the premises during the subsistence of lock in period the outermost limit in which courts may ask you to compensate the owner is by awarding 2 months notice period + another 1 OR 2 months notice period which appears just and equitable to both the parties.

7) Hope this information is useful.

Rajgopalan Sripathi
Advocate, Hyderabad
2092 Answers
394 Consultations

5.0 on 5.0

In the absence of any termination clause other than that mentioned kindly send in a notice to the lessor with proper reasons.

Please revert whether the lock in period mentioned in the lease agreement had any clause of penalty forvtermination of the same within the lock in period. Also while sending a notice to the lessor please send a notice of cancellation of lease to the sub registrar office as the same is a registered one.

Arun V S
Advocate, Jaipur
55 Answers

4.0 on 5.0

Even though there is not termination clause in the deed except the one for the default of the rental amount, you can still send a notice to the Lessor for termination of the Lease and refund the security deposit after deduction of arrears of rent.

But you may have to make vary good ground for termination of the lease earlier to the lease period.

Rajashekar
Advocate, Bangalore
570 Answers
4 Consultations

4.8 on 5.0

Ther termination clause will contain the conditions for exit during lock in period also.

If not the lease termination conditions will be applicable for the break of lock in period too.

You may invoke the same clause of giving two months notice to vacate the leased premises and indicate willingness to compensate the two months monthly rental amount in your letter communicating your decision to terminate the lease period.

Send the communication by registered post so that an evidence is created to defend future legal disputes, if any may arise.

.

T Kalaiselvan
Advocate, Vellore
70617 Answers
986 Consultations

5.0 on 5.0

Can it be informed to the lessor that due to the potential inability to pay lease rent, the premises will be vacated within two months from the date of written notice? And that the lessor can deduct the two months' rent from the security deposit and forfeit the balance?

Yes, the above arrangement works. Intimate this to the lessor. It would be better if this initiation is sent on your behalf through a lawyer. Since, you are not bothered for the refund of the security deposit, there's no impediment in the above arrangement mooted by you.

Vibhanshu Srivastava
Advocate, New Delhi
9148 Answers
185 Consultations

5.0 on 5.0

Do the same as advised, send a notice to the owner for the termination of the lease.

Regards

Anilesh Tewari
Advocate, New Delhi
17860 Answers
318 Consultations

5.0 on 5.0

Hi,

Lease deed is made in such a way that it is more favourable to lessor, even termination for convenience is also not added. Lock in period will end in January 2019, 2-3 months notice period seems reasonable. Possible way out is negotiation with lessor about reducing lock in period and serve a notice of 2 months and rent for 2 months will be refunded and rest will be paid, utmost what lessor can do is forefiture of security deposit. Or you can sub lease the premises as find a sub lettor, check whether you have right of subletting to third party.

Manisha Navlani
Advocate, New Delhi
6 Answers

4.0 on 5.0

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