Definitions
Termination means ending the lease contract, which can occur at the end date of the lease, or earlier, depending on how the lease is written.
Default is an omission or failure by either Party to meet a provision of the lease. If the default is not “cured” (“remedied”) by the defaulting Party, actions may be taken by the other Party, including (but not limited to) terminating the lease.
Purpose
The purpose of this section is to address various termination scenarios – in part to minimize the potential stress of a termination. It also establishes what constitutes a default by either Party, and how a default is addressed. Defaults and remedies should be specified in reasonable detail. An agricultural lease should spell out what happens to crops remaining at the time of termination, whether at the end of the term or earlier. See What happens if a farmer-tenant has crops in the ground when his/her lease terminates?
FAQs
A “default” is a failure to comply with a provision in the lease. “Curing” or “remedying” the default means correcting the failure or omission. A common example is a failure to pay the rent on time. Failing to meet any of the requirements in a lease can legally constitute default, e.g., not showing evidence of insurance, removing trees if prohibited by the lease, not repairing a structure. A landlord can also default by not performing certain responsibilities. Typically a lease will give the parties adequate notice and time to fix the problem before more drastic action is taken.
If a lease is terminated due to the tenant’s default, the tenant’s obligations depend on the terms of the lease. The tenant could be required to pay the rent for the full (or remaining) lease term as damages. Typically all provisions in the lease pertaining to termination would also apply.
In a farmland lease arrangement, annual crops produced by a tenant legally belong to the tenant. How this issue is addressed depends on the type of crop, the language in the lease, and other factors. The best approach is to include a lease provision allowing a tenant to come back on the leased property to harvest crops after the lease has terminated. In some jurisdictions, if a lease does not address the issue, the “doctrine of emblements” may apply. In some states the common law “doctrine of emblements” guarantees the farmer’s right to harvest and carry away his or her crops (“emblements”), even if the crop matures after a lease terminates.
It depends. If a tenant defaults and does not “cure” the default, as defined in the lease, this may constitute grounds for early termination. Additionally, some leases include language permitting either party to terminate before the end of the term as long as they provide written notice before terminating. Note, however, that if the lease is for five years, but the landlord can give a six-month notice of termination, then in effect, the tenant has six months’ security. If a landowner terminates early, s/he may owe the tenant the value of their unharvested crops, at a minimum. See our fact sheet Termination and Default.
Yes, a tenant can terminate before the end of the lease, but depending on how the lease is written, s/he may be liable for the remaining rent. A lease may permit the tenant to terminate at any time with notice. If the landowner defaults, as defined in the lease, this may constitute grounds for early termination without penalty to the tenant. See fact sheet Termination and Default.
Example Text
These text examples (in italics) illustrate what you might include in parts of this section. Example text is not intended as “sample” or “model” language, or as “best practice.” You may copy and paste example text into the template, then modify it for your working lease document. Or you can learn from the examples in order to develop your own text.
Text box “Conditions for termination”
- The Tenant may terminate this Lease with a written notice to the Landlord not sooner than 6 months prior to the desired termination.
- The Landlord will/will not hold the Tenant liable for rental payments due for the remainder of the Lease term.
- If the Premises subject to this Lease shall be damaged, in whole or in part, by fire or casualty or action of public authority, either party may terminate this Lease upon thirty (30) days written notice to the other.
Text box “Terms of default”
- The following shall be “events of default” under this lease:
- Failure by the Tenant to pay timely the rents and/or utilities required to be paid for a period of fifteen (15) days following written notice.
- Failure by the Tenant to observe and perform any of his/its obligations under this Lease for a period of thirty (30) days after receiving written notice specifying such failure and requesting that it be remedied, unless such period to remedy is extended by agreement of the Parties;
- Failure of the Tenant to abide by the laws, statutes or regulations of the State of ___________;
- Abandonment by the Tenant of the leased Premises during the Lease Term.
- Events of default by Landlord shall include, without limitation, failure to make the Premises fully available to Tenant for the establishment and development of an agricultural enterprise.
Text box “Default procedures”
- Whenever any event of default referred to above shall have happened and not be cured per this lease, the Landlord may take any one or more of the following remedial steps:
- declare all installments of rent payable for the remainder of the Lease Term to be immediately due and payable;
- re-enter and take possession of the leased premises;
- and/or take whatever action at law that may appear necessary or desirable to collect the rent and any other amounts payable by Tenant or to enforce performance and observance of any obligation, agreement or covenant of the Tenant under this lease.
- A default in any of these provisions by either party may be cured upon written notice by the other party within 60 days of receipt of such notice. If the Lessee fails to remedy the default, the Lessor may terminate the Lease. If the Lessor fails to remedy the default, the Lessee has the right to withhold rent and to pursue other remedies.
- Landlord shall in no event be in default in the performance of any of its obligations under the Lease unless and until he has failed to perform such obligations within sixty (60) days, or such additional time as is reasonably required to correct any default, after notice by Tenant/Lessee to Landlord properly specifying his/her failure to perform any such obligation.