As a tenant or landlord in Singapore, it is important to understand the concept of an exit clause in a tenancy agreement. An exit clause is a legal provision in a tenancy agreement that allows either party to terminate the agreement early under certain circumstances. In this article, we will explore the different types of exit clauses in a tenancy agreement Singapore and what you need to know about them.
Types of Exit Clauses in Tenancy Agreements
1. Break Clause
A break clause is a popular exit clause that allows either the landlord or tenant to terminate a tenancy agreement before the end of the fixed term. Typically, the break clause is included in the tenancy agreement with specific conditions, such as a minimum notice period and a reason for termination. For instance, the landlord might include a break clause that allows them to terminate the agreement when they need to sell the property.
2. Mutual Break Clause
A mutual break clause is another exit clause that allows both the landlord and tenant to end the tenancy agreement at any time before the end of the fixed term. This type of clause usually requires both parties to agree before the termination can occur. One common condition for a mutual break clause is that the landlord may only exercise this clause if the tenant has met all the rent obligations.
3. Fixed Term End Clause
A fixed term end clause is a provision that specifies the date when the tenancy agreement will come to an end. This clause sets an automatic exit point for the tenant and landlord without the need for either party to give notice.
4. Early Termination Clause
Also known as a break fee clause, this type of exit clause allows either party to terminate the agreement before the end of the fixed term by paying a pre-determined fee. This clause is usually included in the tenancy agreement to protect the landlord from potential financial loss if the tenant terminates the agreement early.
What to Consider When Including an Exit Clause in Your Tenancy Agreement
When drafting a tenancy agreement, it is important to consider including an exit clause that aligns with your best interests. Here are some factors to consider when including an exit clause in your tenancy agreement:
1. Purpose: Consider the reason for including the exit clause in your tenancy agreement. Is it to provide flexibility to either party, or is it a contingency plan for unforeseen circumstances?
2. Timing: Determine the appropriate timing for the exit clause to take effect. Consider how soon either party can terminate the agreement and whether there should be a minimum notice period.
3. Conditions: Identify the conditions for the early termination of the agreement. Consider the types of events that trigger the clause, such as the sale of the property or a breach of the agreement.
Including an exit clause in your tenancy agreement can save you time and money when unforeseen circumstances arise. It is important to understand the different types of exit clauses available and consider the factors that affect the inclusion of a provision in your tenancy agreement. Tenants and landlords can protect their interests by having a clear and detailed agreement that includes an appropriate exit clause.