Pre-termination of Lease Contract

I have been leasing a residential condo unit for over five years now. It was originally covered by a one-year lease and thereafter was renewed/extended annually. The renewal/extension was documented through a letter. The letter specified the new validity period, rental amount among others.

The original lease (2007) specified a negative pre-termination and provided for penalty in such case the lease is pre-terminated.

In 2010 renewal/extension, upon my request, the pre-termination was allowed upon due notice of 60 days as I was anticipating the transfer to our own house.

However, there was a delay in the planned house acquisition that required me to renew/extend the lease contract anew.

My current lease expires July 2013. I wish to pre-terminate the lease as we acquired our own townhouse.

I already gave due notice to the lessor about the pre-termination. However, the lessor insists that I shall be penalized as the original lease contract does not allow pre-termination.

I insisted however that the pre-termination was allowed given a 60 day notice due to the amendment done in 2010.

My lessor insists that the positive pre-termination option granted in 2010 was specific to that period only. The amended option in 2010 did not specify that is was valid only for such year.

I explained to the lessor that the annual renwal/extension covered by the letter is in fact an addendum to the original lease contract and thus is an integral part of lease contract. Any change/addition made effectively supersedes the original terms. Thus, given the 2010 amendment on the pre-termination clause, I am allowed to pre-terminated upon due notice. Is my understanding correct?

I hope you can provide me legal guidance as the lessor in a letter consulted their legal counsel and said that the original term on pre-termination applies and therefore subject to penalty.

Thanks in advance.

Your understanding is correct.

charevel wrote:
The original lease (2007) specified a negative pre-termination and provided for penalty in such case the lease is pre-terminated.

In 2010 renewal/extension, upon my request, the pre-termination was allowed upon due notice of 60 days as I was anticipating the transfer to our own house.

At this point, the 2010 renewal/extension of your contract is in effect supersedes or amends the negative restrictions on pre-termination, it does not operate as an addendum from the original terms and conditions, among others the lease contract dated way back in 2007, after or as when the lessor
take heed from your request. Should the lessor oppose on this, then he should negotiate the same particularly the "pre-termination restrictions". Otherwise, he is bound by the clear terms of your request.

charevel wrote:
My current lease expires July 2013. I wish to pre-terminate the lease as we acquired our own townhouse.

I already gave due notice to the lessor about the pre-termination. However, the lessor insists that I shall be penalized as the original lease contract does not allow pre-termination.

My lessor insists that the positive pre-termination option granted in 2010 was specific to that period only. The amended option in 2010 did not specify that is was valid only for such year.

At this point, the lessor is estopped from denying that the current terms of the lease contract which allows the pre-termination is not enforceable. Applying the principle of estoppel.(let the lessor's counsel research for this)

charevel wrote:
I hope you can provide me legal guidance as the lessor in a letter consulted their legal counsel and said that the original term on pre-termination applies and therefore subject to penalty.

Ofcourse, counsel yan ng lessor, syempre i ssubject ka nila sa penalty.

Congrats to your new house!

Thanks for the speedy reply.
I anticipate however that the lessor will not accede to my intended action to pre-terminate the lease without subjecting me to penalty. Please enlighten me on the following still:
1. I have an advance rental equivalent to one month which is to be applied to the last month of the contracted lease term (ending July 15, 2013). Since I'm pre-terminating the contract, can I effectively apply this advance rental to the last month of the shortened lease term (ending March 15, 2013)?
2. Since I have issued PDCs as required under the contract, can I issue a stop payment order to the bank by reason of terminated contract?
Appreciate so much your advice.

charevel wrote:
1. I have an advance rental equivalent to one month which is to be applied to the last month of the contracted lease term (ending July 15, 2013). Since I'm pre-terminating the contract, can I effectively apply this advance rental to the last month of the shortened lease term (ending March 15, 2013)?

Yes. The subsequent change of terms and condition of the original contract will effectively modify the date of the application of the advance rental, but it does not negate your obligation to apply it on the last month of your agreed termination period

charevel wrote:
2. Since I have issued PDCs as required under the contract, can I issue a stop payment order to the bank by reason of terminated contract?
Appreciate so much your advice.

Yes. Once your contract is terminated, then you are no longer obliged to issue PDC, even you pre-terminate it.( I based this on presumption that the lessor agrees to your request on pre-termination of contract.)

Thanks once again.
However, I'm thinking of the worst case scenario that the lessor will not accede to the pre-termination.
1. Does it mean that if i request for a stop payment order for the PDCs covering the months after intended pre-term date without the lessor agreeing to the pre-termination that im liable still to the lessor?
2. What are my legal options so that the lessor will not negotiate the remaining PDCs covering the months after my intended pre-term date?
3. Do i understand correctly that i dont need approval by lessor to pre-term as long as i give due notice?

charevel wrote:
1. Does it mean that if i request for a stop payment order for the PDCs covering the months after intended pre-term date without the lessor agreeing to the pre-termination that im liable still to the lessor?

Yes, because you cannot unilaterally modify or novate the contract of lease. There must be with the consent of the lessor before it can be done (the pre-termination to be effective).

Teka lang, did the lessor agree to your request? because, you post it last time that the lessor ALLOWS you to pre-terminate the contract. So if he allows then logically, he agreed to your proposal.

charevel wrote:
2. What are my legal options so that the lessor will not negotiate the remaining PDCs covering the months after my intended pre-term date?

Take hold on what youve posted that the lessor AGREES to you request on pre-termination of contract. To simplify,:

Did the lessor accept your pre-term offer? If yes, you can order for stop payment after march 15(the shortened term)

If not, then the original contract will prevail, thus you are liable to issue PDC until july 15.

charevel wrote:
3. Do i understand correctly that i dont need approval by lessor to pre-term as long as i give due notice?

Wrong understanding. Approval by the lessor is mandatory because this is a contract, there must be a meeting of BOTH minds, negotiating the terms and conditions therein.

Also, since there exist an original contract of lease, which will expire on July 15, the subsequent change of its terms and conditions as in the case of pre-termination, must be with the APPROVAL of the lessor. GIving of due notice is only an OFFER to modify the terms and the same is not binding to the lessor unless and until the lessor accept/approve/agree/accede to it.

Sorry, but now I’m confused.
My lessor and I have a disagreement as to the pre-termination clause of our lease contract.
Currently, my belief is that the terms allow pre-termination of lease provided 60 day notice as expressed in our 2010 lease extension (you opined this in effect supersedes the 2007 negative pre-termination clause).
On the other hand, my lessor believes that the original 2007 negative pre-termination is prevailing citing that the positive pre-termination was specific for the period July 2010-July 2011. Although such validity period is not written in the 2010 renewal letter.
Subsequent to the 2010 lease extension, two lease extensions were likewise agreed but the letter-documents covering these extensions were silent on the pre-termination.
Since, I personally believe that I am allowed to exercise the pre-termination given due notice, I intend to issue a stop payment order for the PDCs submitted to my lessor so as to protect myself from making undue payments to my lessor.
Question now is, by doing so what do I risk getting into knowing that my lessor’s position on the pre-termination is different from my position?
What are the appropriate legal actions so I can protect myself?

Better file a petition for declaratory relief before you breach the contract. The contract now is subject to different conflicting interpretations.

OR

Re-Negotiate the contract, stating clearly the terms and conditions, to settle once and for all amicably.