How to terminate a fixed-term lease agreement correctly

The moving date is known, relations with the landlord are strained, or the apartment no longer meets what was promised. That is precisely when the question arises: how to terminate a fixed-term lease when several months or even a year remain on the agreement? Leaving quickly without a clear arrangement or legal basis can mean an obligation to pay rent even after the keys have been returned. At the same time, neither the tenant nor the landlord need remain stuck in a seemingly unsolvable situation.

When terminating a fixed-term residential lease, three things must first be distinguished: expiry of the agreement at the agreed date, termination by mutual consent of the parties, and extraordinary termination on compelling grounds. The right choice depends on the agreement, the actual circumstances, and the evidence available.

What does a fixed-term lease mean?

A fixed-term lease is concluded for a specific period, for example from 1 September 2026 to 31 August 2027. As a rule, such an agreement expires automatically upon the arrival of the end date. No separate notice of termination is required for this, although in practice it is sensible to agree well in advance on the time for handover of the premises, meter readings, and the calculation of the security deposit.

An important difference from an open-ended agreement is that a fixed-term lease generally cannot simply be terminated by ordinary notice on the grounds of wishing to move to cheaper premises, to another city, or to live with a partner. These reasons may be perfectly understandable from a personal standpoint, but they do not in themselves necessarily release a party from contractual obligations.

A residential tenant does, however, have a special rule available: if a fixed-term lease has been concluded for longer than one year, the tenant may generally terminate it by giving at least three months' notice. Before sending the notice, it is worth checking both the date on which the agreement was concluded and its specific terms. Where the situation is not entirely clear, a single incorrectly chosen date can give rise to a dispute over the final month's rent or the security deposit.

How to terminate a fixed-term lease by mutual consent?

The most amicable and often the most advantageous course is a written agreement between the parties. The tenant explains to the landlord as early as possible when they wish to vacate and proposes a specific handover date. The landlord may agree, particularly if finding a new tenant is realistic or if the current tenant has fulfilled their obligations properly.

The agreement should be in a form that allows written reproduction, such as an email exchange or a separately signed document. A message along the lines of "you can leave at the end of the month" leaves too many open questions. At a minimum, the document should record the date on which the lease ends, the amounts payable, the procedure for handing over the keys, and the principles governing the return or offset of the security deposit.

Finding a new tenant may help facilitate an agreement, but it does not automatically terminate the existing lease. The current tenant remains liable until the landlord has clearly consented to termination of the lease or has concluded a new agreement with a new tenant in a manner that releases the previous tenant from their obligations. Subletting is likewise not the same as termination and may require the landlord's consent.

When is extraordinary termination possible?

Extraordinary termination is intended for situations in which continuation of the lease cannot reasonably be expected. A mere wish or inconvenience is generally not sufficient. A significant reason is required, which typically arises from a breach by the other party or from the condition of the dwelling.

From the tenant's perspective, such grounds may include, for example, serious defects that render the dwelling dangerous to use or substantially restrict its use — such as a prolonged lack of heating during winter, extensive damp or mould damage, a hazardous electrical system, or another significant defect that impedes use of the dwelling. Even then, it is not advisable to simply leave the keys in the letterbox and stop paying rent.

The defect must ordinarily be reported to the landlord without delay, describing the problem as precisely as possible and allowing a reasonable opportunity to remedy it. Photographs, videos, an expert assessment, emails, and messages will later help to prove what happened and when it was reported. If the landlord does not respond or the situation is so serious that waiting is not possible, extraordinary termination may be justified.

The landlord, in turn, may acquire the right of extraordinary termination, for example where the tenant repeatedly fails to pay rent, causes damage to the dwelling, or materially breaches the agreed conditions of use. The landlord too must comply with the requirements set out in law. Termination is not a punitive measure nor a mere instrument of pressure in a dispute.

A notice of termination must be clear and verifiable

Where termination is not based on the mutual agreement of the parties, a proper notice of termination must be served. It is advisable to send it in a manner by which receipt can subsequently be proved. Email may be suitable if the parties have used it as their means of communication and delivery of the notice to the addressee can be verified. Where there is a risk of dispute, greater certainty is provided by a digitally signed document or another method of delivery for which a reliable confirmation is retained.

The notice must clearly state which agreement is being terminated, the date from which the termination takes effect, and whether it constitutes ordinary or extraordinary termination. In the case of extraordinary termination, the grounds must be set out specifically. For example, a general statement such as "the condition of the apartment is unsatisfactory" is insufficient. The defect must be described, along with prior notifications and the reasons why continuation of the lease can no longer reasonably be required.

An ambiguous message may later mean that the lease did not end on the intended date. For this reason, oral arrangements that exist only in one party's memory should also be avoided. If the other party later claims the contrary, documents will be of decisive weight.

Before handing over the keys, prepare a handover report

On the date the lease ends, the dwelling must be returned in the agreed condition, taking into account normal wear and tear. Normal wear and tear does not include, for example, some fading of paintwork or a floor worn over the years, but damaged furnishings, unauthorised alterations, or property left uncleaned may give rise to claims.

A handover report helps to prevent subsequent disputes. It is worth recording the condition of the rooms, the number of keys handed over, the readings of water, electricity, and other meters, any visible damage, and any agreements reached between the parties. Take dated photographs. If the landlord does not come to accept the handover at the agreed time, document your presence and promptly offer a new time in writing.

The security deposit is not an additional fee for the landlord nor an automatic final month's rent. It may be used to cover justified outstanding amounts or damage, but the accounting must be transparent. If the landlord retains any portion of the security deposit, ask for a written explanation and supporting documents. If the claim is unfounded or the amount disproportionate, the tenant need not simply accept it.

Common mistakes that make a dispute more costly

Most frequently, tenants vacate before the end of the term on the basis of a verbal promise alone, fail to report a defect, or treat the security deposit as the final month's rent without any agreement to that effect. Problems also arise when a tenant stops paying before the lease has actually ended. In this way, an initial wish to save money quickly can lead to a claim, penalty interest, and court proceedings.

The other extreme is a situation in which the landlord refuses everything in principle, even where there is a serious and documented defect in the dwelling. In that case, endless correspondence may not produce a result. It may be necessary to obtain an assessment of the legal situation, to prepare a proper notice, or to conduct negotiations through a representative.

If the text of the lease, the correspondence, or the condition of the dwelling raises doubts, Eurocity Law Office can calmly review the situation, explain the realistic options, and prepare the necessary documents. Timely and clear action gives both parties the best opportunity to bring the tenancy to an end without unnecessary loss and a protracted dispute.