Termination of Lease

Author: LegalEase Solutions 

RESEARCH FINDINGS

As a general rule a tenant will be relieved of any obligation to pay further rent if the landlord deprives the tenant of possession of the premises by an actual eviction.  Nylen v. Park Doral Apartments (1989), Ind.App., 535 N.E.2d 178, 181, trans. Denied.  However, there is an exception to the rule prohibiting an action for additional rent payment where a lease includes a savings clause expressly providing that termination shall not affect the accrual of liability for rent. Id. at 181. “[A] lessor cannot maintain an action for rent accruing subsequently to the bringing of an action of ejectment by him, if the [lessee] yielded possession in obedience to such action.” Jennings v. Bond (1895) 14 Ind.App. 282, 287, 42 N.E. 957, 959. Marshall v. Hatfield, 631 N.E.2d 490, 493 (Ind. Ct. App. 1994).

In Marshall v. Hatfield, 631 N.E.2d 490, 493 (Ind. Ct. App. 1994) the court noted that there is no express provision here dictating that termination of the lease shall not affect accrual of liability for rent.  Hence, a tenant will be relieved of any obligation to pay further rent if the lease agreements do not include a savings clause expressly providing that termination shall not affect the accrual of liability for rent.   However, even assuming that there was an express provision for accrual of liability for rent notwithstanding termination of the lease, if the lease is one which is extended from month to month, and once all payments were made for the last month of occupancy, there was simply no additional rent due. Marshall v. Hatfield, 631 N.E.2d 490, 493 (Ind. Ct. App. 1994).

Termination of a lease agreement occurs when the tenant surrenders the tenancy and the landlord accepts the tenant’s surrender.” Eppl v. DiGiacomo, 946 N.E.2d 646, 650-51 (Ind. Ct. App. 2011).  “A surrender of tenancy is a yielding of the tenancy to the owner of the reversion or remainder, wherein the tenancy is submerged and extinguished by the agreement.” “Surrender may be express or by operation of law.” Surrender arises by operation of law when the parties to a lease “take an action that is so inconsistent with the subsisting landlord-tenant relationship as to imply they have both agreed to deem the surrender to have taken effect.” Eppl v. DiGiacomo, 946 N.E.2d 646, 651 (Ind. Ct. App. 2011).  Here in this case, the lease contained provisions that, if Tenant’s job was transferred to another geographic location, Tenant could terminate the lease without penalty.  When Tenant’s job as an instructor was eliminated by the university and she was not given a replacement position, Tenant informed Landlord of the job elimination and asked for an alternate arrangement while Tenant looked for new work.  However, Landlord refused to provide an arrangement and ordered Tenant to vacate immediately within thirty days.  Tenant vacated within thirty days.  Actual termination of the lease occurred when Tenant surrendered the premises and Landlord accepted Tenant’s departure (and presumably the keys) and Landlord cannot now claim the balance of the rent.

Even though the Lease contained a clause that early termination of a lease must be in writing, the landlord should be estopped from raising that argument as it was the Landlord who ordered the tenant to vacate and the Tenant complied with Landlord’s express instructions.  In Siller v. Dunn (1930), 103 Cal.App. 154, 284 P. 232, 110 A.L.R. 375, the lessor re-entered within the term of the lease and remodeled the premises making it untenantable for the purpose that it had originally been leased. There was a clause which provided for the collection of rent for the rest of the term from the lessee if the lessee surrendered the premises during the term. The court stated that notwithstanding the savings clause in the lease, the plaintiff (lessor) abandoned the lease and by his actions is now estopped to maintain this action.’ Further, the court noted that estoppel may occur contrary to the actual intent; and inferred from the acts of the parties. N. Ind. Steel Supply Co. v. Chrisman, 139 Ind. App. 27, 36-38, 204 N.E.2d 668, 673-74 (1965)

Similarly in the case at hand, Landlord was the party that demanded that Tenant surrender the lease, and Tenant complied, and as such, Landlord would be estopped from raising the argument that the termination was invalid as it was not in writing. The Landlord’s acceptance of Tenant’s surrender of the lease and Landlord’s subsequent control over the leased premises supports Tenant’s position that the lease was terminated.  The lower court erred in granting default judgment in favor of the landlord when it was evident that no lease existed when the Landlord claimed rent on balance lease period.

“Termination of a lease agreement occurs when the tenant surrenders the tenancy and the landlord accepts the tenant’s surrender.” Floyd v. Rolling Ridge Apartments, 768 N.E.2d 951, 955 (Ind. Ct. App. 2002).  However, the mere delivery of the keys to the landlord without other acts to show the landlord accepted the keys as a surrender of the premises, was not sufficient to release [the tenant] from liability.

In Floyd, tenant Floyd signed an original one-year lease and paid a security deposit. She subsequently signed a one-year renewal lease; however, she vacated the premises mere days before the close of the renewal lease period. Within approximately a month of her departure, the landlord sent her an itemization of damages. Floyd filed suit, alleging, inter alia, that the itemization was untimely because the landlord had not delivered it at the end of the original lease period. The trial court inferred from the parties’ conduct that no itemization of damages was required at the end of the original lease term and concluded that the lease had terminated (and the 45–day clock had commenced to run) at the end of the renewal lease term. Eppl v. DiGiacomo, 946 N.E.2d 646, 651 (Ind. Ct. App. 2011).

Here in this case, it is to be noted that the tenant had not sought to abandon the lease without the Landlord’s consent. The Landlord ordered the tenant to vacate and Tenant complied within the time period demanded by the Landlord.  The Landlord intended to terminate the lease and landlord cannot now claim that the lease was not terminated as it was not made in writing.  The conduct of the parties shows that the lease was terminated on mutual agreement.  Even though the termination was not made in writing, the facts of the case show that the parties in fact expressly agreed to termination of the lease.

In order that there be surrender and acceptance thereof, there must be some form of mutual agreement between parties to effect that lease should cease to be binding on them and agreement must cause separation of privity of contract when there is written lease. N. Ind. Steel Supply Co. v. Chrisman, 139 Ind. App. 27, 204 N.E.2d 668 (1965).  Covenant of surrender and acceptance releasing lessee’s liability may be either express or by operation of law. Id.  The acts of the parties must be so inconsistent with the subsisting relationship of landlord and tenant, that it may be implied that both lessor and lessee have agreed to consider the lease has ended. Id. at 671. In the case at hand, this is clearly the case, as Landlord demand Tenant’s surrender of the lease within a 30 day time period and Tenant complied.

Termination of the lease by operation of law is implied from the acts of the parties. The acts of the parties must be so inconsistent with the subsisting relationship of landlord and tenant, that it may be implied that both lessor and lessee have agreed to consider the lease as ended. Carp & Co. v. Meyer (1929), 89 Ind. App. 490, 493.  Carp court apparently concluded that landlord accepted tenant’s surrender when landlord re-leased premises to another.

In the case at hand, the fact that Landlord demanded Tenant’s surrender of the lease within the 30 day period taken in conjunction with Tenant’s actual surrender of the Lease within the 30 day time period, clearly constitutes a termination of the lease, both by agreement of the parties and by operation of law. The fact that the termination was not in writing is not conclusive and certainly does not obviate termination of the lease by operation of law.

Indiana courts have consistently upheld the termination of a lease by operation of law based on the conduct of the parties. In the case at hand, the conduct of parties proved that the lease was terminated and was no longer in existence and that Tenant did not owe any rent. The lease contained provisions that if Tenants job was transferred to another geographic location, Tenant could terminate the lease without penalty.  Tenant was never in default on her lease.  Tenant always made timely rent payments.  Tenant informed Landlord of her job elimination and asked for an arrangement going forward while Tenant looked for new work. However, Landlord refused to accommodate Tenant’s request and ordered Tenant to vacate immediately within thirty days.  Tenant was forced to vacate by the Landlord and should not be penalized for no fault of her.  When it was the Landlord who terminated the Lease, it is not justifiable to demand that termination should have been in writing.

The landlord sued Tenant for the balance of the rent 6 months after Tenant was forced to surrender the lease.  Landlord’s claim that there could be no termination without writing should not be allowed because it was the Landlord who ordered the tenant to vacate and the Tenant complied within the time period.  The Landlord accepted the surrender of lease and the activities of the landlord in the premises can be understood to point to the fact that the lease was terminated as to the day when the Tenant vacated the premises.