What does Termination Costs mean in a Rent to Purchase Agreement?

Last modified December 21, 2021

Termination Costs can have extensive or various meanings depending on what the Rental Agreement has stated or the Rent with Option to Buy Agreement stipulates. Many times it means that the Escrow Deposit, also known as Security Deposit is automatically forfeited if the Rental Agreement is breached by the Tenant. Some other examples of provisions to the Rental Agreement that are Termination Costs may allow the Landlord to charge the Tenant Legal and/or Attorney's fees, the rehabilitation of the property, third party professional costs such as cleaning, repairing walls that were damaged by the Tenant or any other similar damages if any other provision of the contract or agreement is breached by the Tenant. Rental Agreements may also provise that even if the Escrowed Funds (Security Deposit) are greater than the damages, the remainder of the Escrow Deposit may be retained by the Landlord as Liquidated Damages. You just need to read the Agreements.