Know why Diplomatic Clause in Tenancy Agreement is Important

For expat renters in Singapore, finding suitable accommodation is just the first hurdle. Understanding the intricacies of your tenancy agreement, especially clauses like the “Diplomatic Clause,” is crucial for a smooth experience. This article delves into the nitty-gritty of this clause, equipping you with the knowledge to make informed decisions and protect your interests.

What is the Diplomatic Clause?

A Diplomatic Clause, also known as an “Early Termination Clause” or “Get-Out Clause,” offers flexibility in long-term (usually 12 months or more) tenancy agreements. It allows tenants to break the lease prematurely under specific circumstances without being liable for the remaining rent. This safeguard provides peace of mind, particularly for individuals whose stay in Singapore might be subject to change due to employment-related factors.

How Does it Work?

Typically, only the tenant has the right to activate the clause. In some cases, it might be extended to co-tenants facing similar circumstances.

To exercise the Diplomatic Clause:

You must have occupied the premises for a minimum of twelve (12) months and due to the following reasons:

• Job transfer outside Singapore: Relocation due to company orders is the most common trigger.
• Job termination: Losing your job can lead to financial hardship, making continued rent payments difficult.
• Required by Authorities: Required by the relevant authorities to leave Singapore or is otherwise incapable of residing in Singapore.

you have to:

• Provide two (02) calendar months’ notice in writing to terminate the tenancy.
• Alternatively, pay two (02) months’ rent in lieu of notice.

Documentary evidence (such as job transfer documents) must accompany your notice.

While the clause allows early termination, it doesn’t necessarily waive all financial obligations. Some common scenarios include:

• Pro-rated Commission: You are liable in paying the Landlord the pro rate commission for the remaining months of the lease.
• Early Termination Fee: Some agreements levy a fixed fee for invoking the clause.

Negotiation and Customization:

Tenants can negotiate specific terms before signing the Tenancy Agreement. These might include:

• Expanding trigger events: Including additional valid reasons for early termination.
• Reducing minimum occupancy period: Depending on the landlord’s flexibility.
• Minimizing early termination fees: Discussing possibilities for reducing or waiving the fee.

Important Considerations:

• Read the fine print: Carefully review the specific wording and conditions of the clause in your agreement.
• Seek legal advice: If you need more clarification on any aspect, consult a lawyer specializing in tenancy law.
• Transparency and communication: Keep the landlord informed about potential early termination well in advance.
• Maintain the property: Even with the clause, fulfill your tenant’s responsibilities regarding the condition of the property.

Beyond the Basics:

Understanding the nuances of the Diplomatic Clause goes beyond just knowing its core function. Here are some additional points to ponder:

• Landlord’s perspective: While offering flexibility, the clause can create uncertainty for landlords who rely on consistent rental income.
• Market fluctuations: Negotiating terms might be easier in a tenant-dominated market and vice versa.
• Alternatives to the clause: Exploring subletting options or finding a replacement tenant might be mutually beneficial solutions.

Conclusion:

• The Diplomatic Clause serves as a safety net for tenants. It comes into play when unforeseen circumstances arise, such as job transfers or termination of employment.
• Most two-year tenancy agreements include this clause to protect tenants from having to cover unpaid rent in case they need to leave Singapore prematurely.

Other Key Tenancy Clauses for Tenants:

Beyond the Diplomatic Clause, several other provisions deserve your attention:

• Minor Repair: Understand what the minor repair amount is and what are your liabilities.
• Security Deposit: Be aware of the amount, terms for holding and returning it, and deductions allowed.
• Repair and Maintenance Responsibilities: Know who is responsible for repairs and maintenance during the tenancy.
• Renewal Clause: Be clear about the process and terms for renewing the tenancy.