Short Definition
Ending the lease before its agreed duration, either by mutual consent or for legitimate reason, potentially incurring penalties per contract clauses.
Overview
Legal Basis
Early termination is regulated by the Civil Transactions Law issued by Royal Decree No. (M/191) of 1444 AH in articles related to contract expiration. The Ejar platform provides the mechanism for electronically documenting early termination and required procedures. Judicial termination for material breach is filed via Najiz with the competent court (usually the General Court), and either party may request termination for a supervening excuse while compensating the other (Article 442).
Practical Example
An employee at a Riyadh company rented an apartment for one year at SAR 36,000 rent. After 6 months, he was transferred to another city. He reviewed his contract and found an early termination clause requiring 60 days notice and payment of two months as compensation. He sent an official notice via Ejar, and after 60 days vacated the apartment. In Ejar, both parties signed the contract termination electronically. The lessee recovered the remaining SAR 3,000 of his SAR 9,000 deposit after deduction of SAR 6,000 (two months as compensation), and the contract was officially closed. Had there been no early termination clause, he would have had to agree with the lessor or ask the court to terminate for a supervening excuse while compensating the lessor’s loss (Article 442 of the Civil Transactions Law); otherwise he would remain liable for the remaining SAR 18,000.
Common Mistakes
- ✗Vacating the property and leaving the keys without documenting termination in Ejar — the contract remains active and rent accrues until period end.
- ✗Relying on verbal agreement with the lessor for termination — not legally recognized, electronic documentation is required.
- ✗Vacating because the property 'doesn't suit me' — not a statutory reason; unilateral termination requires an explicit clause, a material breach by the other party, or a genuine supervening excuse with compensation (Article 442).
- ✗Forgetting to request deposit refund in writing upon termination — the lessor may later claim it was consumed, so ensure proof of property's sound delivery.
- ✗Delaying termination notice believing sudden departure suffices — contracts with an early-termination clause usually set an advance-notice period, and delay may oblige you to pay rent for that period.
International Differences
In Dubai, early termination is generally governed by the lease terms under Law No. 26 of 2007, with any compensation set by the contract. In Turkey, the Turkish Code of Obligations limits the grounds on which a landlord can end a residential lease. In Kuwait, the rent circuit of the Court of First Instance hears lease disputes, including termination. The Saudi advantage: flexibility in initial agreement on termination clauses with rapid electronic termination documentation, reducing disputes.
