Lease Termination Letter: Free Templates for California Co-Owners

A lease termination letter proposes an agreed date for ending a lease, and for co-owners of a California rental property it is often the first step toward selling. A lease does not end because the owners disagree, decide to sell, or file a partition action. It ends when its term runs out, when the law allows a notice, or when the owners and the tenant agree in writing. The free templates below cover that third path.

This comes up most often with siblings who inherit a rented house, former partners who still own a duplex together, and investors who no longer agree on a building. One owner wants to sell, the other is content to collect rent, and a tenant is living in the middle of the dispute. Our guide to partitioning a rental property with tenants covers the whole process. This page covers the letter.

Can One Co-Owner End a Lease Without the Others?

Usually not alone. Each co-owner has the right to possess the whole property, and each can lease that right to a tenant without the others signing. Once that happens, the other co-owners cannot simply cancel the lease. As the Court of Appeal put it in Verdier v. Verdier (1957) 152 Cal.App.2d 348, 352: “A cotenant has no right to oust a person who holds possession with the consent of another tenant in common.”

The rule cuts both ways. In Swartzbaugh v. Sampson (1936) 11 Cal.App.2d 451, 458, the court explained: “One joint tenant may make a lease of the joint property, but this will bind only his share of it.” A paper signed by one owner speaks only for that owner. A tenant who wants a clean exit, and a buyer who wants a clean title, will expect every co-owner’s signature on the agreement that ends the lease. If your co-owner will not sign, you have reached the limit of what a letter can do.

A Sale or a Partition Does Not End the Lease by Itself

Selling the property does not cancel the lease. Most rentals are sold with the tenant in place, and the buyer becomes the new landlord. Under the Tenant Protection Act, Civil Code section 1946.2, once a tenant has lawfully lived in a covered rental for 12 months, the owner generally needs a just cause listed in the statute to end the tenancy, and a sale is not on that list. Cities such as Los Angeles and San Francisco have their own rules that can be stricter.

A partition action does not change those rules, but it does put someone in charge. When the court orders a sale, it appoints a partition referee under Code of Civil Procedure section 873.010 (CCP 873.010 on appointing a referee). Under Code of Civil Procedure section 872.120 (CCP 872.120 on the court’s powers), the court may “make any decrees and orders necessary or incidental to carrying out the purposes of this title.” From that point the sale, including dealings with the tenant, runs through the referee and the court, not through two owners who cannot agree.

When a Negotiated Lease Termination Makes Sense

• The house will sell for more empty. Buyers who plan to live in a single-family home often pay more than investors, and they need the house vacant at closing.
• One co-owner is buying out the other and wants to move in. A co-owner buyout is simpler when the tenant’s move-out date is already agreed.
• The tenant wants out too. A tenant who is ready to leave may trade an early move-out for a release from the remaining rent.

Example: Say you and your brother each own half of a rented house. The lease has eight months left at $3,000 a month, and your broker expects a better price from buyers who want to move in. You offer the tenant $6,000 to move out in 60 days, with the security deposit handled the way the law requires. The tenant accepts, the house is listed vacant, and the $6,000 comes out of the sale proceeds, $3,000 from each of you. These are illustrative numbers. When a tenant is paid to leave, the deal is often called cash for keys.

What a Lease Termination Agreement Should Cover

The letter starts the conversation. The signed agreement ends the lease. Make sure it covers:

• Every signature. All co-owners and all tenants on the lease sign.
• The move-out date. A specific date and time for returning the keys.
• The payment. The amount, when it is paid, and who pays it. If one co-owner advances the money, say how it will be credited between the owners. In a partition, those credits are decided under Code of Civil Procedure section 872.140 (CCP 872.140 on compensatory adjustments).
• The security deposit. Civil Code section 1950.5 controls how the deposit is returned or accounted for. An early end to the lease does not by itself forfeit the deposit.
• A release. Each side releases the other from the rest of the lease once the tenant has moved out and been paid.
• The referee, if one has been appointed. Under Code of Civil Procedure section 873.070 (CCP 873.070 on instructions to the referee), the referee or a party can ask the court for instructions before money from the property is committed.
• Local buyout rules. Some cities require specific disclosures and a cancellation period when a tenant is paid to move out.

Free Lease Termination Letter Template for Co-Owners

For co-owners proposing an agreed end to a tenant’s lease. This is a proposal, not a notice to quit.

[Names of all co-owners]
[Contact information]
[Date]

To: [Tenant names]
Property: [Address]
Re: Proposal to end your lease by agreement

Dear [Tenant names]:

We are the owners of the property you rent under the lease dated [date]. We are writing to propose that the lease end early, by agreement, on [date].

In exchange for moving out by that date, we offer to pay you $[amount] on the day you return the keys. Your security deposit will be returned or accounted for as California law requires. Once you have moved out and been paid, you and we will release each other from the rest of the lease.

This letter is a proposal. It is not an eviction notice, and you are free to say no. If you decline, your lease continues on its current terms.

If these terms work for you, or if you would like to suggest different ones, please contact [name] at [phone and email] by [date]. Any agreement will be put in writing and signed by every owner and every tenant.

Sincerely,
[Signature of each co-owner]

When the Tenant Wants Out: A Tenant’s Lease Termination Letter

The second template runs the other direction. Scott Talkov and Colleen Talkov prepared it in July 2020 for a commercial tenant whose business was shut down by coronavirus restrictions. It remains below as a model of how a tenant proposes terms: the facts, the legal position, and a specific offer.

• It is a proposal, not a release. Sending the letter does not end the duty to pay rent. A signed agreement does.
• Use today’s facts. Do not reuse the 2020 shutdown dates or emergency rules as if they describe current conditions.
• Put the result in writing. Get a signed termination and release rather than relying on a check memo or an informal reply.

Coronavirus, Force Majeure, and Rent Obligations

Coronavirus-related losses do not automatically cancel a lease or reduce rent in proportion to lost sales. The lease language and the effect of the claimed event on performance matter. In West Pueblo Partners, LLC v. Stone Brewing Co., LLC (2023) 90 Cal.App.5th 1179, the court rejected a commercial tenant’s force majeure defense where the tenant admitted it had the resources to pay rent despite pandemic-related business losses.

The sample below presents a historical negotiation position, not a prediction that its arguments will succeed. References to frustration of purpose, impossibility, and impracticability require analysis of the particular dispute. The spreadsheet is a settlement illustration, not a court-approved formula for calculating rent owed.

Free Lease Termination Letter: Historical Coronavirus Template

Historical context: This example concerns a commercial business affected by 2020 restrictions. Its discussion of shutdowns, business conditions, and proposed defenses must not be treated as current facts or copied without review. It has been edited to clarify its limitations; it is not an unaltered historical document.

[Sender’s Name]

[Sender’s Address, Phone Number and Email]

[Date]

VIA EMAIL ONLY

[Recipient Name]

[Recipient Address]

Phone: [Recipient’s Phone]

Facsimile: [Recipient’s Fax Number]

[Recipient’s Email Address]

Re:      [e.g., Proposed Termination of Lease]

Property Address: [Property Address]

Occupant: [Occupant Name(s)]

Landlord: [Property Owner’s Name]

Dear [Mr/Ms.] [Property Manager/Property Owner/Other Party to Contract],

I hope this letter finds you well. Unfortunately, with regard to your lease with [name of tenant(s)], the State of Emergency following the Coronavirus pandemic and [governmental restrictions] in [name of county] County have made continued operations economically infeasible. Accordingly, this letter proposes terms that we suspect will be agreeable to the landlord to terminate the lease dated [date of lease] between [name of landlord] (“Landlord”) and [name of tenant] (the “Lease”), for the premises at [address of leased property] (the “Premises”).

Regretfully, the problems for [name of tenant] began immediately when the State of Emergency was declared by Gov. Gavin Newsom, which included stay at home orders effective March 19, 2020. This shuttered [name of tenant] by operation of law. In an effort to protect their employees and customers, effective the day before, [name of tenant] ceased its operations entirely. While many public leaders and business owners were optimistic at the time that the issues caused by this shutdown would be temporary, that is not what has occurred.

Unfortunately, since the Coronavirus pandemic began, the operations of [tenant], as reflected by its gross sales, have been a small fraction of what they were before the pandemic. Specifically, as shown in Exhibit 1 hereto, the sales from March 18 through [end date of calculation] were [specify small amount]. Thereafter, [the tenant] reopened for [limited operations, e.g., take-out] on [specify date]. However, this resulted in only about [specify percentage of sales] of the normal sales in [specify month of comparison]. Even when [normal operations, e.g. dine-in] was allowed in [specify date, e.g., June 2020], sales were a mere [specify percentage] of what [name of tenant] would normally enjoy.

Even more unfortunate for all parties, on July 1, 2020, the State of California issued new health orders, mandating that [type of tenant’s business, e.g., restaurants] in [name of county] County must cease indoor operations. An article published by the [name of newspaper] on [specify date] entitled, [name of article] is attached herein as Exhibit 2, for your reference. As for [name of tenant], there is no ability to comply with this new law by providing an alternative means of carrying on its business, meaning they must return to sales that they expect to be about [specify small percentage of sales while governmental restrictions continue] of the normal gross revenue.

Regretfully, this level of gross sales does not begin to cover the fixed costs of the business, most notably the rent to the landlord. While [tenant] has paid [all or most] rent through the date of this letter, the continued financial frustrations and uptick in Coronavirus transmissions has led to the undeniable conclusion that this will be a long recovery for any businesses that are similarly doing next to nothing during this pandemic. Accordingly, [tenant] plans to close its doors effective [specify date].

In connection with this closing, they would like to terminate the lease and turn over possession in a prompt fashion, subject to a written agreement with the landlord. References to emergency eviction rules must be checked against the rules applicable to the specific time and dispute.

The tenant requests consideration of potential frustration of purpose and impracticability arguments, subject to the lease terms, supporting facts, and applicable law. The pandemic alone does not establish these defenses. Related thereto, Civil Code § 1511(2) provides that the performance of an obligation is excused “when it is prevented or delayed by an irresistible, superhuman cause, or by the act of public enemies of this state or of the United States, unless the parties have expressly agreed to the contrary.” [In this case, there is no clause in the contract addressing what would occur in light of the irresistible, superhuman Coronavirus pandemic that has effectively shuttered certain parts of the American economy. Accordingly, the judicial decisions in California will control. Or, if there is a force majeure clause in the contract, quote the relevant portions of that clause that support your position that the clause applies to the Coronavirus pandemic.]

California courts have held that “force majeure…is not necessarily limited to the equivalent of an act of God.” Pac. Vegetable Oil Corp. v. C.S.T., Ltd. (1946) 29 Cal.2d 228, 238. The test for whether a force majeure or act of God situation is present is “whether under the particular circumstances there was such an insuperable interference occurring without the party’s intervention as could not have been prevented by the exercise of prudence, diligence and care.” Id.

For example, in 20th Century Lites, Inc. v. Goodman (1944) 64 Cal.App.2d Supp. 938, the court discharged a defendant’s obligations to pay a plaintiff for a three-year lease of neon light advertising of the defendant’s business after a government regulation was enacted prohibiting the lighting of such signs.

The leading California case on frustration of purpose explains that “the applicability of the doctrine of frustration depends on the total or nearly total destruction of the purpose for which, in the contemplation of both parties, the transaction was entered into.” Lloyd v. Murphy (1944) 25 Cal. 2d 48, 53–54. Under doctrine of frustration of purpose, “performance remains possible but the expected value of performance to the party seeking to be excused has been destroyed by a fortuitous event, which supervenes to cause an actual but not literal failure of consideration.” Lloyd, supra. “This defense applies when performance is not impossible or impracticable, but has become pointless—i.e., the main purpose of a contract has become frustrated. [See La Cumbre Golf & Country Club v. Santa Barbara Hotel Co. (1928) 205 C 422, 425-426, 271 P 476, 477—hotel agreed to pay monthly amount to golf course for use by guests, but hotel burned down].” Cal. Prac. Guide Civ. Pro. Trial Claims and Def. (The Rutter Group) Ch. 9(I)-C, 9:18.

Moreover, impracticability of performance is yet another defense to performance of contract, which applies when “a thing is impracticable when it can only be done at an excessive and unreasonable cost.” City of Vernon v. City of Los Angeles (1955) 45 Cal. 2d 710, 719–20.

In this case, the terms of the Lease clearly delineate an intention and expectation, by both parties, that the tenant would use the Premises as a [specify nature of business]. As such, the March 19, 2020 mandatory stay at home restrictions and the [specify date of later order hindering business] order mandating the [termination of the tenant’s business] within [specify county name] County have effectively frustrated the purpose of the Lease, as [name of tenant] is unable to use the Premises for the specified purpose. This has also made the performance of the Lease impracticable where the only way for the tenant to perform is at an unreasonable cost, i.e., at a guaranteed, extraordinary loss month after month.

Lloyd placed limits on the application of frustration of purpose as follows: “The doctrine of frustration has been limited to cases of extreme hardship so that businessmen, who must make their arrangements in advance, can rely with certainty on their contracts. The courts have required a promisor seeking to excuse himself from performance of his obligations to prove that the risk of the frustrating event was not reasonably foreseeable and that the value of counterperformance is totally or nearly totally destroyed, for frustration is no defense if it was foreseeable or controllable by the promisor, or if counterperformance remains valuable.”

In this case, the Coronavirus pandemic was unforeseeable not only to the tenant, but also to the United States government, as has been reflected by its response. Even the President’s trusted advisor, Dr. Fauci, at one point estimated a death toll of a quarter-million Americans- even with the shutdown that has occurred. As of the writing of this letter, the death toll in America has surpassed [specify death toll in America from Coronavirus], despite the efforts at social distancing. This shutdown has nearly eliminated the need for the services provided by the tenant. Even further, this event was entirely outside of the tenant’s control, but, rather, has occurred due to the contagious nature of the virus and, at least arguably, the slow governmental response. What has occurred has rendered performance of the contract, by way of payment of the rent and operation of the business, impossible or impracticable [OPTIONAL: The [party writing this letter, e.g. the tenant] was already running without sufficient profitability such that there is simply no purpose for the continued performance of the contract.]

[OPTIONAL: While the Coronavirus pandemic ultimately [caused this request for termination or brought the tenants to close their business], there were issues with the [the contract or condition of the property due to the landlord’s lack of maintenance] that predated the Coronavirus pandemic that created the conditions for [this need to terminate the contract or this financial failure]. Specifically, Section [specify section] of the [lease or contract] identifies the [e.g., “Lessor’s Obligations” as follows: “Lessor, subject to reimbursement pursuant to Paragraph 4.2, shall keep in good order, condition and repair the foundations, exterior walls, structural condition of interior bearing walls, exterior roof, fire sprinkler system, Common Area fire alarm and/or smoke detection systems, fire hydrants, parking lots, walkways, parkways, driveways, landscaping, fences, signs and utility systems serving the Common Areas and all parts thereof, as well as providing the services for which there is a Common Area Operating Expense pursuant to Paragraph 4.2”] Contrary to those obligations, [specify the other party’s breaches, e.g., the roof has had repeated and ongoing leaks]. This is shown in the attached [e.g., pictures of the roof, the walls, and the floors attached as Exhibit 3]. These show [e.g., water damage on the roof, water seeping down the brick walls, and water on the floor]. These issues caused repeated damage to [e.g., the business, the tenants’ personal effects, while diminishing the tenant’s reputation as a reputable business].]

For settlement purposes only, the tenant proposes that the parties consider the reduction in gross revenue when negotiating a compromise of rent claims. The attached spreadsheet illustrates this proposal; it does not establish a legal entitlement to proportional rent reduction or prove that rent was overpaid. Any adjustment requires the landlord’s agreement or an applicable legal basis established in court.

We suspect that the Landlord would prefer not to go without the payment of any further rent for [specify number of months remaining on lease] months at the Premises, but rather would prefer to find a new tenant that can make a viable use of the Premises in light of the Coronavirus pandemic.

Accordingly, the tenant offers the landlord a termination of the lease on the following terms. First, the tenant will pay the lump sum of $[specify amount, e.g., two months of rent]. Second, the landlord would retain the deposit already on hand with the landlord of $[specify amount of deposit]. Third, the Tenant will leave the property in broom-swept condition on [specify date that tenant will vacate]. In exchange, the landlord would release the tenant from all obligations arising under the Lease, as expressly stated in a signed termination and release agreement. The tenant is prepared to send a check to the landlord with the memo line “Lease Termination – Paid in Full – Landlord to Retain Deposit” in exchange for termination of the Lease as of [specify date that tenant will vacate]. This check can be sent as soon as the landlord indicates its acceptance.

I hope to hear from your office on these issues by [specify a date about one week away]. I can be reached at [add your phone number] and at [your email address]. [If there is something to be done if the offer is accepted, specify that it will be done promptly, e.g. I can overnight the keys as soon as you confirm your agreement as set forth herein].

Very truly yours,

/s/ [Sender’s Signature]

[Sender’s Name]

Encl.

Historical Settlement Spreadsheet

The original spreadsheet is retained for readers following earlier references to this resource. It illustrates a proposed rent compromise based on reduced revenue. It does not determine the rent legally owed, establish an overpayment, or create a right to withhold rent.

Download the historical coronavirus rent-settlement spreadsheet

End the Co-Ownership, Not Just the Lease

A lease termination letter solves a tenant problem. It does not solve a co-owner problem. If your co-owner will not sign the letter, will not agree to sell, or is keeping the rent, the answer is a partition action. The right to partition does not depend on your co-owner’s consent, and a rented property can be sold with the tenant in place or after an agreed move-out. The court also settles the money, including your share of the rent and the offsets and credits for what each owner paid.

Talkov Law can help. With 12 full-time partition attorneys and experience in over 650 partition actions throughout California, our team handles every step of the process, from the first letter to your co-owner through the court-ordered sale and the final division of the proceeds. Call (877) PARTITION (727-8484) today or contact us online for a free consultation with a partition attorney.