Lease for a definite period. Rescission. Deposit. Unlawful rescission.

The parties entered into a lease for a definite period to run from 1 November 2019 until 31 October 2022. In an e-mail to the landlord on 17 June 2020 the tenant announced her intention of moving out on 30 June 2020. The landlord then pointed out that the tenant was bound by the lease until the end of the lease period, and asked at the same time who would take over the lease. The tenant replied that it was not her business to arrange that. As it is not possible to terminate a lease for a definite period and the provisions on exceptions had not been utilised, this amounted to rescission. The tenant’s grounds for rescission are covered in Article 60 of the Rent Act; the reason for the tenant’s decision, which may be deduced as being that the rent was too high, does not meet the conditions laid down in that provision.

The Complaints Committee requested confirmation from the landlord that he had taken immediate steps to limit his loss by advertising the property as being available for rental. He said he had done this but that no one wanted to rent this apartment. Thus, the committee considered that the landlord had complied with the first paragraph of Article 62 in attempting to limit his loss.  The committee therefore considered that the tenant was liable for the loss resulting from her non-performance, and rejected her demand for the return of the deposit.

Conclusion: The landlord was not obliged to return the deposit of ISK 420,000, amounting to almost three months’ rent.