Early Termination of Lease Agreement

If you have ever rented or been a renter, you’ve probably encountered a situation where you have to get out of your lease early or where your tenant wants to get out of the lease.

Lease agreements serve an essential role for the landlord and the tenant, providing legal protection for both parties. Early termination of lease agreement provides protection primarily for the landlord. However, if a tenant wants to leave, you certainly can’t prevent them from doing so. So, how do you honor an early termination of lease agreement and let a tenant out of the contract they have already signed? 

What Is an Agreement of Early Termination of Lease?

An agreement of early termination of lease is a legally binding document or clause in your lease agreement that lays out the provisions for a tenant breaking their contract prematurely. There are many situations where you might also include language for the conditions under which a landlord can choose to break a tenant agreement prematurely.

Reasons Tenants Want an Early Lease Termination

There are many reasons why a tenant might want to terminate their lease agreement before the original agreement.

1. A tenant might receive a promotion or be encouraged to transfer to another area. Similarly, they might lose their job. There are no federal or state protections for tenants who lose their job, but if they cannot make rent, forcing them to abide by the terms of their agreement doesn’t benefit the landlord either. In these situations, it’s always good to remember to show compassion, even if your rental property is a business. You might consider working with your tenants to write a new lease agreement to prevent vacancy. You could lower the rent for a few months, during which time they can find a new job, and then slowly increase the rent each month until it’s back to normal.
2. A tenant might have a health problem or family emergency and need to move. Illness can significantly impact financial stability and the ability to continue paying rent. This is especially true if there has been a death in the family and the death involves someone responsible for paying rent. Again, this is a scenario where you should exercise compassion over profit.
3. They could also be the victims of unlawful harassment, sexual assault, stalking, or domestic violence. There are state laws that allow survivors of these situations to use an early termination of lease agreement to get out of their current rental agreement without ramifications. The statutes vary from one state to the next. Some states prohibit you from asking for verification or even holding the individual financially responsible for prematurely breaking the lease, while others do not.So you have to verify what laws exist in your state. 
4. Tenants could have a divorce, and the two people no longer want to live in the same home. However, neither of them may be able to afford the property individually. There are scenarios where you can keep both tenants on the lease agreement legally, even if only one tenant remains occupying the home. However, if you consider your rental property as a business, it’s better to avoid getting involved in family drama if at all possible, so allowing an early termination of lease agreement could be the better option. 
5. A tenant might be a military member who is deploying. Military members must be legally allowed to break their lease early. This includes the National Guard, NOAA, and U.S. Public Health. Tenants under this category must still provide a 30-day notice which takes effect starting the next rent due date. So, if you are renting to a military member who is deploying, and they give notice on February 15, they are still responsible for rent for March. 

Should You Let the Tenant Find a Sublet?

If you have an early termination of lease contract, your tenant might know that they are still financially responsible for breaking the lease prematurely. In this case, they might offer to find someone to sublet until the lease expires.

However, you should not let them do this. You should be the one who controls who lives in your rental property. You, as the property owner, shoulder the risk of the tenants who occupy your space. A tenant who prematurely leaves has next to no financial loss involved if the subletting tenant causes significant damage. Instead, you should find individuals to rent out the space for the remainder of the contract or for a new lease term, using the same interview and application processes you did originally.

What is Included in the Early Termination of Lease Agreement?

When you write an early termination of lease contract yourself, include things like:

1. Minimum notice

This is how much time a tenant or landlord must provide for termination. It’s common to require a minimum notice of 30 days.

2. Format

List the requirements for early termination. Some landlords prefer that the early termination be sent in the mail, via email, or otherwise written out, while others accept a verbal format.

3. Fees

In this section, explain what the early termination fees are or how they will be calculated. You are not required, however, to define what the fee will be. You can choose to have a tenant continue paying rent until you find a qualified renter to replace them. Your state law might have a minimum obligation for tenants designed to cover situations where you forget to have an early termination of lease clause.

4. Dates

Here, you can explain when early termination will go into effect. Usually, this is 30 days after the notice is received.

5. Termination Effective

This might be a section where receiving notice is not enough, and the tenant is still responsible for paying things like termination fees or other charges. 

Please consider that this is a non-exhaustive list but just a few main things this agreement should have. You can use this example of the early termination of lease clause example and double-check with a lawyer.

Early Termination of Lease Agreement Sample (PDF, Word)

Download this printable template of the early lease termination agreement to fill in all the required information.

How to Write an Early Termination of Lease Contract?

Coordinate with a tenant/lessor

Before you start writing an early termination of lease contract, make sure you talked to a lessor and you discussed the possibility of terminating the lease.

Negotiate essential terms of the contract

Agree on money-related, time-related, and other issues, the details of which need to be specified in the contract.

Download the template and fill in all the necessary information

Download the template provided above after you negotiated all the details with another party. Make sure you will in all the blanks.

Also, please note that if you have an early termination of lease agreement letter, this is very likely to be in addition to the regular lease. Even if you don’t have a separate letter, you could have an early termination of lease agreement clause in your lease agreement.

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