Early Termination Clause

Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes

@Ryan Spath, a couple comments:

1. I VERY much appreciate that you mentioned that one needs to look at the state laws when writing these sorts of clauses. MANY landlords believe whatever the landlord and tenant agree to is legally binding but many times there are legal limits they are unaware of.

2. I also have a vaguely similar clause for early termination. My clause requires the tenant pay rent until the next tenant is in place or the lease ends which ever is LESS and also an $800 early termination fee.

State law requires me to try to try to rent the place out actively and only charge the tenant rent to that point. Aka no "double dipping". I charge the fee to compensate me for the time and effort it takes to prep, advertise, show, vet, lease prep, etc. So, the fee is justifiable if asked what the lease compensates me for.

3. For a tenant is good standing, I will often discuss with them and negotiate a flat amount to settle for. The lease terms are justifiable, but I don't feel as though I need to collect every penny to be fairly compensated.

So, for a good tenant, I will lay out what they would pay on average if it takes me an average amount of time to get a replacement tenant in place and then propose a lesser flat amount that we can agree on. Virtually always will the tenant accept this and pay it feeling I am being MORE FAIR than I need to be.

In addition to charging them somewhat less, they gain the certainty as to the amount whereas the lease clause could have them paying rent for several months in a worst case.

4. The lease clause is enforced in full with an eviction which is just another case of "early termination".

If your clauses doesn't make it clear, I would specifically make it clear that eviction cases have the same amounts due!

I want to charge evicted tenants FULLY because many times the judgement cannot be collected. So, if/when I can collect one, I want to be able to collect as much as is justified.

1 Reply

Ryan SpathBusiness Member

OP

Real Estate Agent · Boise, ID · Member since 2017 · 580 posts · 379 votes

7mo

@Kevin Sobilo

I appreciate you taking the time to respond in such depth. I like your #2, they pay a fee and the rent until you can find a replacement, I may have to consider this one for myself.

Totally agree with your #3, this is actually what sprung the post idea. One of my personal properties the tenant called about a week ago and let me know they were intending to break the lease end of March and move out of state. The lease they are in ends May 31st. This tenant has been amazing, an excellent communicator, they take amazing care of the property. We ended up agreeing that a one month fee will be the lease cancellation fee. The tenant was more than satisfied with this outcome, and I am too.

Regarding your #4, thank you for bringing this up, I will look into this.

Conversations like this are why I love biggerpockets, two people sharing and collaborating, with efforts of lifting up and helping! Have a great day and Ill see you in the forums!

[email protected]208-600-2814

1 Reply

Drew SygitBusiness Member

Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes

7mo

Quote from @Ryan Spath:

This one clause has helped my rental property management possibly more than anything else. Every time something happens good and bad I modify my lease, make an addendum, make it stronger, another thing to consider for future agreements.

The Lease is what you and your tenant legally agree to when entering into the relationship of landlord tenant. You always want to check with state and local laws to make sure you are being compliant.

Many moons ago I had a tenant move into one of my properties and after they occupied the property for a week they notified me the wrote an offer on a home and would be out by months end. We ended on great terms and because of this interaction I added this clause to my lease:

(I)
Early Termination. In the event the tenant needs to terminate this rental agreement earlier than the
agreed upon for any reason, the tenant shall give the landlord a 30 day written notice and be subject to pay two (2)
months rent and forfeit the security deposit.
Example: Tenant notifies landlord on July 25th with intent to vacate property. Tenant will pay normal
August rent and possess property until the end of August. At this time the tenant will be liable for two (2)
month’s rent and forfeit the security deposit. For this lease the total sum due would be $4,410.00 and the
tenant would forfeit the $1,845.00 security deposit.

This clause does several things, it allows the tenant to move out and know what is expected from them financially if they chose to end the agreement. From the property-owner side, it gives you an easily copied and pasted portion of the lease if an occupant needs to move out early for whatever reason.

What clauses have you added that has improved your business?

Check your state laws as most don't allow a security deposit to be liquidated as you have structured.

Can only be liquidated as legally allowed - which may cover unpaid rent when a lease is broken.

[email protected]248-209-6824

Logical Property Management4.9465 Reviews

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3 Reply

Kevin Sobilo
Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
7mo
Quote from @Drew Sygit:

Quote from @Ryan Spath:

This one clause has helped my rental property management possibly more than anything else. Every time something happens good and bad I modify my lease, make an addendum, make it stronger, another thing to consider for future agreements.
The Lease is what you and your tenant legally agree to when entering into the relationship of landlord tenant. You always want to check with state and local laws to make sure you are being compliant.
Many moons ago I had a tenant move into one of my properties and after they occupied the property for a week they notified me the wrote an offer on a home and would be out by months end. We ended on great terms and because of this interaction I added this clause to my lease:

(I)
Early Termination. In the event the tenant needs to terminate this rental agreement earlier than the
agreed upon for any reason, the tenant shall give the landlord a 30 day written notice and be subject to pay two (2)
months rent and forfeit the security deposit.
Example: Tenant notifies landlord on July 25th with intent to vacate property. Tenant will pay normal
August rent and possess property until the end of August. At this time the tenant will be liable for two (2)
month’s rent and forfeit the security deposit. For this lease the total sum due would be $4,410.00 and the
tenant would forfeit the $1,845.00 security deposit.

This clause does several things, it allows the tenant to move out and know what is expected from them financially if they chose to end the agreement. From the property-owner side, it gives you an easily copied and pasted portion of the lease if an occupant needs to move out early for whatever reason.
What clauses have you added that has improved your business?

Check your state laws as most don't allow a security deposit to be liquidated as you have structured.
Can only be liquidated as legally allowed - which may cover unpaid rent when a lease is broken.

In many leases any monies owed whether it be late fees, utilities etc are described as being "payable as rent". So, for all of those leases all the monies owed are rent.
1 Reply
Ryan SpathBusiness Member
OP
Real Estate Agent · Boise, ID · Member since 2017 · 580 posts · 379 votes
7mo
Quote from @Drew Sygit:

Quote from @Ryan Spath:

This one clause has helped my rental property management possibly more than anything else. Every time something happens good and bad I modify my lease, make an addendum, make it stronger, another thing to consider for future agreements.
The Lease is what you and your tenant legally agree to when entering into the relationship of landlord tenant. You always want to check with state and local laws to make sure you are being compliant.
Many moons ago I had a tenant move into one of my properties and after they occupied the property for a week they notified me the wrote an offer on a home and would be out by months end. We ended on great terms and because of this interaction I added this clause to my lease:

(I)
Early Termination. In the event the tenant needs to terminate this rental agreement earlier than the
agreed upon for any reason, the tenant shall give the landlord a 30 day written notice and be subject to pay two (2)
months rent and forfeit the security deposit.
Example: Tenant notifies landlord on July 25th with intent to vacate property. Tenant will pay normal
August rent and possess property until the end of August. At this time the tenant will be liable for two (2)
month’s rent and forfeit the security deposit. For this lease the total sum due would be $4,410.00 and the
tenant would forfeit the $1,845.00 security deposit.

This clause does several things, it allows the tenant to move out and know what is expected from them financially if they chose to end the agreement. From the property-owner side, it gives you an easily copied and pasted portion of the lease if an occupant needs to move out early for whatever reason.
What clauses have you added that has improved your business?

Check your state laws as most don't allow a security deposit to be liquidated as you have structured.
Can only be liquidated as legally allowed - which may cover unpaid rent when a lease is broken.

Thanks for pointing this out, I will look into this and confirm I am indeed compliant. To the best of my knowledge in Idaho, this is not illegal however it could be challenged if damages are less than this amount.
[email protected]208-600-2814
0 Reply
Ryan SpathBusiness Member
OP
Real Estate Agent · Boise, ID · Member since 2017 · 580 posts · 379 votes
7mo
Quote from @Kevin Sobilo:

Quote from @Drew Sygit:

Quote from @Ryan Spath:

This one clause has helped my rental property management possibly more than anything else. Every time something happens good and bad I modify my lease, make an addendum, make it stronger, another thing to consider for future agreements.
The Lease is what you and your tenant legally agree to when entering into the relationship of landlord tenant. You always want to check with state and local laws to make sure you are being compliant.
Many moons ago I had a tenant move into one of my properties and after they occupied the property for a week they notified me the wrote an offer on a home and would be out by months end. We ended on great terms and because of this interaction I added this clause to my lease:

(I)
Early Termination. In the event the tenant needs to terminate this rental agreement earlier than the
agreed upon for any reason, the tenant shall give the landlord a 30 day written notice and be subject to pay two (2)
months rent and forfeit the security deposit.
Example: Tenant notifies landlord on July 25th with intent to vacate property. Tenant will pay normal
August rent and possess property until the end of August. At this time the tenant will be liable for two (2)
month’s rent and forfeit the security deposit. For this lease the total sum due would be $4,410.00 and the
tenant would forfeit the $1,845.00 security deposit.

This clause does several things, it allows the tenant to move out and know what is expected from them financially if they chose to end the agreement. From the property-owner side, it gives you an easily copied and pasted portion of the lease if an occupant needs to move out early for whatever reason.
What clauses have you added that has improved your business?

Check your state laws as most don't allow a security deposit to be liquidated as you have structured.
Can only be liquidated as legally allowed - which may cover unpaid rent when a lease is broken.

In many leases any monies owed whether it be late fees, utilities etc are described as being "payable as rent". So, for all of those leases all the monies owed are rent.

thanks for the insight
[email protected]208-600-2814
0 Reply
Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
7mo
Quote from @Kevin Sobilo:

Quote from @Drew Sygit:

Quote from @Ryan Spath:

This one clause has helped my rental property management possibly more than anything else. Every time something happens good and bad I modify my lease, make an addendum, make it stronger, another thing to consider for future agreements.
The Lease is what you and your tenant legally agree to when entering into the relationship of landlord tenant. You always want to check with state and local laws to make sure you are being compliant.
Many moons ago I had a tenant move into one of my properties and after they occupied the property for a week they notified me the wrote an offer on a home and would be out by months end. We ended on great terms and because of this interaction I added this clause to my lease:

(I)
Early Termination. In the event the tenant needs to terminate this rental agreement earlier than the
agreed upon for any reason, the tenant shall give the landlord a 30 day written notice and be subject to pay two (2)
months rent and forfeit the security deposit.
Example: Tenant notifies landlord on July 25th with intent to vacate property. Tenant will pay normal
August rent and possess property until the end of August. At this time the tenant will be liable for two (2)
month’s rent and forfeit the security deposit. For this lease the total sum due would be $4,410.00 and the
tenant would forfeit the $1,845.00 security deposit.

This clause does several things, it allows the tenant to move out and know what is expected from them financially if they chose to end the agreement. From the property-owner side, it gives you an easily copied and pasted portion of the lease if an occupant needs to move out early for whatever reason.
What clauses have you added that has improved your business?

Check your state laws as most don't allow a security deposit to be liquidated as you have structured.
Can only be liquidated as legally allowed - which may cover unpaid rent when a lease is broken.

In many leases any monies owed whether it be late fees, utilities etc are described as being "payable as rent". So, for all of those leases all the monies owed are rent.

Yes, but we can't assume the lease in this case has the proper language.
Also, if it goes to court the judge will ask for a Rent Ledger. It will need proper rent charges and what the SD was liquidated to cover.
[email protected]248-209-6824
Logical Property Management4.9465 Reviews
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2 Reply

Jim Johnson

Real Estate Agent · Memphis · Member since 2026 · 597 posts · 350 votes

7mo

Good example of using the lease to reduce uncertainty. The biggest improvements usually come from clauses that remove gray areas in day-to-day operations, not just big events.

A few that tend to help operationally:

Maintenance reporting requirements.
Tenants must report issues promptly and in writing. This prevents small problems (leaks, HVAC issues, etc.) from turning into expensive repairs later.

Filter / basic maintenance responsibilities.
Simple things like HVAC filter changes or drain care spelled out in the lease reduce a lot of avoidable service calls.

Late fee structure and enforcement language.
Clear timing, amounts, and consistency expectations remove negotiation when rent is late.

Unauthorized occupants / guests.
Limits on long-term guests help prevent “extra tenants” quietly moving in.

Like you mentioned, the lease tends to evolve over time. Most of the strongest clauses come directly from situations landlords have already experienced once.

2 Reply

Ryan SpathBusiness Member
OP
Real Estate Agent · Boise, ID · Member since 2017 · 580 posts · 379 votes
7mo
Quote from @Jim Johnson:

Good example of using the lease to reduce uncertainty. The biggest improvements usually come from clauses that remove gray areas in day-to-day operations, not just big events.

A few that tend to help operationally:

Maintenance reporting requirements.
Tenants must report issues promptly and in writing. This prevents small problems (leaks, HVAC issues, etc.) from turning into expensive repairs later.

Filter / basic maintenance responsibilities.
Simple things like HVAC filter changes or drain care spelled out in the lease reduce a lot of avoidable service calls.

Late fee structure and enforcement language.
Clear timing, amounts, and consistency expectations remove negotiation when rent is late.

Unauthorized occupants / guests.
Limits on long-term guests help prevent “extra tenants” quietly moving in.

Like you mentioned, the lease tends to evolve over time. Most of the strongest clauses come directly from situations landlords have already experienced once.

Jim thansk for the feedback.
[email protected]208-600-2814
0 Reply

David PeschioBusiness Member

Richmond, VA · Member since 2019 · 358 posts · 181 votes

7mo

I would refer to this as a "termination fee" rather than "rent." If it is labeled as rent, you could encounter issues if the property is re-rented immediately, as you are generally not permitted to collect double rent for the same time period. By classifying it as a termination fee, it allows you to collect the payment while still maintaining the flexibility to re-rent the unit as soon as possible.

[email protected]804-909-1929

PMI Richmond4.4304 Reviews

Website View Page

1 Reply

Ryan SpathBusiness Member
OP
Real Estate Agent · Boise, ID · Member since 2017 · 580 posts · 379 votes
7mo
Quote from @David Peschio:

I would refer to this as a "termination fee" rather than "rent." If it is labeled as rent, you could encounter issues if the property is re-rented immediately, as you are generally not permitted to collect double rent for the same time period. By classifying it as a termination fee, it allows you to collect the payment while still maintaining the flexibility to re-rent the unit as soon as possible.
David, thank you for sharing!
[email protected]208-600-2814
0 Reply

David PeschioBusiness Member

Richmond, VA · Member since 2019 · 358 posts · 181 votes

7mo

@Ryan Spath Sure thing and thanks for posting - love to see what others are doing. Always looking on ways to improve.

[email protected]804-909-1929

PMI Richmond4.4304 Reviews

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