Early Termination Fee Lease Agreement

August 13th, 2022 Posted by Uncategorized 0 comments on “Early Termination Fee Lease Agreement”

Early Termination Fee Lease Agreement: Everything You Need to Know

When it comes to leasing a property, both landlords and tenants enter into a legally binding contract known as a lease agreement. A lease agreement outlines the specific terms and conditions for the rental property, including the lease term, rent amount, security deposit, and more. One crucial provision in most lease agreements is the early termination fee, which can be imposed on tenants who break their lease agreement early.

What is an early termination fee?

An early termination fee is a penalty fee that tenants have to pay if they break their lease agreement before the lease term ends. The fee is typically stated in the lease agreement and can vary depending on the terms of the agreement. Most landlords impose an early termination fee to protect themselves from financial losses that may occur if a tenant breaks the lease.

How does an early termination fee work?

If a tenant decides to break their lease agreement early, they will be required to pay an early termination fee as specified in the lease agreement. The fee is usually a set amount or a percentage of the remaining rent that the tenant would have paid if they had stayed until the end of the lease term. For example, if a tenant has six months left on their lease agreement and the early termination fee is set at two months` rent, they would be required to pay the equivalent of two months` rent to the landlord.

The landlord can deduct the early termination fee from the security deposit or request payment from the tenant. If the tenant fails to pay the fee, the landlord can take legal action to recover the unpaid amount.

Are there any exceptions to early termination fees?

In some cases, tenants can break their lease agreement without paying an early termination fee. For example, if the tenant is a victim of domestic violence or if the property becomes uninhabitable due to unforeseen circumstances such as a natural disaster or fire, they may be exempt from paying the fee. However, tenants will need to provide proof of their situation to the landlord.

Can landlords charge an early termination fee for any reason?

No. Landlords cannot charge an early termination fee for any reason they choose. The fee must be reasonable and should reflect the landlord`s actual expenses incurred due to the early termination of the lease agreement. Additionally, the landlord must mitigate their damages by actively seeking a new tenant to occupy the property as soon as possible.


An early termination fee is a crucial provision in most lease agreements that protects landlords from financial losses. Tenants who break their lease agreement early may be required to pay a fee that is stipulated in the lease agreement. However, there are exceptions to early termination fees, and landlords must ensure that the fee is reasonable and reflects their actual expenses due to the early termination of the lease. It is crucial for both landlords and tenants to understand the terms and conditions of the lease agreement to avoid disputes in the future.