What Is Lease Termination?

The Different Ways a Lease Ends

Not all lease terminations are the same. Understanding the type of termination matters because it determines your legal obligations and the tenant's financial responsibility.

Natural expiration. The lease term ends on the date specified in the lease agreement. If neither party takes action, the tenancy may convert to month-to-month under state law or the lease terms. If the tenant moves out, you proceed with the normal move-out and deposit return process.

Early termination by tenant. The tenant wants to leave before the lease expires. Maybe they got a new job, bought a house, or just want out. If your lease has an early termination clause (and it should), this clause specifies the fee and notice requirements.

Early termination by landlord. You want the tenant out before the lease ends. You can only do this for cause: non-payment, lease violations, or illegal activity. You cannot terminate early just because you want to sell the property or rent it to someone else. You must follow proper legal procedures.

Mutual agreement. Both parties agree to end the lease early. This is often the cleanest option when the landlord-tenant relationship is not working but neither party has a strong legal position. You negotiate terms, put it in writing, and both sign.

Constructive eviction. The tenant terminates because the property has become uninhabitable and the landlord has not fixed serious habitability issues. This is effectively the tenant saying "you broke the deal by not maintaining the property, so I am leaving." If the tenant has documentation, this can hold up in court.

Early Termination Clauses

Every lease should include an early termination clause. Without one, your options when a tenant wants to leave early are messy and expensive for both sides.

A typical early termination clause looks like this: "Tenant may terminate this lease early by providing 60 days written notice and paying an early termination fee equal to 2 months rent. Tenant is responsible for rent through the end of the 60-day notice period."

The fee should be high enough to discourage frivolous early departures but reasonable enough that a court would enforce it. Two months rent is the standard that courts generally uphold. A fee of 6 months rent would likely be considered a penalty and struck down.

Real Example: Early Termination Math

Your tenant is 6 months into a 12-month lease at $1,500/month. They just got a job transfer and need to move in 45 days. Your lease has an early termination clause requiring 60 days notice and 2 months rent as a fee.

Tenant pays: $1,500 x 2 = $3,000 early termination fee, plus rent through the 60-day notice period ($3,000 for the next 2 months). They are paying $6,000 total to leave early.

You receive: $6,000, which covers 4 months of rent. You now have 60 days to find a new tenant. If you fill the unit in 30 days, you have effectively been paid 3 months rent for 1 month of vacancy. That is a good outcome.

Without the early termination clause: the tenant just stops paying and leaves. You go through the eviction process (2-8 weeks depending on state), then try to collect unpaid rent through small claims court. You might get a judgment but collecting it is another matter entirely.

The Move-Out Process

Step 1: Receive and acknowledge the termination notice. Whether the lease is expiring naturally or the tenant is terminating early, acknowledge receipt in writing. Confirm the move-out date, any fees owed, and the expectations for the unit condition.

Step 2: Schedule a pre-move-out inspection. Many states allow or require a pre-move-out inspection where you walk through the unit with the tenant and identify issues they can fix before the final move-out. This reduces disputes over the security deposit.

Step 3: Conduct the final inspection. After the tenant moves out and surrenders keys, do a thorough inspection. Compare against the move-in condition report. Document everything with photos.

Step 4: Process the security deposit. Follow your state's deposit return timeline and provide an itemized statement of any deductions. This deadline starts the day the tenant surrenders possession.

Step 5: Begin turnover. Start the make-ready process to prepare the unit for the next tenant. The faster you turn the unit, the less vacancy you absorb.

Common Mistakes

Not having an early termination clause. Without one, you are stuck choosing between accepting the loss or going to court. Neither is a good option. Include an early termination clause in every lease.

Not mitigating damages. In most states, when a tenant breaks a lease, you have a legal obligation to mitigate damages by making reasonable efforts to re-rent the unit. You cannot just let it sit empty and charge the tenant for the remaining lease term. Advertise the unit promptly.

Confusing "lease termination" with "eviction." A tenant giving notice to terminate is not the same as an eviction. Eviction is a legal process initiated by the landlord for cause. Termination is the normal end of a lease. Using the wrong terminology creates confusion and potential legal issues.

Not getting termination agreements in writing. If you and the tenant agree to end the lease early by mutual agreement, put the terms in writing and have both parties sign. Verbal agreements about lease termination lead to disputes about what was actually agreed to.

Frequently Asked Questions

Can a tenant break a lease for a job transfer?

A job transfer alone does not give a tenant a legal right to break a lease in most states. However, your early termination clause should cover this situation. Military service members have additional protections under the SCRA (Servicemembers Civil Relief Act) that allow lease termination with proper documentation.

What if a tenant just disappears?

If a tenant abandons the unit (leaves without notice, stops paying rent, and removes their belongings), you must follow your state's abandonment procedures. This typically involves posting a notice, waiting a specified period, and then securing the unit. Do not dispose of any remaining belongings until you have followed the legal process.

Do I need to allow subletting as an alternative to termination?

Not unless your lease says you do. Most leases prohibit subletting without landlord approval. However, allowing a subtenant or lease assignment can be mutually beneficial since you keep the unit occupied and the original tenant fulfills their lease obligation.