Looking for a advice on allowing a tenant to terminate their lease early with a replacement tenant lined up.
A tenant in my warehouse has outgrown their space and rented a larger unit in a neighboring city.  They asked to be let out of their lease 2 years early and I agreed as long as we can find a suitable replacement tenant before they leave.

We've found a new tenant but before I move forward I wanted to check and see if there is anything I should have either party sign before moving forward.  

Thanks from a newbie!
[{"id": "j10p3uv", "text": "Do your normal due diligence on the incoming tenant.\n\nI'd think it wouldn't hurt to have you and the outgoing tenant sign an acknowledgment that they're leaving the premises early and no longer have access. But I heard that I've been called paranoid behind my back.", "replies": [{"id": "j10q4cq", "text": "I don\u2019t know why you\u2019d be called paranoid for that. The last thing any landlord wants is to have space double leased on paper. Even a simple letter amendment would probably suffice to establish an expiration date for the vacating tenant. It protects everybody b", "replies": [], "depth": 2}, {"id": "j10qgyg", "text": "Thank you, Ive asked for financial statments and they seem to actually be a better tenant then we currently have in place.  Anything else I should request?", "replies": [], "depth": 2}, {"id": "j1229dc", "text": "You definitely want to draft a termination agreement stating the final day of the lease, address condition the premises are to be left in (any fixtures to remain or be removed).  \n\nWe typically require termination fee to cover our costs - broker commissions, attorney fees, and landlord work or rent abatement.", "replies": [], "depth": 2}], "depth": 1}, {"id": "j10q79q", "text": "Are you charging an early termination fee? Very likely you will incur either a short term decline in cash flow or additional expenses in the transition between tenants which should be covered by the departing tenant.\n\nIf you have already agreed without addressing termination expenses, it may be too late to bring it up. You\u2019ll have to figure that out.", "replies": [{"id": "j10r5kn", "text": "I hadnt even thought of a termination fee.  I didnt list one in their lease but they agreed to pay any costs associated with advertising the space and agreed to cover any broker fees.  \n\nIm fortunate they seem to be an honest organization that is just growing and I want them to do so but dont want to misstep anywhere and shoot myself in the foot.", "replies": [{"id": "j10rt5p", "text": "Take them up on their offer and put it in the next lease. Since it\u2019s not in the lease, you\u2019re in an uncertain situation. You\u2019re not holding them liable for 2 years of rent which you could do but you also have no written agreement for early termination, so anything at this point is by mutual agreement.", "replies": [{"id": "j11t1au", "text": "Which is why you shouldn\u2019t put anything in any lease about an early termination unless it\u2019s absolutely necessary. Then you could only enforce the terms of the early termination right, rather than the remaining term of the lease", "replies": [{"id": "j11tb4h", "text": "You\u2019re new at this aren\u2019t you?", "replies": [{"id": "j11utxp", "text": "No- I\u2019ve got a couple years under my belt but certainly open to learn about this", "replies": [], "depth": 6}, {"id": "j14sdck", "text": "Rude and you're actually wrong. Early termination is not a common lease clause and it shouldn't be in a standard lease. Brokered hundreds of office/industrial deals in US northeast and maybe a handful of them had early termination language. The language benefits the tenant unless there's some major market shift that suddenly makes their lease a below market deal, or unless there's some massive payout to the landlord.", "replies": [], "depth": 6}], "depth": 5}, {"id": "j1b30gs", "text": "100% right here. There should be literally no reference in a lease allowing early termination that would correlate to a stated fee. \n\nI think I've only seen two termination rights, both relates to non-performance of LL on projects with large turn-key LL work. Never seen a right to terminate for a fee, though some larger tenants essentially view their security deposit as such.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "j10qrdx", "text": "You need to draft a termination agreement between you and 1st tenant just establishing the terms of leaving (date, condition, etc). Then for the new lease you just need to make sure it starts after the expiration date in the termination with 1st tenant. This isn\u2019t (or shouldn\u2019t be) a complicated issue for any of the parties.", "replies": [], "depth": 1}, {"id": "j113g1a", "text": "You paid broker fees on the full deal I assume?  Maybe a credit back from tenant?", "replies": [{"id": "j11m1yi", "text": "I was lucky enough to find the tenant without a broker so that keeps that area pretty clean.  Good to consider for next time though for sure!", "replies": [], "depth": 2}], "depth": 1}, {"id": "j118bz3", "text": "Maybe you would consider an [assignment of lease](https://www.contractscounsel.com/t/us/assignment-of-lease) esp if the terms for the new tenant might be the same as for the old tenant (as in same use with same risks)? Rather than terminating the old one and drafting up a new one. \n\nMaybe folks with more experience can highlight pros and cons.", "replies": [{"id": "j11m7qk", "text": "Would love to hear the pros and cons. The new tenant is asking for a longer lease so Im assuming that means a new lease is needed", "replies": [], "depth": 2}, {"id": "j11t99c", "text": "Thank you!  This is absolutely the expected outcome.  You assign the lease to the new tenant w a new master lease in place for ensuing term.  If current tenant defaults, you gave both on the hook.  If current tenant doesn\u2019t like it, I they pay termination fee.  Tenant should pay % of LLs legals fees based on term of new lease.", "replies": [{"id": "j12t2zn", "text": "Perfect, thank you both so much! This is precisely what I was looking to find on this sub! Nice to lean on the more experienced!", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "j11tceo", "text": "Did you agree to let the T sublease to this new T or are you just cutting a fresh lease? If it were me, I'd probably have the existing tenant sign some sort of lease break form to memorialize the agreement if you're inking a fresh lease. If it's a sublease don't do anything, just sign off on the sublease and be done with it. \n\n2.) In my market, it wouldn't be uncommon for the existing tenant to pay the difference between what the new rent is and what they pay if there's a deficit so you are made whole, but I live in one of the hottest industrial markets in the country. Assuming you're already past the point of being able to push for that and if so, just get the deal done.", "replies": [], "depth": 1}, {"id": "j11yiwh", "text": "Could ask for a 3 month guarantee (or something) from the old T. Not that they'll go for it, but they certainly wouldn't go for it if you never ask.", "replies": [], "depth": 1}, {"id": "j11yrdl", "text": "You could also angle for an assumption- new party agrees to assume the prior lease. You keep the prior terms (if good) New party will want to ensure they have renewals past 2 years. Are you putting TI dollars in? That would be a reasonable ask (at least in part, first 2 years amortized) from the old T.", "replies": [], "depth": 1}, {"id": "j129v0g", "text": "Assignment of lease with new approval, financials and deposits. Charge the cost of the assignment, cost of due diligence, attorney.", "replies": [], "depth": 1}, {"id": "j129wxi", "text": "My lease as a renter simply has if I sublet a space or even sell the business, that person goes under review like a new tenant for the landlord. Seems like you're in a fair spot and just do your normal checks for the new tenant so that they are financially sound but try to charge for your time and paperwork. Any lease holder knows they are losing money ending anything early, literally anything.", "replies": [], "depth": 1}, {"id": "j13xdea", "text": "First of all, good work.  Second of all, yes, you need a termination agreement with a nice discounted fee for your trouble!", "replies": [], "depth": 1}, {"id": "j14ummz", "text": "These immature people who make derogatory and ignorant statements and then block the person they are attacking have nothing useful or informative to say about the real world.  \n\nIn business everything is about negotiation.  Contracts are broken quite often and the best outcomes are negotiated resolutions.  \n\nLacking a termination clause ignores the reality that leases are terminated early and seldom does the tenant pay the full remaining rent. Without a termination clause, the landlord is left with few options. Going to court to enforce the full term of the lease is a losing proposition for all parties except the lawyers.  A well written termination clause makes it simple for everyone.\n\nThe arrogant ignoramuses who say I\u2019ve been doing it for years are really only saying they\u2019ve been doing it wrong for years.", "replies": [], "depth": 1}, {"id": "j1b3f06", "text": "So, I've had this situation once before. I forget exactly how we executed this but basically the lease termination agreement was tied to the date of the new lease Commencement. Essentially tried to avoid the case where you terminate the old lease and the new tenant walks, leaving you with a vacancy.", "replies": [], "depth": 1}, {"id": "j1mcv6j", "text": "Having your current tenant move out should be conditional on them guaranteeing the rent for the new tenant for the remainder of their term\n\nSo if your new tenant comes in and sucks at paying rent you can evict them while still collecting rent from the guarantor. Then the guarantor can go after the deadbeat for the money and you should have a no cause eviction to push through.", "replies": [], "depth": 1}]