The fee or liquidated damages required to execute an early termination.
By Angel Campa, Founder · Updated March 2026
The termination penalty determines whether the early exit option is financially viable. A penalty equal to the remaining rent obligation effectively negates the option's value. Typical penalties range from 3 to 9 months of rent plus unamortized TI and commission costs. On a $30,000/month lease with $150,000 in unamortized TI, the penalty could reach $420,000 -- still far less than 5 years of remaining rent at $1.8 million.
In the "Termination Option" section, usually stated as a formula: X months of base rent + unamortized tenant improvement costs + unamortized leasing commissions. May require advance notice of 6 to 12 months.
Lextract uses a combination of AWS Textract OCR and Claude AI to identify and extract the termination penalty from your lease PDF. The AI searches for all pages of the document, then assigns a confidence score based on OCR quality and extraction certainty. Fields with lower confidence are flagged for human review.
Has Renewal Option
Indicates the presence of a contractual right to extend the lease term.
Renewal Terms
The specific parameters of the renewal.
Renewal Notice (Days)
The deadline prior to expiration by which the tenant must exercise the renewal.
Has Termination Option
Indicates the right to break the lease prior to the natural expiration date.
Right of First Refusal
Indicates a ROFR on specific adjacent or building spaces.
Right of First Offer
Indicates a ROFO to lease space before it hits the open market.
The penalty usually includes: (1) a specified number of months of base rent (3-9 months), (2) the unamortized balance of the TI allowance, (3) the unamortized balance of leasing commissions, and (4) the unamortized value of any free rent concessions. Some leases simplify this to a fixed dollar amount.
The TI allowance is amortized straight-line over the initial lease term. If the tenant terminates after 5 years of a 10-year lease with a $200,000 TI allowance, the unamortized balance is $100,000 (50% of the original allowance).
A legal reference guide to commercial lease renewals and terminations. Covers notice periods, option types, holdover provisions, and negotiation tactics.
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