In rental practice, one of the most common—and most frequently disputed—questions is:
“If a tenant wants to terminate a lease early, can the landlord deduct a penalty?”
Some people believe, “If the tenant terminates early, the penalty is capped at one month’s rent.”
Others think, “Whatever amount is written in the contract must be paid.”
Both views are incomplete.
In a previous article, we explained that under certain circumstances, a tenant may lawfully terminate a lease early without constituting a breach of contract.
However, what often causes confusion is the next question:
When a tenant requests early termination, under what circumstances may a landlord lawfully claim or deduct a penalty?
What Does the Law Say?
Civil Code Article 252:
“Where an agreed penalty is excessively high, the court may reduce it to a reasonable amount.”
✨ Plain explanation: Even if a tenant has breached the lease and the contract includes a penalty clause, the court may still intervene if the amount is clearly unreasonable. In other words, a landlord is not automatically entitled to collect the full amount simply because it is written in the contract.
⚖️ Legal Source: Civil Code Article 252 – Law.moj.gov.tw
Required and Prohibited Lease Terms & Mandatory and Prohibited Clauses:
“If early termination is permitted under contract, the party terminating shall notify the other at least 30 days in advance. If not notified, the breaching party shall compensate up to one month’s rent.”
✨ Plain explanation: If the contract explicitly allows early termination, the tenant must give at least 30 days’ notice. If no prior notice is given, the landlord may claim a penalty—but the maximum amount is one month’s rent.
This rule applies only when the lease already allows early termination. If the tenant fails to give the required notice, the breach is of the notice obligation, and the penalty is capped at one month’s rent.
This one-month cap does not apply to every early termination scenario.
⚖️ Legal Source: Ministry of the Interior – Residential Lease Standard Contract Regulations
When Can a Landlord Not Deduct a Penalty?
A landlord may not deduct a penalty if the following condition is met:
👉 The lease allows early termination, and the tenant has complied with the required notice period.
In this case, early termination is contractually permitted and does not constitute a breach.
Accordingly, the landlord has no legal basis to deduct a penalty.
Simply put, early termination does not automatically equal breach of contract.
The key issue is not how early the tenant moves out, but whether the tenant has violated any contractual obligation.
When May a Landlord Deduct a Penalty?
There are two situations in which a landlord may have grounds to claim a penalty.
✅ Situation 1: Failure to Give Required Notice
If the lease allows early termination but requires prior notice, and the tenant terminates the lease without giving notice, the tenant has breached the notice obligation.
👉 In this case, the landlord may claim a penalty, but the amount is capped at one month’s rent.
✅ Situation 2: Lease Explicitly Prohibits Early Termination
If the lease is a fixed-term lease and explicitly states that early termination is not permitted, yet the tenant terminates the lease anyway, this constitutes a full breach of contract.
👉 In this scenario, the penalty is generally governed by the contract and is not subject to the one-month cap.
If the Penalty Is Written in the Contract, Is the Landlord Guaranteed to Get It?
Not necessarily.
Even when the tenant has breached the lease, the penalty must still be reasonable.
If the penalty is clearly disproportionate to the landlord’s actual loss or is punitive in nature, the tenant may request the court to reduce it under Article 252 of the Civil Code.
Therefore, the absence of a one-month cap does not mean there is no limit at all—the court may still intervene.
👽 Related Read: What Is a Non-Fixed-Term Lease in Taiwan?
🛸 Related Read: Can a Tenant End a Lease Early in Taiwan? What “May Terminate” vs. “May Not Terminate” Really Means
🪐 Related Read: Can a Tenant or Landlord Cancel a Lease After Signing but Before Moving In?
🌎 Related Read: Can Tenants Terminate a Lease Early in Taiwan?
Quick Reference Table: Can the Landlord Deduct a Penalty?
Situation | Can the Landlord Deduct a Penalty? |
| Lease allows early termination; tenant gave proper notice | ❌ No |
| Lease allows early termination; tenant failed to give notice | ✅ Yes, up to one month’s rent |
| Lease prohibits early termination; tenant terminates anyway | ✅ Generally yes, per contract |
| Penalty is clearly unreasonable | ⚠️ Court may reduce it |
As the table shows, the decisive factor is not how early the tenant moves out, but how the lease is written and whether the tenant’s conduct constitutes a breach.
Conclusion
Whether a landlord may deduct a penalty after a tenant terminates a lease early does not depend solely on whether the tenant moved out early. Instead, it depends on the lease terms and whether the tenant’s actions actually constitute a breach of contract. Only when a tenant has breached the lease may a landlord potentially claim a penalty, and even then, the amount must be reasonable. A penalty written in the contract is not automatically enforceable in full, as courts retain the authority to reduce excessive penalties based on the circumstances.
