Do I need a termination letter for a tenant leaving a lease early?

[Nick Roth]

I have a situation where a tenant is backing out of the lease due to health related issues. They had signed a lease and as they was moving in, found out the home just isn't right for them. I have since then found a new tenant and had them sign a lease. 

Should I write up a termination letter to officially cancel the first tenant who ended up backing out of the property?

I would imagine I could just write a letter and have us both sign it? I would simply put in the letter - "As of January 28, 2023 both (landlord/myself) and (tenants name) are terminating the lease at (my rental address), effective immediately on January 28, 2023."

Is this all I need to do? or should a termination letter be more in depth, if necessary at all

Thanks in advance! This is my first rental and situation like this 

[Nathan Gesner]

Quote from @Nick Roth:

It is always best practice to have something in writing.

You should also develop a policy for terminations that includes them paying a penalty. You agreed to rent it, you spent time putting the lease together, and you probably even held it for them for some period of time. Those are expenses and you should be compensated for them.

When I approve an application, I extend an offer that requires the tenant to sign a Holding Agreement and pay a deposit equal to one month of rent. The Holding Agreement says we will hold the property for XX days (max of 14) and that Tenant agrees to sign the lease, set up utilities, pay all amounts owed, and rent the property no later than [DATE]. If they fail to follow through, for any reason, they forfeit the Holding Deposit and we put the property back on the market. If they follow through, the Holding Deposit is applied toward the security deposit, rent, or other expenses.