Existing Condition: Early termination with or without penalty?

[Shane Benner]

I recently bought a triplex. One of the units had mold growing on the wooden window sill in the bathroom. I negotiated the cost of the repair at closing knowing the whole bathroom needed renovating.  The unit has a tenant in place, 6 months into a yr long lease.  The tenant signed the lease with the current conditions in place with no documentation for repair (even though claiming a verbal from previous property mgmt company to repair, I am checking with them). I have agreed to repair the bathroom and prorate the rent for the time the tenant is out of the property. The tenant has asked to terminate their lease because of the conditions, stating they are unhealthy for her and her pet.  

Understanding the conditions were in place when lease was signed do I allow an early termination with or without penalty? The penalty is one month's rent.  Also, I agreed to prorate the rent while removed from the property, am I a responsible for anything else (i.e., temporary housing)?  There is nothing in the lease suggesting this, just covering my bases.

Anything else I should be thinking of? Thanks.