1 of 2 tenants wants to move out early, new lease or sublease?

[Colin Paarmann]

I have 2 tenants (Tenants A and B) that have been renting our townhome together for about 3 months. Tenant A texted me today saying he plans to move out of state and that Tenant B has a friend that would like to move in. I have an early termination clause (and fee) in my lease that I plan to remind the Tenant A about, but I am leaning towards waiving the early termination fee if the new tenant passes background screening since I won't be losing any rent.

My questions:

1. Should I structure this as a sublease or end the current lease and start a new one with Tenant B and the new person?

2. How should I handle the security deposit if I sublease? Or if I end the current lease and start a new one? There is a minor amount of damage that will need to come out of the current deposit.

Thanks!

[Colleen F.]

I agree with @Dick Rosen do an addendum.  Stating all terms remain the same except the following:  xyz.   Make sure all three sign and as for security deposit make sure the leaving tenant acknowledges that along with the release of the lease they acknowlede no security deposit refund is owed to them .