This is correct, however you also have to look at the spirit of the agreement overall. In cases like this, penalty amounts are often selected to be of an amoun

This is correct, however you also have to look at the spirit of the agreement overall. In cases like this, penalty amounts are often selected to be of an amount that discourages unreasonable behavior, enforceable (and by extension payable by the other party), and with the idea that it would be an exception event, not a continuous event. To use a sort of residential analogy, if you have a wild party and your carpets get stained from spilled drinks and dirty shoes, you can probably give them a good cleaning and they'll be almost like before, no noticeable wear unless you really look for it. Overall, the carpet would still be good for its expected lifetime of say 10 years. But, do that every weekend and the carpet will need to be replaced within a year. Property rental agreements (and prices) have all kinds of assumptions in them. If the agreement is based on the idea of one tenant moving in, staying for a bit, maybe having family over during the holidays, and then moving out it would be structured a lot differently than a tenant who wants to be a junior landlord.