Tenant Signed Lease, Wants to Annul lease

[Katy Logue]

Have a B property in an A area, had 3 serious inquiries within days of listing. We ended up with the property under 12 month contract on the first showing. This was 6 weeks ago for a lease that starts a few weeks from now. Tenant now wants to annul the lease and get the security deposit back.  I want to work with this tenant to find a solution as this doesn't seem like a great situation. 

My plan is to remind the tenant we have a 12 month contract and I plan to proceed with the lease (ie no promises given). Then I will work in good faith to get the place re-leased ASAP. If the new lease does not begin before or on the same date as the prior date, I will prorate the initial security deposit on a daily basis until the place is leased. I doubt it goes more than a month, but if so then I will expect another month's rent.  As soon as the place has a new tenant sign, I will then work with the other tenant that wants out and addend their lease. 

Is there anything I am missing, doing wrong / illegal, tips?