Tenant backs out of lease

[Ronnie Sparrow]

Not sure how to handle this situation. I have a signed lease for a year and a deposit of $1,600, the tenants were scheduled to move in on June 5th 2015. I get a call today and tenant wants to back out of the lease now. What should I do. The lease is a TREC lease from Texas. Do I need something in writing from them? Do I keep the deposit and put it back on the market? Do I return the deposit to them and move on?

Need advice.

[Bob H.]

The tenants definitely need to give you a notice of termination in writing, but you should not agree to simply cancel the lease. You should tell the tenants they are obligated to pay rent starting June 5 unless you find a new tenant who wants to start on that date or earlier. You also should mitigate your damages by trying to find a new tenant now. Don't return the deposit until you have a new lease signed. If the new tenant takes the property after June 5, charge the lease-breaking tenants the prorated rent for the days you have a vacancy because they backed out.

Also, if you find that you can't rent the property without reducing the rent below the amount they agreed to pay, charge them an amount to make up the difference for the term of the lease being broken. 

This make-up rent is unlikely in your situation, but I have charged it when tenants wanted to break a year lease halfway through the term, and I was forced to advertise the house in the late fall, a time that is not as popular as midsummer, when my tenants' lease started. My tenants were reasonable and seemed sincere about not wanting to cost me extra money. In return, I tried to make the early termination work with the security deposit I had already collected, and it did.

Read your lease provisions regarding early termination and replacement tenants. The TREC lease may be harsher than necessary and may envision you collecting more of a penalty than is realistic.