Fellow Landlords,

My tenants are trying to back out of the lease 2 days before they move in. Any advice would be great. Here's the background:

I have a 1973 SFH in Wichita Falls, TX. 4/2, 2143 sq ft on a corner lot. I am in the Air Force and was recently transferred to North Carolina. We decided to rent the house out because we've owned for 6 years and plan to return to Texas in 2 years.

We put the house on the market in late May and had a 2-year lease signed by June 7th, lease terms from 1 July 2016 - 30 June 2018, $1495/month with a $1495 security deposit. The couple paid the security deposit at the time of application, but we haven't received July's rent yet. Their credit was good, bordering on Excellent. Combined income was $95K annually. The only issue with the background check was the husband tenant had an assault charge 21 years ago, time in county jail, but no prison time.

This afternoon, my property manager called me and told me that the tenants called her today and told her that "they didn't realize their current lease wasn't up until the end of July". They are hoping that I will just cancel the lease and give them their security deposit back.

However, my PM also told me that a different realtor within the same brokerage firm received an email about midnight last night from these tenants inquiring about a different property that is only $1250/month. After my PM spoke to me about it, I told her to call the tenants and see what was going on. After a little prodding, the wife tenant stated that while she likes the house, her husband did not so he was wanting to get out of the lease and was the one inquiring about the other house. I don't know if the information about their current lease not ending until the end of July is true, but I believe it to be a lie. The reason is because at first the wife tenant tried to play it off by telling my PM "I don't know what email you're talking about, it wasn't us". But like I said, after some prodding, she admitted it was her husband that sent he email inquiring about the other house. There is already a level of dishonesty from these tenants and they haven't even moved in.

My wife and I are torn on what to do. I want to hold them to the terms of the lease until we can fill the house with other tenants, but I don't want them to go ahead and move in since we won't let them out of the lease. I would rather just do what my PM suggests and write up an agreement that they can break the lease, but it will cost them their security deposit. Financially, I can handle July's mortgage payment without them paying me July's rent, and without the security deposit, but if I don't have a rent check in August, I'll go into default on my mortgage because I have to pay for the house I'm living in in North Carolina.

Have any of you ever dealt with this? What are my options? What do you suggest we do? Let them out and keep the deposit, or hold their feet to the fire until I get a new tenant in? Like I said, I'm afraid to do the second one because of the dishonesty thus far, I don't want them to "settle" for my house and actually become my tenants for the next 2 years. Any advice would be greatly appreciated!