House under contract - how to handle a unique lease situation?

[Nate Chucta]

Little background before my question....We have a house under contract that is a student rental (closing date should be around 4/7/2017).

The current students' lease runs until 7/30/2017.  The seller has a new group of students lined up and is going to have them sign a lease that starts 8/1/2017 and runs until 7/30/2018.  We are asking the seller to hold off so that we can screen them ourselves, but he is  refusing.  He doesn't want the sale to fall through and then have his new group of students sign elsewhere.

We are putting in a clause that allows us to back out of the sale if we don't approve of the new group of tenants.

Now the question:  Do we have to honor the new lease (which starts 8/1) if the new tenants do not pass our screening?  Would it be possible to return their security deposit and sign someone else since the new lease doesn't start until August?

Thanks in advance for any help or advice!