Question: I had prospective tenants sign a one-year fixed-term lease and pay the security deposit. The lease doesn’t start for another two weeks. They just called stating that they are moving out of state, will not be moving in and are reneging on the lease. What are their (and my) obligations?

Answer: When a tenant has executed a lease, but decides not to move in, it is, from a legal standpoint, the same as any other premature lease termination.  The tenant is on the hook for the rent for the remainder of the lease term, as it comes due, subject to the landlord making good faith efforts to re-rent the premises. 

You should get a written statement from the tenant confirming they will not take possession and that you are free to rent the unit to someone else: This provides you with confirmation that the tenant has breached the lease and is not going to show up later expecting to move in.  This allows you to make the unit available to someone else and minimize the rental damages the breaching tenant will have to pay.  

Since the tenants aren’t moving in, the 21-day period to return the deposit began when the tenants notified you of their decision not to occupy the unit. You can deduct any rent that comes due prior to the end of the 21-day period from the deposit (unless you have a new tenant paying rent for any of those days – you can’t collect double rent).  

Of course, you can also enter into an agreement with the tenants for something different than what is described above.  For example, you could agree that the tenant may pay a sum equal to a couple months’ rent in exchange for being released from further obligations under the lease. CAA has created a premature lease termination agreement that can be used for this purpose..