Apartment and Rental Properties - Tenant wants to break lease before move in

Need some advice.

Had a couple sign a year lease June 4 to rent a home starting July, they gave a deposit and were suppose to give the first months rent a week later to get the keys. The owner said they could start moving in after that and the rest of June would be free.

He called me 3 days later, said he found a better house and wants out of the lease. They never moved into the house.

Owner said she would let him out of the lease, but she would keep their deposit. He said no way, not giving her a dime, wants out. Now, the owner said, she wants to hold them to the lease until it is rented again. Any suggestions on how to handle this?

Yep, look at the lease - how you handle this should have been spelled out there.

A lease is a legally binding contract. Your lease should spell out how the agreement is to be terminated as well as how deposits are refunded.

If you are in the rental business, then you should be very familiar with your state's landlord tenant laws. Most states have these posted online. What does your state law say about deposits? Broken leases?

In Ohio, the deposit covers unpaid rent and any damages. If the tenant does not move in and does not pay rent, then the deposit is kept. The tenant is still responsible for the rent. The landlord must make a good faith effort to re-rent the home, and the tenant is responsibile for the rent until the property is rented. To collect unpaid rent may require going to court. Collecting it would likely be a challenge.

I think it's obvious that the person who broke the contract would forfeit the deposit or at least a portion of it to cover the cost associated with re-advertising and the loss of revenue because the property could not be rented to anyone else after the lease agreement was signed. Just tell them that you are sorry they changed their mind, but the deposit cannot be refunded. In fact if there is any damage to the vacant property because they left it vacant, there may be additional charges they owe.

Thanks for your responses. I have just started managing properties and this is the first time I ran into this problem. I received a call from the tenant saying he was stopping payment on his deposit and he was throwing out the lease he signed. I did contact an attorney, and went to the attorney general website, and there is no '3 day right of rescission' as he thought. He signed a binding contract and is obligated to it. The owner offered him an out, by asking him to forfeit the deposit (which is allowed in this state) to break the lease, or continue to pay rent until the property is relet. A letter went out to him yesterday, I am waiting to hear what his response is. My guess is we will probably end up in court.

If the deposit check has been deposited and has cleared the bank, the tenant can not stop payment. The tenant can throw out his copy of the lease agreement, but you still have yours.

The landlord tenant law spells out rights and responsibilities of the landlord and the tenant. It does not include right of recinsion after signing a legally binding contract and making a deposit.

Yes, you will likely end up in court. Again, if you are new to the rental business make sure you know your state's landlord tenant laws and that you have a solid lease agreement that covers all potential problems.

Wow. Of course, I shouldn't be surprised, but, yeah. A lease is a legally binding contract. The renters should definitely not have gotten to a point where they were signing the lease unless they had made their final decision. In that situation, it sounds as through the property owner is being reasonable, given the renters are breaking lease merely for their own convenience. Giving the rest of June for free was incredibly generous of them as well.

IMO, the leasers should be responsible for every month of rent in the lease term until another lease for the property can be completed, plus costs of marketing, property management, etc. If it re-leases next week, maybe that'd be less than the deposit, if it doesn't re-lease for months, considerably more.

Either way, the legal weight of leasing seems like a lesson the tenants need to urgently be taught.

Read all papers you had the leasee sign. Check that the deposit was not just for damages, but to secure the residence. That part of the paperwork will express who keeps the deposit.

The lease should have an early-out paragraph. If not it gets kinda gray here. You will have to find out what your state law is. You can look under your state's website. It may have the statutes, look under landlord / tenant law, if it's not clearly spelled out, call your lawer.

When it comes to real estate, everything should be addressed within the contract. If you come to a disagreement, it is not a choice; it will have to be cleared by the law.

Good Luck,

Minnesota landlord tenant law (https://www.revisor.leg.state.mn.us/statutes/?id=504B)
and from Minnesota's AG's office:

For Definite Term Tenancies

Procedures for ending this kind of tenancy are generally written into the lease. Tenants with a definite term lease have to pay for the entire term no matter when they leave, unless the landlord agrees to accept new tenants who would take over the remaining payments. But some term leases have provisions allowing the tenant to “break” the lease. Often in such cases, the tenant is required to pay a “breaklease” fee - a sum of money and/or the tenant’s security deposit.

Some definite term leases spell out what kind of notice is needed to end the tenancy when the lease ends. Typically this is a written notice presented 30 to 60 days before the lease ends. Often such a requirement is part of an automatic renewal provision. Automatic renewal means if the tenant does not give notice he or she can be held to an additional period of time - for example, one or two months.

But if the automatic renewal is for an extra two months or more, the landlord must give the tenant written notice and call the tenant’s attention to the automatic renewal provision. If the landlord does not, the automatic renewal provision cannot be enforced. The renewal notice must be given either by personal service or by registered or certified mail. It must be received by the tenant 15 to 30 days before the tenant has to give the landlord written notice to vacate. (127) The tenant may not use the security deposit as the last month’s rent.
learn fast or learn hard

I just caught this after I posted. You really need to understand the laws that control here.

required notice to tenant (https://www.revisor.leg.state.mn.us/statutes/?id=504B.181)

everytime I go back to the website., I see something else that is extremely important for you to know.

this is the Minn AG's site on this topic. Read it all and very thouroughly. I noticed there is some notifications you must provide to the prosepective tenants. Under "Entering into the Agreement" notice the "disclosure to the tenant section" Lots to learn and know.

ag's stuff (http://www.ag.state.mn.us/Consumer/housing/lt/default.asp)