When a tenant changes his mind about renting from you before he’s moved in, what does that mean for you, the tenant and the rental property?

Perhaps the tenant got notice of a job transfer, encountered a family emergency or simply got cold feet about moving into your rental property.

We actually discussed on our podcast a real life example of a tenant wanting to break the lease before moving in. You can listen in to that to hear how that story progressed.

It’s important for the landlord to document everything, especially the early termination letter.

No matter what the circumstances, sometimes tenants change their mind about occupying a unit even before they move in.

Learn what both of you are legally obligated to do when this unusual situation occurs so you can minimize the financial impact.

You can grab a free copy of our early termination letter here.

Signed A Lease but Changed My Mind

Once the rental lease agreement has been signed, the landlord and the tenant have entered into a binding contract, whether the tenant actually occupies the unit.

If a tenant signed a lease but changed their mind about moving in, you must treat the notification as his intent to break the lease agreement.

Ask the tenant to provide a written 30-day notice for your records that he will be breaking the lease. Explain to the tenant that he is legally liable for rent for the entire lease agreement; however, you will try to re-rent it as soon as possible as part of the good-faith effort required by most states.

The tenant is responsible for paying rent until your property is rented out again, whether he is physically present at the unit or not.

This is What Security Deposits Are For

The security deposit (generally equal to two or three month’s rent) is made for situations like this—to compensate you in the event of unpaid rent.

Because most landlords require tenants to pay the security deposit at the same time the lease is signed, it can help bridge the income gap between your tenant’s first few months of rent.

If you have collected the deposit from the tenant, you and the tenant have two options:

  1. You keep it, apply the security deposit toward rent owed until the property is re-rented, and then send the unused portion back to the tenant. The tenant doesn’t pay rent unless the rent owed exceeds the total deposit. This route is risky because it may be difficult to collect or sue for rent from the tenant after the security deposit is used up.
  2. You set it aside and the tenant pays rent each month until the property is rented again. Then, you send the deposit back in full, since there won’t be any damages to the unoccupied unit. This route is safer for you because the tenant has the incentive to pay the rent in order to get the security deposit back in full. If the tenant fails, you can deduct rent from the security deposit anyhow.

3-Day Right to Rescind

When the tenant doesn’t get his deposit refunded immediately or wants to give you an earful when you stand your ground on rent responsibility, he may invoke a “right to rescind.”

This is referring to a consumer protection law that requires financial lenders to allow borrowers to back out of a loan under certain circumstances after three days.

Unfortunately for the tenant, this right does not relate in any way to lease agreements and rental properties.

If the tenant tries to convince you of this policy, go ahead and debunk the notion that there is a right to rescind or cancel a lease agreement within three days.

Summary

When your tenant wants to terminate the lease agreement before occupying the rental property, you can work with him to minimize the financial impact for both of you.

As the landlord, you are entitled to keep the security deposit, and are entitled to collect rent until the unit re-rents.

However, it is your duty to minimize the time it takes to re-rent and find a replacement tenant.

Landlord Calls In About A Tenant That Wanted To Break The Lease Early

On our podcast “RentPrep For Landlords” we dive into different issues that landlords call our company about.

In episode 164 we discuss a conversation where a landlord had a tenant that wanted to break the lease early.

Subscribe: Apple Podcasts | Android | Google Play | Stitcher | TuneIn | RSS

FAQ around Early Termination of Leases

How long after signing a lease can you back out?

Unlike the lemon laws around cars where you have a grace period to bring a car back. Once a tenant signs a lease you’re contractually obligated to the rental for the lease period. You can try and negotiate with the landlord on leaving the lease early.

Backing out of a lease after signing?

There is no flip of the switch for backing out of a lease after signing. The best course of action is to clearly communicate to the landlord why you’re considering backing out of a lease after signing. The landlord is legally entitled to the rent you’ve signed on for but that doesn’t mean they will try and collect. Some landlords may work with you or even let you off of the lease if they have other suitors waiting.

Can you cancel a lease?

A lease can be canceled if both landlord and tenant agree to the terms. Sometimes a cash for keys agreement is used in situations where a landlord is trying to evict a tenant. This can be used in reverse where a tenant promised a cash buy out from their lease. Perhaps one month rent to give the landlord time to find a new tenant. Be sure to get this agreement in writing.

Signed lease but never moved in

A lease becomes a contract when it is signed by both the landlord and tenant. If you signed a lease but never moved in it has no bearing on the contract. The same way if a sports player signs a contract in the offseason but has yet to play for that team, the team and player are contractually bound to one another. You must communicate as early as possible to the landlord that you’re not interested in moving in and would like to break the lease. The earlier you communicate this the better your chances are of breaking the lease without penalty.

About the author

I started RentPrep in 2007 and our mission is to pull the stress out of being a landlord.

We do this by helping you find the best tenant and providing educational resources along the way.

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Comments

  1. Stephen White

    If you signed the lease then you are bound to the terms. Your best bet would be to approach the landlord immediately and explain that you no longer want the unit. But you are risking the possibility that the landlord will try to enforce the agreement.

    These situations are touchy and some landlords are more lenient than others. But the bottom line is that you signed the agreement so you are legally responsible for the terms.

    Most landlords will work something out if they’re given enough notice. Some will charge partial rent for the time it takes to find a new tenant. It all depends on the landlord. Legally they can hold you responsible, so walking away without paying anything would be fortunate on your part.

    • nav

      I’ve contacted the landlord, and he was a bit rude. I’m not sure what’s the outcome now, but I didn’t leave any sort of cash with him. Not even the roommates has contacted me back. I hope I’m not in for a situation.

      • Stephen White

        Of course he’s upset, but I don’t think it’s worth his time to pursue anything. Next time be sure of your decision before you sign the lease! You got away with one.

  2. Stephen White

    It depends mostly on whether they moved in or not.

    If not, then I would return any security deposit and move on.

    If they did move in, then I would give them this option – they can pay late and initiate the eviction process, which will create an eviction record that will follow them. Or they can move out to avoid the eviction process. As an added incentive, you’ll be kind enough to return their security deposit.

  3. Stephen White

    Jayla, if you signed a lease.. it’s legally binding you to the lease term. So to get out of it you’ll need to break your lease. And how your landlord responds to this will depend on the landlord themselves.

    Some, like me, would apply the security deposit to lost rent and let you out of the lease immediately so I had more time to find a replacement. I can’t imagine you’ll get the security deposit refunded in full and be let out of the lease.

    Bottom line is a commitment was made. A lease is in place to protect both you and the landlord. He couldn’t accept your security deposit and then decide to give the place to someone else after the lease was signed.

  4. Stephen White

    Did the lease start today or was he letting you in early to get your stuff in?

  5. Stephen White

    Roscoe, you signed the lease on the 27th, therefore it was in effect on the 27th. You made a legal agreement so you’d have to honor it or break it.

  6. Stephen White

    Once you sign the agreement, it’s binding. Meaning that you have to honor it. Just the same, the landlord must honor his end as well. That’s why we have agreements, to protect ourselves. Imagine how upset you’d be if the shoe was on the other foot. The landlord took your deposit after you signed the agreement and then all the sudden calls you to say that he changed his mind and is giving the place to someone else. You’d be upset because by signing the agreement he made a commitment.

    Make sense? You can ask the landlord to let you out of the lease, but he certainly doesn’t have to.

  7. Stephen White

    Katie, this is one of those rare situations where you should be able to break the lease since you didn’t move in yet. If there is a pest infestation prior to move-in, the landlord is responsible for the extermination.

    Approach this with good communication and reason. Have a conversation with the landlord and explain that you’re the type of tenant that will NEVER be happy knowing that there was a pest problem. You want peace for both you and the landlord so this situation is not ideal for either.

  8. Stephen White

    Robert, did you sign anything saying you were breaking the lease or getting let out early?

  9. Stephen White

    You can’t be evicted without good reason. I’d let them know you’re not going anywhere and ride out the lease. And don’t be paranoid about the inspection vehicle, you’ll be given at least 24 hours notice before anyone can come in to inspect your rental unit. At least that’s the law..

  10. WTBYbenz

    We just signed the lease to the apartment about 3 days before finding out the family memeber we are living with has fallin gravley ill and we are now to stay where we are to take care of them. Both deposit and rent paid in full, we even switched the light expecting to be in the apartment by the 1st. But becuase of this cercumstance we cannot fullfill our lease. we trully feel horrible about the situation and spoke to our realtor. What is the worse case senario. We are asking for at least half of our money back given that we would need to pay the bills for the house we are in now. We would be ok if they took the security deposit for the first months rent. We are worried they will try to tie us down to the lease. We’ve never signed a lease before so we are not sure what to expect. Please advise.

    Also when we signed the lease we only signed it for 4 people to live with us but it looks like i will have 2 more people that willbe staying with us tillthey get on our feet, would the leas still be valid if i need to make a change?

  11. Stephen White

    You signed the lease, so no. It’s a legal binding agreement with no 3 day grace period to change your mind, like with some contracts. Your best chance to get out of the lease is to talk with the landlord, but it all depends on his policy. He may let you out and not want to deal with a problem right off the bat, or he can hold you to the lease.

  12. Stephen White

    Roxy, you absolutely have a right to keep the deposit to cover damages (lost rent). As long as she signed the lease and agreed to the lease terms. By the letter of the lease, by not moving in and paying February’s rent, she would be in violation of the lease terms.

    Stick to your guns, these people sound like scam artists. Call the police next time they come around uninvited so you can get the incidents documented. Worst case scenario is that she tries to sue you. In which case, you could show the signed lease, along with the Police records to show that you have been harassed over the matter.

  13. Stephen White

    If you didn’t sign the lease then ultimately you can back out because there are no “terms” to be held to.

  14. Stephen White

    Um… NO, it’s not legal!!!

    I would sincerely hope that the landlord isn’t crazy enough to break a lease because he “doesn’t like” the tenant. If there was no reason to terminate the lease, he would be violating the agreement.

  15. Stephen White

    It’s a hard lesson learned as a landlord. You went outside of your normal routine, and made exceptions. If everything was done correctly, would you be in this situation? Probably not. We all make these mistakes at some point so don’t feel bad, but you can’t have your cake and eat it to. The cost for the mistake is the loss of the security deposit and a months rent. Give the money back and move on.

  16. Stephen White

    I’m not sure I’d say it was “unfair”. If you signed a lease or an agreement, it’s binding by both parties. You agreed to the terms and paid the deposit, why would the landlord be obligated to break the lease? Just remember the same lease protects you from the landlord backing out of the agreement as well don’t forget. It’s mutually binding.

    Now if the landlord wanted to give you the deposit back and move on, that’s their choice but they’re certainly not obligated to do so.

  17. Stephen White

    You need to talk with the landlord in the most reasonable, non-threatening way. He legally does NOT have to let her out of the lease if it was signed. But most landlords would understand the situation and not want to deal with a tenant that can’t pay every month.

  18. Stephen White

    Time frame does not matter when it comes to residential lease agreements. Many states have laws giving someone 3 days to back out of a contract, but not for rentals. So your only option is to reason with the landlord and ask to be let out. Otherwise, they’re not obligated to do so since the lease was signed.

  19. Stephen White

    Hmmm, depends on whether the screening process is considered complete and the lease is binding at this stage. If you haven’t technically been “approved” yet, they would have nothing to lose by letting you back out of the lease. Did you pay the security deposit yet? Or have you already moved in?

  20. Stephen White

    Of course he could break the lease and re-rent the unit. Unless there is some sort of subsidized housing situation or something making it more complicated than it has to be.

    But at the end of the day, it’s a contract that he can legally enforce. So unless you have a very compelling reason, ie. lost a job, moving, etc., it sounds like he doesn’t want the hassles of re-renting the unit.

  21. Stephen White

    Once it’s signed, it’s enforceable. You can certainly ask the landlord and see if they’ll let you go month to month. You definitely have a better chance of negotiating after your first least term was fulfilled so I’d say there’s a good chance.

  22. Stephen White

    Unfortunately there’s not a whole lot you can do. You are the lease holder, and only subleasing, therefore you would be responsible. Even if the person you subleased to is the one being unreasonable. The property owner didn’t have an agreement or terms with her, only you I assume. So it would your problem to deal with.

  23. Stephen White

    I would give the new tenants the option to wait out the turnover first. If they don’t want to then I would refund any deposit and terminate the agreement.

  24. Stephen White

    Ken, I’m with you, they shouldn’t have bound the rental agreement without a co-signer… especially considering its their own policy to have a co-signer. My advice might be to act as if the agreement was void from the beginning because of a lack of a co-signer.

    Now, lets look at the situation from the point that you’re at now with everything.. they are holding your son to the lease. In any court, regardless of state, you’ll never be charged more than 2.5 months worth of rent. Some of that would be covered by the security deposit obviously. So worst case scenario, you’ll pay for a few months of vacancy.

    But going back to the co-signer policy, I don’t think they can hold the agreement up. They should be more than happy to walk away with a security deposit that they don’t deserve. I believe in court they’d lose even the security deposit and your son can claim he was under the understanding that he needed a co-signer and assumed the agreement was void. So it might be a sacrifice to end things where they are and not waste everyone’s time to just walk away from the security deposit if they agree to end any collection efforts. Otherwise, I’m confident they’d lose a judge’s decision, and therefore would have nothing to show for their stubbornness.

    • Jay Smith

      ” In any court, regardless of state, you’ll never be charged more than 2.5 months worth of rent.” Could you clarify the 2.5 months limit? I thought that, as long the landlord made a good faith effort to re-lease the property, the tenant was bound to pay the entire rent for the duration of the lease.

      • Stephen White

        This is based on my experience Jay, not anything from a law book. I have been on the landlord side of many broken lease lawsuits and claims through my years owning a collection agency, as well as my time performing background checks, so I’m drawing from actual outcomes. And I have never seen a landlord awarded more than 3 months of lost rent from a broken lease. Even if they make every effort to re-rent the unit. In fact, if they can prove they made every effort, then and only then would they be awarded the higher amounts of 2 or 3 months. I have one particular case in mind that was related to a tenant who was renting an apartment above a hair salon, which she was also renting for her salon business. She abandoned the property after only 3 months to rent a competing space across the street. It drove the landlord crazy seeing her in the space across the street knowing that his rent was being neglected and he was stuck with a vacant space and a signed 2 year lease. I thought he’d have more success considering the space was partially commercial, but he was only awarded 2.5 months of the remaining 21 months on the lease. The money was never collected as that’s a whole different discussion of itself.

  25. Stephen White

    You can certainly make a good argument that you were told in writing, but at the end of the day it comes down to what is on the lease agreement that you and them both sign. So be sure to straighten anything out before you sign anything.

  26. Stephen White

    Sure, but I would give the agent a heads up so it’s not a weird or awkward situation when they bring someone by for a showing thinking the place is vacant. But if the lease is valid and your rent is paid up, it’s your place still.

  27. Stephen White

    Are you sure they don’t mean renters insurance?

  28. Stephen White

    Have you already paid the original rent amount listed in the original lease you signed? If so, and they cashed it/accepted it, I would think you can make the case that this was the agreed upon terms. Regardless of whether they signed the lease or not, accepting the payment would bind the lease.

  29. Stephen White

    Better to have the conversation sooner than later. Just approach it reasonably and be willing to accept that you might lose some or all of the security deposit if the landlord is not willing to work with you. Depending on the situation, hopefully there’s enough time that the landlord can regroup and rerent without a loss. This would make him more likely to let you out.

  30. Stephen White

    Well they can’t cash the check since it’s been cancelled, so there’s no worry there. I would explain that you cancelled the check because you were told that you could come pick up the check and you simply wanted to save yourself the trip.

    Now, just because they said come get the check, doesn’t mean they were letting you out of your lease. Unless they said they were letting you out of your lease, I wouldn’t make the assumption. I would try to talk with them and reason. But at the end of the day, you have your money and they have a signed lease. So unless they feel like pursuing the issue there’s not much they can do about it now.

  31. Stephen White

    The only situation I can imagine you being responsible for another tenant’s lease term is if you got out of your lease early, and they are charging for lost rent. With the unit being rented and them collecting rent, they can’t charge twice, so your payments would stop. But it doesn’t sound right that they’d expect your payments/lease term to continue because the new tenant didn’t work out. I kind of get where they’re coming from, but it’s a huge stretch. And I’m not sure it’s legal.

    I’d ask for clarification and if you feel that it’s unreasonable, I would consult an attorney. The last thing you want is to have a judgment against you for something you might not owe for.

  32. Stephen White

    First be sure the lease even allows for subleasing. Many landlords and property managers want to stay away from subleasing and include language against it in the lease.

  33. Stephen White

    It depends on the lease and the landlord Luz. Most leases are binding when signed and agreed to. So there’s a good chance you’ll be breaking the lease and it’s up to the landlord how they want to handle that.

  34. Stephen White

    You signed the lease so that sticks. You deal with the outlets separately, it’s not related.

    My advice is to approach the landlord with good communication and explain you’d like to be let out of your lease instead of trying to find violations that might get you out. If they want to let you out, they will. As for the outlets they’ll have to address those in time as well if they are not to code.

  35. Stephen White

    A good lesson in “you tend to get what you pay for” seeing that the rent is cheap. I understand where you’re coming from, but the only way to get out of a lease is for it to be broken, or to be let out. My advice is to approach management and explain your situation. If that doesn’t work you can scour the lease and look for something that connects the dysfunctional gates or lack of security to a breach. In other words, your lease specifically states these amenities will be provided to you, and obviously they are not currently.

  36. Stephen White

    Probably not Mike. Unfortunately you signed the lease and agreed to the terms, I can’t see a change in management creating a loophole in any way.

    I understand your concern though. Part of me wants to say don’t immediate jump to conclusions that things are going to now be awful. Chances are if the ship was ran right by the other company, a new driver in the seat (so to speak) shouldn’t make a big difference. But then again I’ve heard enough horror stories to know there’s certainly a chance things might take a turn for the worse, as feared.

    My best advice is to be open about the problems noted online. Don’t let it be the elephant in the room. I’d approach them and say “hey I’m concerned about some of these things I saw from your reviews, can you help me understand how we’re not going to have the same problems..” Or something along those lines, just to open the conversation. Unfortunately many property management companies aren’t even aware of the damage bad reviews are doing to them. Hopefully when it’s brought into the open, they can address some of the potential concerns and avoid future problems.

    Maybe this is just me being optimistic, but you can’t assume the worst based on reviews that you likely don’t know the whole story. Or if anything was done to address the issues and complaints.

  37. Paris Roach

    Hi Stephen I just sign a rental lease and I never got to see the rental property until after the lease was signed. There were contingencies that had to be stated before processing the application which I had none but I thought the rental place would include painting between Tenants. Now I had to request to see the property and it needs to be painted which they will not paint because I stated no contingencies not to mention after I signed the contract which I had to do within 3 days of approval the place wasn’t ready to be showed to the public. Also I never received my copy of the lease. Help what rights do I have?

  38. Silver

    While all of the points here are true as discussed by Stephen, I think the author encourages the landlord to exercise their right to the maximum extent for their benefit. For landlords, Stephen’s advice is great. But for tenants, I will suggest looking for other advice on how to pressure your apartment management to work with you if you have unexpected events pop up that causes you to need to break the lease. In my past experience, there are way too many apartment managers who are unwilling to work with honest and well intentioned tenants on unexpected circumstances, and I hope that the culture is changed. I sincerely think it is the manager’s best interests to work with tenants instead of simply saying this is policy, bla bla bla. Don’t get me wrong, I understand that the tenant needs to be fair to the landlord too. But the landlord often has much more power already, and them throwing their weight around just because they can sometimes disgust me a lot. You need to recognize that you can always stick to policy, but if you are being an a-hole and show zero empathy to a situation when the tenant is proposing an outcome where you are still reasonably compensated, you should allow it instead of saying ‘we can’t do this per policy’. If not, you can always expect complaints from tenants on various platforms, such as apartment rating websites or just giving you a bad word of mouth reputation. I encourage tenants to consider their options based on fairness to both yourself and the landlord’s interests, don’t just accept it just because it is in the lease because too often than not, landlords just make it as restrictive as possible without a second thought and tenants are not able to fight any of it because they are unwilling to read, to question or to negotiate, which is what led us to more and more unreasonable clauses in rental contracts today, just because the landlord is able to put it there and enough people are willing to accept it without reading it or questioning it. Be aware that whatever you propose must be reasonable though, and does not put the landlord in a spot where they may be losing money because of the proposition – that should not be your intent as a well-intentioned tenant. Read your leases and understand it, ask for deviations to make it as favorable for you as possible before signing, or to establish it as a contract of adhesion if they refuse to negotiate (take it or leave it contract) so that you are as well protected as possible if something crazy unexpected occurs. Tenants, stand for your rights, for both yourself and your fellow renters. Promote fairness in the rental world and don’t be a silent victim and accept everything without negotiating.

  39. Alexis

    I signed a lease in Missouri and was unable to take possession of the property on the agreed upon date. The toilet was not installed and there was an awful spell, potentially mold. We do not have time to fully move again before our current lease is up so we just want to renew it instead of going to this new place. The rental company wants to move us to a different unit in the same complex, but I am still wary of the conditions of the second one since of first one were bad. I am willing to give up my deposit but don’t know if I can get out of the lease since we were unable to take possession. If you have any advice I would appreciate it.

    • THUVARAKI BALASUBRAMANIAM

      Hello,
      I have just arrived to Texas before 1 week for my higher studies. I actually want to break the leasing, because all my friends are living in another apartment. The moving date of signed apartment is Aug 18th. Yesterday I have given notice to the landlord that i will not be able to move in. He acted rude and asked me to pay 250$ of cancellation fee and to find someone for replacing the same apartment number. When I signed through online, Landlord has not signed yet. Even though I have signed, they have not yet sent me the confirmation letter. Now they are threatening me to do the above penalty. Since I’m new to this place, and I do not know anyone, how can I find someone. Can Anyone tell me what should I do in this situation. ( What if I do not come to US and still I am in my home country)

  40. Rammy

    Hi there,
    I have signed a lease for 1 year effective Jul 1st and paid the security deposit along with 1 month rent but my landlord won’t give me the keys, everyday he would make an excuse with different reasons so I extended the lease with my current landlord after waiting for 3 days, with a fear in mind that where would I go after June 30th if he refused to provide the keys. Now that I told him that I have extended
    the lease at my current place, he said he will sue me and I wold be responsible for the whole year rent.
    Please advise!

  41. Eliya Hakim Moully

    Hello,
    I signed a lease basically yesterday which begins in 3 weeks, and still have not paid first last and security. In literally that time, I have found a better housing option for me. What are my options in terms of dropping out of this lease without legal repercussions? There is also another roommate involved who I would be leaving without a roommate.

  42. Lori

    Here’s a good one, my daughter signed a lease with two other girls and my daughter and another roommate had to have co-signers. Interesting thing the co-signers didn’t sign the lease. They signed two weeks ago, we have been asking since then for a copy of the lease and still have not received anything. I do not know the terms, who much is owed. As a co-signer am I not entitled to that information. Now I also learned my daughters potential roommates has bedbugs, so I want to cancel and get out of lease

  43. Jennifer

    I gave the first months rent and deposit to management company to rent a home i havent sign the lease until tomorrow can i get my money back i found a better place

  44. Colleen R Moore

    What happens if someone signed a lease but hasn’t paid anything yet and now wants to back out of the lease?

  45. ANDREW I MAGLEBY

    What happens if a lease is signed between the property management company and a party and the owner of the property lets a different party move in without consulting with the property management company. Which party has the legal right to move in? Deposit has been paid to the management company, but not first month’s rent.

  46. Zelda

    I signed a lease but unable to come up with the security deposit will I still be bound to the contract .

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