Can a landlord terminate a lease before it begins?

[Alexis F.]

My husband and I are landlords in California. We have a tenant that signed a lease agreement and gave us a security deposit. After seeing and committing to the property they are now making several demands, cosmetic and not functional, and we are trying to rent the property "as is". We have offered to terminate the lease and return the security deposit if the property does not meet their needs but they are declining since they have already made arrangements to move out of their current residence. Are we legally allowed to terminate the lease without a mutual agreement as long as we return the security deposit? Any advice you can give on this matter would be greatly appreciated.