Tenant wants to break lease before moving in

[Kristine Johnson]

Hello,

I received a deposit to hold a property. The prospective tenants signed a lease. Then the husband lost his job, before the move-in date, so they would like out of the lease since they cannot afford it. I am fine with that as I do not want tenants who are unable to afford the home. They have not moved in. I am willing to return the deposit and have found new possible tenants. I want to be sure I am not liable later because of the lease. How can I have the lease nullified by both parties?

Thank you for any guidance.

Kristine

[Ryan Spath]

@Kristine Johnson

You're approaching this situation thoughtfully and professionally, which is key. To formally and cleanly release both parties from the lease, you’ll want to use a document called a “Mutual Lease Termination Agreement.” This ensures both you and the tenants agree in writing that the lease is being canceled and that neither party will pursue any claims against the other later.

Here’s how to proceed:

✅ Steps to Nullify the Lease Safely

1. Draft a Mutual Lease Termination Agreement
   This should include:

   • Names of the landlord and tenants

   • Property address

   • Original lease start date and signed date

   • A clear statement that both parties agree to cancel the lease

   • Confirmation that no one will pursue damages or further obligations

   • Statement regarding the return of the deposit (if applicable)

   • The effective date of the termination

   • Signatures and date from all parties

2. Return the Deposit (Optional but Recommended)
   If you're choosing to return the full deposit, mention this in the agreement. Include language such as:
   “Landlord agrees to return the full holding/security deposit to Tenant upon execution of this agreement, and both parties agree that no further sums are due.”

3. Get All Signatures
   Make sure both tenants (if the lease was jointly signed) sign the termination form. Keep a fully executed copy for your records.