IF THE LEASE WAS SIGNED BUT THE TENANT NEVER MOVED IN
Once the tenant signs the lease, it becomes a legally binding contract even if they never pick up the keys or step foot inside the unit. In this case, the tenant is in breach of contract and may still be liable for rent.
WHAT HAPPENS NEXT DEPENDS ON YOUR LEASE
If Your Lease Has an Early Termination Clause
If There’s No Early Termination Clause
You may hold the tenant responsible for rent through the end of the lease term. However, most states (except Arkansas) require landlords to mitigate damages by re-listing the property and trying to find a new tenant as soon as reasonably possible. If you re-rent the unit within two months, for example, the tenant would only owe rent for those two months. You may also be able to recover costs related to advertising the rental or lost income, depending on your state’s landlord- tenant laws.
Some leases include an early termination fee, such as one or two months’ rent. If clearly stated, you may enforce it. However, security deposits are typically intended for damages or unpaid rent, not early termination fees unless your lease clearly says otherwise.
PROTECT YOURSELF GOING FORWARD
You can’t stop a tenant from backing out, but you can protect your investment with a few smart steps:
• Include a clear early termination clause in every lease.
• Use holding deposit agreements if you’re reserving a unit before a lease is signed. Put in writing whether the deposit is refundable and under what terms.
• Document everything including emails, signed leases, and written notices from the tenant.
• Remind tenants in writing that they remain responsible for rent until the unit is re-rented, per your lease and applicable laws.
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