Once the rental lease agreement has been signed, you and the tenant have entered into a binding contract, whether the tenant actually occupies the unit.
If a tenant changes his 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:
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.
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 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.
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.
It is the attorneys fiduciary duty to inform a Landlord the request of getting a refund for his client, who just signed a lease, but being aware that this is to be negotiated for the Landlords loss of rent involved. Real Estate Law states the Landlord is entitled to be compensated for any loss of rent incurred. To demand for a full refund from the Landlord and or the Realtor involved as well is not how it will end up if this goes to small claims court.
The Realtor earned the commission when there was ACCEPTANCE. If the Landlord wishes to refund the security amount, that is about all the tenant is entitled to at this point.
New York State Law-regarding apartments and tenants.