A potential tenant submitted an application and application fee. Once the applicant was screened and approved, he and the landlord executed the lease, and the tenant provided a security deposit along with the first month's rent.

A few days before the move-in date, the tenant notified the listing broker that he would no longer be moving in because he found a better deal. He asked the broker to send the security deposit and the first month's rent to his new forwarding address. The landlord was upset and wanted to retain the entire security deposit along with the first month's rent. Is the landlord entitled to retain the security deposit and the first month's rent?

If a satisfactory replacement tenant is not secured and moved in to the dwelling no later than the lease's commencement date, the landlord is entitled to retain the security deposit and the first month's rent.

The landlord will not be able to retain the security deposit or the first month’s rent if the tenant finds a replacement tenant satisfactory to the landlord and the replacement tenant moves in by the lease’s commencement date.

On the other hand, if the landlord finds a replacement tenant with the same conditions, the landlord may deduct from the security deposit and the first month’s rent either a sum agreed to in the lease as a cancellation fee or actual expenses incurred by the landlord in securing the replacement tenant.

This type of situation is governed by Section of 92.1031 of the Property Code.

If you have more questions, please do not hesitate to Email me or contact me at 713-589-3234 for more information.

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