I am a listing agent. Tenant signed a lease, paid deposit and first month rent. Contract effective today and I handed a key to them. One hour later, they called to back off the contract. Do I have to return them rent and deposit?
Sounds like you have a legally binding contract. However not being an attorney nor having all the facts I can't provide legal advice. I would consult with an attorney or the TREC legal Hotline for guidance.
Reality based Realtor advice: in our business of housing people we have situations that are not always clear or rational. It's due to our human condition. Seasoned agents will tell you working with the emotions of the client is often the most challenging. While at times unnerving, this fact will keep us in business as internet based companies continue unsuccessful attempts to dehumanize this industry.
In your case a simple question: why? What happened. There's a reason. Just ask. A sickness, Job loss, failed marriage, relationship breakup, bad dream? There is likely a "human" reason for their attempts to terminate in such an irrational way. The answer may influence your course of action. Who is the injured party? Who suffered a loss? You will likely still get paid commissions when it is leased to another party. The owner may miss out on a months rent or so, but in today's rental market post Harvey, it should lease fairly quickly. Good luck.
I would call the TREC legal hotline. They have attorneys that will advise you. They technically sound like they broke the lease, I'm not sure what happens to the deposit. It may be stated in the lease as well, what typically happens when the lease is broken. Hope this helps!