Can we legally hold our tenants’ 2 month deposit to cover the rent in the event that we are unable to rerent it after they decide to break their lease and leave early?

UPDATED: Oct 1, 2022

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Can we legally hold our tenants’ 2 month deposit to cover the rent in the event that we are unable to rerent it after they decide to break their lease and leave early?

We are all on good terms. My husband and I are first-time landlords and our first tenant has cut bait with her new job and is heading out of state. We agreed to be flexible and work with them so that she leave her lease early so rather than mid-August, she is leaving May 1. We believe that we will rent our house again but it has been on the rental market for 2 weeks and we haven’t gotten an offer yet. When we do, we may be renting at a lower rate just to get it rented. The tenants have asked whether they can use their deposit toward the next months rent in the event that it doesn’t rent before then. Can we sign another side agreement to have them agree to this to nullify our having to return their deposit back to them within 30 days of them leaving, if it doesn’t rent?

Asked on April 29, 2019 under Real Estate Law, Connecticut


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

Do you have a written lease? And if so, is it for a defined period of time, with a definite end date? It appears that is the case (mid-August end date?) based on what you write. If that is the case, then unless you have already agreed *in writing* to let her leave at an earlier date (thereby modifying the lease by mutual consent), she is legally obligated to pay rent until the end of the lease term. If she leaves early in this case, you can apply the deposit to the rent she owes but has not paid (e.g. May, June, July, part of August, in this example), subject to if you re-rent it right away and don't suffer a loss (e.g. re-rent for at least as much as she paid), you'd have to then return the money to her (you can only keep the deposit to offset your loss under the lease, so if you don't suffer a loss, you return the money).
However, if had a written month to month lease, an oral lease, or an already-expired lease, she is a month-to-month tenant, may give you a month's notice she is leaving and owes nothing past the notice period. Or if you agreed in writing to shorten an existing lease and let her out early, she does not owe anyting beyond the new, mutually agreed-upon date. In these cases, she may voluntarily agree to let you keep the deposit (if she does, get it in writing!), but does not have to.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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