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Tenant signed a lease and now does not want to move forward with lease but wants his money back.

I have a tenant who signed a lease on May 24, 2012 for June 1, 2012 for a year.  He put down the security deposit and 1st month rent.  He notified me on May 30th that he is no longer going to be able to move forward with the lease.  He wants his security deposit and rent back.  I have lost the opportunity to rent the place to other individuals.  I was trying to be generous and was going to return him part of the money if he would sign a mutual release form.  We were suppose to meet yesterday to sign the mutual release but I did not have the money with me.  He did not want to sign the mutual release form.  He was supposed to call me.  So far he has refused to have phone conversations and he is only wanting to have email or text communication.  It is June 1, 2012.  I have a signed lease that I put together through EZlandlordforms.com.  We are in Texas.  I know the lease says it is a legal document.  It does not specify if the security deposit or 1st rent money can be returned if he decides not to move forward with the lease.  Has anyone had something like this happen?  How did you take care of it?  Do I have the right to keep the security deposit and 1st month rent or do I have return it?  I had to spend a lot of more money to get the place ready for him since he wanted the property asap. Now he does not want it.  I do not know if I am suppose to go to report the incident to court.  I really would love to get some help from other landlords that have experienced this.  I will greatly appreciate it.  Margarita

A landlord who receives a security deposit or rent prepayment for a  dwelling from a tenant who fails to occupy the dwelling according to  a lease between the landlord and the tenant may not retain the  security deposit or rent prepayment if: (1)  the tenant secures a replacement tenant  satisfactory to the landlord and the replacement tenant occupies  the dwelling on or before the commencement date of the lease;  or (2)  the landlord secures a replacement tenant  satisfactory to the landlord and the replacement tenant occupies  the dwelling on or before the commencement date of the lease. (b)  If the landlord secures the replacement tenant, the  landlord may retain and deduct from the security deposit or rent  prepayment either: (1)  a sum agreed to in the lease as a lease  cancellation fee;  or            (2)  actual expenses incurred by the landlord in  securing the replacement, including a reasonable amount for the  time of the landlord in securing the replacement tenant.
I advise all new perspective tenants that if they sign a lease with me, say in May but are not able to move in until July of the same year, that if they sign the lease and provide me with the security deposit and first month's rent and then decide to break the lease prior to the move in date, I will refund them the first month's rent but not the security deposit (mind you, my security deposit is the same amount as one month's rent, so essentially the tenant is providing me with two month's rent upfront). I inform them that they will lose the security deposit because that is time I lost of possibly getting a new tenant in the place sooner who would have stayed for the full year. Hope this helps.
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