Legal Question in Real Estate Law in California

Re: breaking a rental lease

Probably not; remember, the purpose of the deposit is to protect the landlord against losses, and so far you haven't sustained any quantifiable financial injury.

I suppose, however, that you could exact a new consideration for the new contract; the lease with the remaining student would be what is called a "novation" (replacement of an existing contract with another) and since the departing students receive a benefit from the novation (release from their obligations on the old contract) they can be asked to pay something. However, if they were to refuse and just move out, there would be no novation, but you'd still have no loss upon which to sue.

I think the practical solution is to retain the same overall amount of money as a deposit, without regard to which tenant it comes from, and let the four of them work it out; but be sure it is understood that when the lease is up you can and will make the entire refund (less appropriate deductions, of course) to the one student who remained.