My question is, what are my legal options to recover money from my current tenants assuming I can't get the townhouse re-rented and if you've been in this situation, how have you handled it?
For starters, you're screwed.
If you initiate any sort of action before they move out then they'll leave the place in crappy condition and may even allow it to be vandalized. (Imagine the effect on you if they mailed you the keys and walked away leaving the front door ajar.) So until you actually change the locks, I don't see that you have many options now that will keep you from losing lots of money/effort/time later.
I don't know your local landlord law, but if it puts most of the rental rights in the tenant's hands then you're doubly screwed. You won't get far with the legal system when you're Snidely Whiplash throwing out unemployed widows and starving/shoeless kids in the middle of Midwest winter.
I think it's far more productive to focus your energy on finding a new rent-paying tenant and to leave the former tenants' legal actions until later (if ever).
You've reminded the tenants of their lease's legal obligations, so the next step would be to arrange the time when they want to walk through the place and turn over the keys. It might be a good idea to show up with a camcorder to document the property's condition... more for the effect that it has on the tenant's behavior than for any legal documentation purposes.
If you're asked about the security deposit then I'd tell the tenants that you're going to handle it IAW the lease, including any property damage. (Hawaii landlords have, IIRC, 14 days to return the tenant's security deposit to allow for contractor's cleaning & repair estimates.) Tell them they'll have their answer after they've moved out and turned over the keys and you've finished the inspection. Of course you're going to keep every penny of their security deposit as a down payment on the foregone rent in the remainder of the lease, but there's no reason to taunt the tenants in person with that info.
Once they're out then you're changing the locks, prepping the place, and spending all your time on getting new tenants. I'd wait until the last possible legal moment to mail the tenants your letter explaining that you're keeping their security deposit as partial satisfaction of the money they owe you IAW the lease. But I wouldn't negotiate or threaten-- just tell them what you're doing and quote the applicable lease terms. Hopefully they're too busy moving or seeking employment to bother sending over cousin Vinnie to trash the place.
While you're waiting for the phone to ring you could total up how much they owe you and then think about whether you want to be compensated or whether you want to be happy with righteous legal approbation. If you rent to a new tenant within a couple weeks then you might as well drop the whole issue because a court would find that you didn't suffer any actual damage, despite the tenant's violation of the lease terms. It's all the compensation you're likely to get.
Otherwise you'll spend a lot of time and money finding lawyers, filing paperwork, and obtaining judgments that will probably never be paid... and even if some miracle paid it then you'd be endorsing the check right over to the lawyer for their legal fees.
You could file a negative credit report with the agencies and Choice Trust. You could also hope that someday you'll be able to extract your karmic vengeance when you're contacted by their prospective new landlord to provide a reference. But I wouldn't waste time on these actions until you had a new tenant's check clear your account.
I guess the "good" news is that [-]you'll be able to document less income on Schedule E[/-] they've decided to move out instead of stringing you along on late rent or even a possible eviction.
Perhaps you should commiserate with her about the economy, tell her you've appreciated her tenancy, and offer her $150 cash (or a half-month's rent, or whatever's appropriate) if she finds you a tenant who signs a one-year lease before Christmas...
