What happens when a tenant quits paying rent
and abandons the premises? Can the landlord sit back and collect
full rent for the remainder of the lease term, or does he
have to try to lease the premises to someone else?
The answer is, “it depends.”
It depends on two things. First, it depends on what the lease
says. Second, it depends on where the property is located.
If the lease itself provides that the landlord has a duty
to mitigate his damages, then he must make reasonable efforts
to find a replacement tenant. He cannot sit idle and demand
payment of the rent each month for the rest of the term without
making reasonable efforts to find a new tenant. If he is successful
in re-leasing the property, the former tenant is entitled
to a credit for the amount of rent the new tenant pays.
What if the lease contains no provision requiring mitigation
(and most do not)? Can the landlord insist on the payment
of full rent for the rest of the term without making any effort
to find a new tenant?
In many states, the law provides that the landlord has to
make reasonable efforts to lease the property to someone else
in order to minimize the tenant's damages, regardless of what
the lease says. In these states, the landlord is entitled
to recover only the deficiency in rent after deducting the
rent he receives from the new tenant, assuming he was reasonably
diligent in trying to re-lease the property. However, if the
landlord fails to make reasonable efforts to re-lease the
property and the tenant is able to show that the property
could have been re-leased, the tenant is responsible only
for the difference between the rent under the lease and the
rent the landlord could have obtained if he had leased the
What about other states? Interestingly, there are a number
of states where the landlord has no duty to mitigate
his damages. He can choose to hold the property vacant
and collect the full amount of rent from the tenant each month
as it comes due, or he may sue for the full present value
of the rent (subject to the duty to refund a portion of it
if he later re-rents the premises even though he has no duty
to do so). This somewhat harsh rule is often justified on
the theory that the tenant should have no right to impose
a duty to find a new tenant on the landlord as a result of
the tenant's wrongful behavior.
States that appear to follow this rule include: Alabama,
Arkansas, California, Delaware, District of Columbia, Florida,
Georgia, Kentucky, Maine, Maryland, Massachusetts, Minnesota,
Mississippi, Missouri, Nebraska, Oklahoma, Oregon, Pennsylvania,
Texas, Virginia, and Washington.
In a number of states, the law is not clear, or there are
cases that appear to have decided the issue both ways, including
Ohio, New York, Illinois, and New Jersey. In some states,
the courts hold that there is no duty to mitigate unless the
landlord re-enters the property and takes possession.
If your business requires you to enter into leases in other
states, do not assume that the law of every state is the same.
If possible, determine what the local law is so that you can
be fully aware of your legal responsibilities under the lease.
In addition, it is always a good idea to study the remedies
provision of your lease carefully, and to try to negotiate
a provision specifically stating that the landlord has a duty
to mitigate his damages if the lease is breached, or capping
the damages at a fixed amount.
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