Hello,

Does anyone know specific details about a landlords obligation to mitigate damages on a residential lease? I have been renting a house in California in which I signed a 1 year lease agreement. I recently terminated this lease early (4 months remaining on lease term) as I found a home to buy. I understand it is a landlords obligation to mitigate damages and it does not seem to me that she is making good faith effort to do so.

There are two particular issues I'm looking for clarity regarding

1) The landlord is simultaneously holding the house for sale and for rent. The landlord has a clearly stated preference to sell the house and believes that the act of holding the house for sale is enough of an effort by itself to mitigate of damages? Is this true?

2) Although the landlord hired a rental agency to re-rent the house, she is making it very difficult to attract new tenants by only offering a month-to-month lease with no minimum guarantee of time. Not even to fulfill the remainder of my agreement through end of year.

Additionally, she is expressing to tenants that she will continue to hold house for sale if they were to move in. This has dissuaded many qualified tenants that have expressed interest from becoming replacement tenants as they could be forced to move within 30 days.

Are her actions considered "reasonable attempts to mitigate damages"?

Any thoughts?

Interesting question, from a philosophical viewpoint. It sounds like the landlord is trying to get out of the landlord business by selling the house and making some profit that way. (Not a bad idea, especially in California!) Now, if you had stayed in the house to the end of the lease, it is possible that she could have done the same thing at the end of your lease, and you would have had to pay rent up to then. By breaking the lease, she may have been able to put the house on the market earlier. But at the same time she is supposed to try and mitigate your damages by renting again as soon as she can. But if she doesn't want to be a landlord anymore, you have effectively cheated her of 4 months rent that she is going to have to either eat, or else potentially get into another lease with a tenant, in which case she is going to have a harder time selling her house.

So, it seems to me that a reasonable response would have been to offer the landlord a buy-out (say two month's rent) to be let out of the lease. That would limit your damages, and the landlord would be free to do whatever she wanted with the house the day after you left.

I'm sure others will be along with a more legal answer.

I fully concur she has every right to sell the house however, it can not come at the expense of failing to make good efforts to mitigate damages in the rental agreement. It seems to me that she is unduly relying on my rent payments in order to test the housing sale market and essentially have no risk of loss income. That is not fair.

I've already offered to settle but the landlord is quite self righteous and unwilling to compromise.

There is no requirement that they can not sell the house. And if they are advertising it for sell, hiring a rental company there is no requirement they offer a long term lease.

I do believe that they are doing all "required" elements, maybe not in good faith, but to the letter of the law.

Fr_Chuck,

I concur that they can sell the house but my contention is that does not constitute mitigation of damages for a rental agreement. Let me pose this question... if they double the asking price for rent is that a "reasonable attempt mitigation"? If you don't allow someone else to step into the lease to fulifill the end of term (4 months) but rather only offer month-to-month, I believe that is changing the terms of the agreement and thus those obligations in the agreement are no longer valid.

Thoughts?

One more thought... good faith efforts to mitigate damages seems very open to interpretation so how do you bridge that gap to the letter of the law?

Wineguy,

I believe that gap is bridged by a judge. The ruling they would make in the event of a law suit. If the unsuccessful party in the suit disagrees with their ruling there are appeals processes (is that a word?)available.

As I see it you have 2 options...

1. Stop paying rent if you don't believe she is making an honest attempt to mitigate damages. If she sues you for the rent that would be your defense in court.

2. Pay the rent and sue her to get it back based on the contention that she is not making an honest attempt to mitigate damages.

I can completely understand where you're coming from on this. But if she has a "for rent" sign in the yard and/or any sort of advertising running for the unit running I think you'd have an extremely difficult time convincing a judge that she's not making an attempt.

What is the amount of the rent? How far are you into the 4 month period (sorry if you already said)? And what if anything have you paid her so far?

Karla in TX

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Originally Posted by wineguy25

I fully concur she has every right to sell the house however, it can not come at the expense of failing to make good efforts to mitigate damages in the rental agreement. It seems to me that she is unduly relying on my rent payments in order to test the housing sale market and essentially have no risk of loss income. That is not fair.

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"Fair" doesn't really enter into this. If it did, I would say that it was unfair of you to break your lease in order to buy a house.

As to whether the landlord could raise the rent and still claim to be mitigating your losses, I'd say that they can do that as long as they are not out of line with the market rates. If you had been renting for 400/month, for example, but equivalent units are renting for $800/month, I see nothing wrong with them listing it for $800. Even though it would be much more likely for them to get a tenant if they listed it at $400. But that would be denying them the benefit of the rent increase that they could have gotten for 8 months if you had moved out at the end of your lease and they raised the price then. And that doesn't seem fair either, does it?

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Originally Posted by wineguy25

This has dissuaded many qualified tenants that have expressed interest from becoming replacement tenants

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Hello wine:

I think THIS act is doing the opposite of mitigating your damages.

excon

Froggy7

Unforseen things happen. If the landlord wants to enforce the contract then she has an obligation to mitigate the damages of the contract. That is the law. Why should she be able to attempt to take advantage of the situation to pursue better terms? That makes no sense. She is no worse of position whether I continue to pay rent or someone else does. That is my point. A replacement tenant should be able to take over the remaining 4 months of the lease.

Quote:

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Originally Posted by wineguy25

Froggy7

Unforseen things happen. If the landlord wants to enforce the contract then she has an obligation to mitigate the damages of the contract. That is the law. Why should she be able to attempt to take advantage of the situation to pursue better terms? That makes no sense. She is no worse of position whether I continue to pay rent or someone else does. That is my point. A replacement tenant should be able to take over the remaining 4 months of the lease.

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Except that they can't. Let's say the landlord's plan was to sell the place when you left. She is currently trying to get someone in for the last four months as a month-to-month tenant, which you say is not appealing to most people. But you will find even fewer people who want to take a 4-month lease. Monthly, 3-month, 6-month, and year leases tend to be the most popular. And the spots that I have done less than year leases at charged a premium in order to do it, because it is more hassle for the landlord, and it is less appealing for the renter.

Personally, she has a leasing agent trying to rent the place out. She is also trying to sell it (which, if it happens before the end of the four months, should relieve you of any obligation to pay rent). I'm not sure what else you want her to do to mitigate the damages.

And yeah, I'm coming down harder on you than her, because you knew what you were signing up for when you signed the lease. You found a home that you just had to have, and I am happy for you, but the risk of having to pay both mortgage and rent is something that you should have considered when you did that. Personally, I paid rent and mortgage for two months earlier this year because I did the math and found out that it would cost me less to just pay the rent for two months than it would to invoke the buy-out clause in the lease that I had.

I would like her to be reasonable. The act of hiring a rental agency does not constitute mitigation. It has to be good faith attempt to actually approve a new qualified tenant.

What I suggested to be fair was to offer 4 months and then go month-to-month that way our contract is fulfilled and she has total optionality after the end of our lease period We actually found replacement tenants willing to do this and the owner refused.

I didn't go into the whole history but in fact prior to our making an offer on the new house we spoke with her representative to find out if we could make an arrangement to terminate the lease early. The owner came back with a verbal agreement (through her rep) to only have us pay for the next 1.5 months, to pay rental brokers commission, and be helpful in showing the place for sale/rental. We readily agreed and moved forward on the purchase of the new house and agreed to an expedited closing based on this understanding with the landlord and what our obligation would be. She reneged on that one month later. Had we known... we would have not agreed to expedited closing or perhaps not purchase house at all.