[Tempic]

I will try to keep this very short. My wife's Michigan business recently closed and moved out of the facility - with proper notice to LL. She was off-lease - it had expired months before so it was a month-to-month arrangement. BTW, the business is incorporated.

Several months after closing we got a letter from LL's lawyer demanding almost $20,000 in unpaid rent.

I questioned my wife and she admitted she hadn't been keeping up with the rent. I looked at the accounting software and found that in fact she had been behind in rent for 16 months, rarely paying the full amount and one month not paying at all, most months paying a significantly reduced amount.

Did LL register a complaint via writing or through legal counsel during the period in question? No. Did he lockout the site until the rent was brought up to date? No. Did he initiate eviction? No. Did he make any attempt to repossess? No. Did he advertise the site to find a new tenant? No. Did he put a For Lease sign in the window? No. When the lease expired did he demand to be brought current before going month-to-month? No.

On the contrary, did he continue to perform as landlord throughout the 16 month period of consistently late, insufficient and even occasional missing payments? Yes.

This seemed crazy to me that this letter was the first official notice of any problem. We offered to settle for just the security deposit he still held. He refused and has now sued us.

Is it legitimate for LL to fail to mitigate for 16 months and then expect the entire difference? Doesn't he have any obligation to act to limit his own damages? If he continued to perform without action over a period of 16 months - doesn't that imply acceptance of the payments as they were?

Are either the "failure to mitigate" or "waiver by acquiesence" defenses valid?

[LisaB4657]

I don't understand your defense of failure to mitigate. How is the landlord supposed to mitigate? Your wife's business was in the premises so the landlord couldn't put another tenant in there. What other method of mitigation is there?

I also don't see how the landlord waived his rights. There is no obligation to evict a tenant for non-payment or partial payment. Maybe the landlord made a business decision that it was better to receive some rent than to have an empty space and receive no rent at all. That doesn't eliminate his right to demand any balance that may be due.

The only thing that may help you is the fact that the business is a corporation. If the original lease was signed by the corporation, and not by you or your wife as individuals, and if neither of you ever personally guaranteed the lease, then the landlord can only prevail against the corporation.

[ScottGem]

I'm sorry but here you have a landlord who was being a nice guy, carrying your wife's business through hard times and now you want to stiff him?? Shame on you!

If the business went bust and the lease was in the business name, that's one thing. The business has no money to pay its bills. But if the lease was guaranteed by personal signature, then you owe him the money. You can try negotiating a settlement but if this comes to court you WILL lose.

[Tempic]

I'm sorry but here you have a landlord who was being a nice guy, carrying your wife's business thru hard times and now you want to stiff him???? Shame on you!

Well, that's one perspective. Here's my view: he didn't do us any favor by letting this slide. His "nice guy" actions made it easy for my wife to hide this information from me (that's a problem between her and I).

Allowing a business that is obviously in trouble to keep going deeper and deeper into debt it is not exactly altruism. Letting this go on for 16 months, even after the lease expired is a calculated risk.

He knew the business was for sale and he took a gamble that we might be able to sell it in which case he would have a new tenant on a long lease again. In the meantime he had some rent coming in - better than nothing. If he had another tenant he could have kicked us out with 30 days notice after the lease expired. There was no other tenant so he took what he could get knowing he could sue us later. Yeah - that's "nice".

We may be on weak legal ground, but don't try to tell me he was being nice. Letting it slide for a month or two is nice. Letting it slide for 16 months - even after the lease expired - is not nice.

[Tempic]

I don't understand your defense of failure to mitigate. How is the landlord supposed to mitigate? Your wife's business was in the premises so the landlord couldn't put another tenant in there. What other method of mitigation is there?

Late, insufficient, and missing payments are violations of the lease contract - he could have taken a variety of formal and informal actions even up to starting eviction. He took no actions at all to mitigate his loss.

"Duty to mitigate" is a well known concept - I'm just not sure if it applies in this case. Most examples I have found relate to what a LL does when a tenant breaks a lease prematurely and leaves the premises, or when a LL throws someone out prematurely for violating the lease. I couldn't find examples that mirrored this situation just shrugs his shoulders for 16 months and then sues.

It may be that the "waiver by acquiescense" is a more appropriate argument.

[ScottGem]

I'm not saying the LL did it totally out of altruism. But the fact is he could have cracked down and caused the business to fail even sooner. I still think you are wrong to try and stiff him.

[LisaB4657]

Late, insufficient, and missing payments are violations of the lease contract - he could have taken a variety of formal and informal actions even up to starting eviction. He took no actions at all to mitigate his loss.

As I asked earlier, what action should he take?

"Duty to mitigate" is a well known concept -

Yes, I'm very well aware of that. (You really should read the profiles of the people who are giving you answers to your questions.)

I'm just not sure if it applies in this case. Most examples I have found relate to what a LL does when a tenant breaks a lease prematurely and leaves the premises, or when a LL throws someone out prematurely for violating the lease. I couldn't find examples that mirrored this situation just shrugs his shoulders for 16 months and then sues.

Gee... I just found a perfect example that mirrors this case by Googling "duty to mitigate" and Michigan and commercial. The perfect example was Barocas v. THC, Inc. 549 N.W.2d 86 (1996), where the court found that the tenant must abandon the premises or surrender the lease before the landlord has a duty to mitigate. Check out footnote 69 at Commercial Real Estate Leases ... - Google Book Search

[Tempic]

Yes, I'm very well aware of that. (You really should read the profiles of the people who are giving you answers to your questions.)

Ouch. Sorry about that.

Gee...I just found a perfect example that mirrors this case by Googling "duty to mitigate" and Michigan and commercial. The perfect example was Barocas v. THC, Inc., 549 N.W.2d 86 (1996), where the court found that the tenant must abandon the premises or surrender the lease before the landlord has a duty to mitigate. Check out footnote 69 at Commercial Real Estate Leases ... - Google Book Search

I googled for hours and didn't find this one. I don't know how close that case really mirrors ours, but I'll concede that the "duty to mitigate" argument is going to be weak.

How about the "waiver by acquiescense" argument? Any value there?

[Fr_Chuck]

Sorry, but nothing will lesson the obligation of the rentor, short of moving out and the area being rented to someone else, officially moving out with notice and being formally evicted.

Why was the landlord a poor business person, and allowing your wife to get away with not paying, maybe just that, maybe they are a poor business person, or perhaps he was not keeping up with the books either but just merely trusted your wife to pay.

[LisaB4657]

How about the "waiver by acquiescense" argument? Any value there?

Very, and I mean VERY, tenuous. Definitely not worth going to court over it. And if you do go to court rather than settling you'll probably have to pay the landlord's legal fees and court costs as well if you lose (which I think you will).

If you or your wife personally signed or personally guaranteed the lease then, if I were in your position, I would settle with the landlord before it reaches trial.