South-Western Legal Studies in Business

Landlord Has Duty to Mitigate Damages When Tenant Abandons Property
Description Appeals court held that when a tenant abandons property, the landlord regains possession, at which point the tenant ceases to pay rent. The landlord has an obligation to mitigate damages by leasing the property at a reasonable price so the trial court can determine damages.
Topic Real and Personal Property
Key Words Landlord and Tenant; Abandonment; Destruction; Mitigation of Damages
C A S E   S U M M A R Y
Facts In 1987, Rockville rented space in a retail center to Circuit City for 20 years. In 1996, Circuit City decided to move to another location and hired a broker to find a subtenant for the space. Rockville rejected the new tenants who were offered. Circuit City closed the store and vacated the premises. Rockville sued. Complicated litigation resulted in an appeal.

When a tenant abandons leased premises, the landlord accepts the surrender of the lease and terminates it. The landlord takes possession of the property at that time and the tenant had no authority to enter the premises. The landlord may rent the property again, and the tenant has no further obligation to pay rent; the issue becomes one of damages. It must be determined at trial whether the landlord breached the obligation to mitigate damages by seeking a new tenant. If the landlord leases the property, it must be established if the new lease was reasonable, that is, reflects true market value of the property.

Citation Circuit City Stores, Inc. v. Rockville Pike J.V., 829 A.2d 976 (Ct. App., Md., 2003)

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