Daily Development for Wednesday, September 28, 2005
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri

LANDLORD/TENANT; LANDLORD’S REMEDIES; DAMAGES; DUTY TO MITIGATE: Landlord satisfies duty to mitigate by offering premises for sale through a broker at price premises has rented for during rentals over the previous seven years.  There is no requirement that landlord offer premises for lease at any price.

Thomas & Kline Realty Co. v. George Rogers, Court of Appeals No. L-04-1361, 2005 Ohio 4876; 2005 Ohio App. LEXIS 4423 (9/2/05)

Tenant left the leased office  premises and stopped paying rent four months before the end of the lease term, sending landlord a letter that he was vacating prematurely.  Landlord listed the premises with a reputable broker, and indeed it was shown to several prospective tenants, but not rented until after the lease had expired.  Landlord sued for the four months unpaid rent, and tenant objected on the grounds that landlord should have leased the premises for whatever they would bring, instead of setting a rent at the price for which the premises had been renting over the prior seven years.

As the caption indicates, the court didn’t buy tenant’s argument.  It noted that the controlling Ohio Supreme Court authority, although it had not discussed the price element of a mitigation, had noted that landlord has no obligation to rent to “just any old tenant.”  Consequently, the landlord behaved properly in offering the premises for rent at a reasonable price based upon the historical  market.

Comment 1:    Sometimes these cases are about something other than what the appellate decision reveals.  Tenant’s proposition on its face seems absurd: why should the landlord, presumably looking for a longer term than four months, be required offer the premises at a bargain price just to protect the defaulting tenant? 

Comment 2: At the same time, there’s a lesson here.  Well advised landlord will put into the lease language protecting specifically their reasonable business decisions when acting to mitigate.  The language should state expressly what the landlords are able to do (without limitation) in terms of new term, combination with other space, limitations on use and other matters, and, of course  rent.  Courts normally will uphold such language if at all reasonable, and the landlord won’t be faced with nit picking appeals. 

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