Daily Development for
Friday, February 21, 1997

by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law

LANDLORD/TENANT; LANDLORD'S REMEDIES: DAMAGES: Although landlord is under no affirmative duty to mitigate damages, lessor's reletting of abandoned premises following reentry terminates commercial lease and discharged liability of lessee *and lessee's* guarantor. Kaschak v. Parkway Meats, Inc., 681 So.2d 197 (Ala. 1996).

Tenant abandoned the premises and landlord relet to two other tenants. The new leases provided for occupancy on a certain date, but did not require any rent for three months. This was the same arrangement by which the original tenant let the premises, and the court found that without such an arrangement the new leases could not have been acquired at all. Nevertheless, the court held that putting the new tenants in possession ipso facto terminated the old lease, and the old tenant was relieved of the rent. Thus, even though the landlord could have left the premises vacant, and even though the court found reasonable attempts to relet required a period of time with possession but no rents, the court terminated the lanldord's claim against the old tenant as of the possession date of the new leases.

The landlord argued that even if the common law of Alabama let the tenant off the hook, the guarantor, which signed an unqualified guarantee nevertheless should be liable for the full contract obligation of the tenant.

Sorry, said the court. The guarantor is liable for no more than the tenant. If the tenant is off the hook, so is the guarantor.

Comment 1: The court says that the landlord's sole remedies upon tenant abandonment are suing for the rent as it falls due or terminating and reletting. Is it possible that Alabama doesn't recognize the possibility of bring a suit for anticipatory breach?

Comment 2: The court doesn't mention the established doctrine, recognized in many jurisdictions, permitting the landlord to relet on account of the tenant and continue to hold the tenant liable for the lease rentals where the reletting rentals fall short. A recent Texas case indicates that Texas recognizes the remedy only when the parties have provided for it in the lease. This may also be true in Alabama, but in many cases the landlord would have the right, even where the lease is silent, to relet as a "quasi-agent" of the tenant without being viewed as terminating the tenant's lease.

The Dirt editor thought he new where the "center" was in terms of the various jurisdictions on the question of lease remedies. But his faith in his own background has been shaken by the Texas and Alabama cases.

DIRT readers: Can you report in? Does Alabama recognize anticipatory breach damages? Does it recognize the "quasi agency" possibility, at least where the lease so provides?

All those readers who have been bashing the editor as pro-landlord may also think that the absence of these two remedies is perfectly OK, but the editor (who actually is pro tenant on a number of other issues) thinks that they severely limit the landlord's options.

Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last six years, these Reports have been collated, updated, indexed and bound into an Annual Survey of Developments in Real Estate Law, volumes 1-6, published by the ABA Press. The Annual Survey volumes are available for sale to the public. For the Report or the Survey, contact Stacy Walter at the ABA. (312) 988 5260 or stacywalter@staff.abanet.org

Items reported here and in the ABA publications are for general information purposes only and should not be relied upon in the course of representation or in the forming of decisions in legal matters. Accuracy of data and opinions expressed are the sole responsibility of the DIRT editor and are in no sense the publication of the ABA.