Daily Development for
Tuesday, October 28, 1997
by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
LANDLORD/TENANT; LANDLORD'S REMEDIES; DAMAGES; DUTY TO MITIGATE: Where landlord raises rent on relet following tenant's abandonment, and tenant has produced a substitute tenant who would have rented at the original rent, landlord has terminated the lease and has no claim for further damages.
Alba v. Sopher, 687 A.2d 309 (N.J.Super.App. Div. 1997).
Residential tenant repudiated the lease and moved out, but supplied a substitute tenant to take possession immediately upon her leaving. The landlord, however, raised the rent (from $1025/mo. To $1095/mo.) and the substitute tenant would not pay the higher rent. Within fifteen days, the landlord had found another tenant at the higher rent, and applied the security deposit to the unpaid rent for this period.
The tenant sued for return of the deposit under New Jersey's security deposit statute, and got a judgment for $7288 - double the amount of the unreturned deposit plus attorney's fees.
Without citation of authority, the court holds categorically that the landlord's demanding a higher rent when the tenant had supplied a substitute at the original rent constituted a termination of the lease.
Reporter's Comment: This case appears to impose upon a landlord not only an obligation to mitigate damages when a tenant vacates prior to the end of the lease term, but also an obligation to accept a substitute tenant recommended by the vacating tenant, at the same rental rate.
Editor's Comment 1: The case does not necessarily hold that the landlord has the obligation to hold the premises available for rent on the original terms of the lease. Instead, it appears to be no more than a holding that the landlord cannot both deny the tenant the ability to sublet or assign and simultaneously hold the tenant to damages for vacating. But the court says nothing about subletting or assignment rights, so the editor is reading this explanation into the thin explanation provided by the court.
Editor's Comment 2: The court points out here that the landlord in fact made a profit by reletting for the balance of the term at a higher rental, but the case does not seem to turn on this fact. Even if the new tenant had abandoned the next month, and the landlord could not relet for the balance of the first tenant's term - thus suffering a net loss on that term - the court probably would have found that the first tenant's lease had terminated upon the first reletting.
Editor's Comment 3: A more profound question would arise if the court were ruling that the landlord had a duty itself to seek out a tenant on the same terms and conditions, including rent and lease term, as that abandoned by the original tenant. This would be an unreasonable imposition upon the landlord. The requirement possibly might work to the disadvantage of the tenant as well, as the balance of the tenant's term might not be an easily "rentable" period and the tenant's original rent could be above market as easily as it could be below market. Better to state simply that the landlord has the duty to take reasonable steps to mitigate damages for the balance of the term, which would prohibit the landlord from unduly transferring costs to the tenant but would permit both parties the benefit of being able to respond reasonably to the market.
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