Citation. 74 N.J. 446, 378 A.2d 767 (1977)
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Brief Fact Summary.
Two parties enter into a lease, but the tenant decided not to occupy the premises and attempted to break the lease.
Synopsis of Rule of Law.
In a residential lease, a landlord has a duty to mitigate damages when he seeks to recover past due rent from a defaulting tenant.
James Kridel (Defendant) entered into a two-year lease with Abraham Sommer (Plaintiff), the owner of an apartment building. Defendant wrote Plaintiff a letter stating that he could not take the apartment and asked to be released from the lease. Plaintiff did not respond. A third party was ready, willing and able to rent the apartment, but was told the apartment was being rented to someone else. Plaintiff sued Defendant for the total amount due under the two-year lease. Defendant claimed Plaintiff breached the contract, failed to mitigate damages, and accepted Defendant’s surrender of the premises. The trial court found for Defendant.
In a residential lease, does a landlord have to duty to mitigate damages when the tenant defaults on payment?
Yes. Judgment affirmed.
The state has a rule that states a landlord has no duty to mitigate damages caused by a defaulting tenant. But, courts have the tendency in interpreting leases and other contracts to focus on the intention of the parties.
When a breach occurs in a multi-dwelling building, each apartment may have unique qualities that make it attractive. Here, there was a specific request to rent the apartment vacated by Defendant. There is no reason to believe that absent this vacancy, Plaintiff could have rented a different apartment to the third party.
Modern notions of fairness and equity must now govern. A landlord has a duty to mitigate damages where he seeks to recover rents due from a defaulting tenant.
If the landlord has other vacant apartments besides the defaulting tenant’s, his duty to mitigate consists of making reasonable efforts to re-lease the unit. He must treat the apartment as one of his vacant stock.
This case shows the unfairness that can happen when a landlord has no duty to mitigate. Plaintiff could have avoided the damages, which accrued by finding a suitable tenant, and so defendant was relieved of his duty to continue to pay rent.
A landlord’s duty to mitigate a residential by trying to find a new tenant is a matter of fairness. The landlord cannot sit on a vacant, abandoned apartment and then expect to recover the full rent from the defaulting tenant.