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A Landlord’s Duty to Mitigate

The following blog details the duties imposed upon a Landlord when a Tenant surrenders or abandons the leased premises prior to the natural lease termination date.

Indiana Standard:

Under common law, a Landlord had no duty to mitigate its damages (i.e. secure a replacement Tenant in the event the current Tenant abandoned the premises).  This common law view was based under the pretense that a lease was akin to a conveyance of real estate versus a contract.  The common law view of a Landlord’s duty to mitigate has gradually given way to a modern trend which holds that a Landlord has a duty to mitigate its damages in the event that a Tenant abandons or turns over possession of the premises to the Landlord prior to the natural lease termination date without an express agreement. The duty to mitigate requires the non-breaching party to make a reasonable effort to act in such a manner as to decrease damages caused by the breach. Indiana falls within the modern trend and imposes a duty to mitigate upon the Landlord.

How can a Landlord fulfill its Duty to Mitigate?

In order to fulfill its duty to mitigate, the Landlord is not required to re-let the premises.  As stated above the Landlord needs to make a reasonable effort to mitigate its damages.  The Landlord’s reasonable efforts would include taking the initiative to advertise the availability of the premises and/or engaging the services of a broker.  The burden to show that the Landlord failed to use reasonable efforts to mitigate its damages ultimately falls upon the breaching party/Tenant.

Conclusion:

Both Landlords and Tenants need to be aware of the duty to mitigate.  It is clear that a Landlord must use reasonable efforts to relet the premises upon a Tenant’s surrender in order to be able to pursue that Tenant for damages.  A lease is clearly now construed as a contract rather than a conveyance of real estate.  For more information please visit- http://portal.hud.gov/hudportal/HUD?src=/states/indiana/renting/tenantrights