My landlord wants rent on a broken lease!
Sorry, it's legal, and you may even have to pay more than just the rent.
Richard Barker, Aprizona Florist, Covington, Ga.
Our business went south, and as a result we had to break our lease. Less than 30 days later, the landlord rented the space to a new tenant. Six months after that, we were served with papers demanding $12,000, which is the remaining rent on the lease. Is it legal for the landlord to collect rent from both new and old tenants?
By Adriana Gardella, FORTUNE Small Business senior editor
The answer depends on your lease terms. As you describe it, the situation sounds unfair, but that doesn't make it illegal, says lawyer Hanna Hasl-Kelcher, author of The Business Guide to Legal Literacy: What Every Manager Should Know About the Law.
Generally, a tenant must pay rent until the lease term expires. Moving out early won't end that obligation unless you have a different agreement with the landlord – preferably in writing. Although some agreements may provide that the landlord can find a new lessee before the broken lease expires and use the new tenant's rent to offset the amount owed by the departing tenant, you shouldn't act on this assumption. "This type of provision must typically be negotiated," Hasl-Kelcher says.
Have an attorney review your lease and discuss possible defenses to your landlord's claim. Typically, you'll face a penalty for breaking a lease, says Elizabeth Milito, a lawyer with the Small Business Legal Center, which is operated by the National Federation of Independent Business in Washington, D.C. Even if your landlord reduced his or her damages by the amount of the new tenant's rent, in many states it is the former tenant's responsibility to prove that damages should be limited, she adds. There are other damages you may be obliged to pay, such as your landlord's attorney fees and expenses incurred in finding the new tenant.
Next time review your lease carefully before signing. "Commercial leases typically provide more room for negotiation than residential leases," Milito says. "Don't be afraid to request modifications."
This column provides general information only and is not intended to replace the services or legal advice of an attorney. Always consult a lawyer regarding any specific legal concerns, as laws vary from state to state.
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I have a different take than Ms. Gardella. It is very clear regardless of what your lease may say that a landlord cannot double recover. In asserting his breach of contract claim, he must prove not only that you breached the contract, but that he was damaged. If the net damages to him were $0.00 because he re-rented immediately thereafter, he will not be prevail on his claim.
That being said, the $12,000 demand may not be for future rent as you believe. Though your landlord may have been able to find a tenant immediately to mitigate his damages, he may have out of pocket damages for commissions or if the rent he is now getting is less than the rent you were obligated to pay. There also could be damages for tenant improvements, or concessions like a month's free rent that the landlord had to include as part of a lease,necssary to get the new tenant in right away.
My advice would be to contact the landlord wo attempt to negotiate a deal. It is difficult to see how any landlord can affort to hire an attorney to sue for $12,000. It just would not, in general, be cost effective.
Jeff Woo, Esq.
http://www.mypropertyrights.com
jeff.woo@sdma.com
@jefferywoo