When Commercial Tenants Abandon: The Alternate Courses of Action for Commercial Landlords
With the average monthly rent for offices in South Florida at $20.91 per square foot, it becomes inevitable that most commercial landlords will at one point have a tenant that abandons prior to the end of their lease. Florida law provides commercial landlords three alternate courses of action when commercial tenants abandon:
(1) the landlord may treat the lease as terminated and retake possession for its own use, thus terminating any liability on the part of the tenant;
(2) the landlord may retake possession of the premises, holding the tenant liable for the difference between rental stipulated to be paid under the lease agreement and what, in good faith, the landlord is able to recover from re-leasing; or
(3) the landlord may stand by and do nothing, holding the tenant liable for the rent due as it matures, which means all remaining rent is due if there is an acceleration clause. Coast Federal Sav. & Loan Ass’n v. DeLoach, 362 So. 2d 982, 983 (Fla. 2d DCA 1978). A landlord cannot use an acceleration clause to hold the remaining portion past due and also re-lease at the same time. Horizon Medical Group, P.A. v. City Center of Charlotte County, Ltd., 779 So. 2d 545, 546 (Fla. 2d DCA 2001).
Commercial landlords are required to act in good faith and take reasonable steps to relet once tenants abandon and acceleration clauses are applied. In Fort Lauderdale Joint Venture Limited Partnership By and Through JVJ Fort Lauderdale Joint Venture v. Sander, the appellate court held that a commercial landlord acted according to standard procedures which were reasonable and in good faith, when it relet the tenant’s premises through “license agreements” to existing tenant in its shopping mall while looking for permanent tenant. 613 So. 2d 133, 134 (Fla. 4th DCA 1993).
In Fairway Mortg. Solutions, Inc. v. Locust Gardens, the appellate court held that a commercial landlord satisfied its duty to mitigate damages after a tenant defaulted on commercial lease, although landlord allegedly rented other properties to prospective tenants before it rented tenant’s property, where the landlord sought and obtained a replacement tenant within three months of retaking property. 988 So. 2d 678, 681 (Fla. 4th DCA 2008).
Florida case law states that commercial landlords must act in good faith and take reasonable steps to mitigate their damages once tenants abandon and commercial landlords retake properties. In many instances it becomes a contested issue in court as to whether landlords properly mitigated their damages. Therefore, commercial landlords should keep detailed records as to the steps they take to relet abandoned properties.
Founded in 1997, Gill Law Firm represents small, medium and large corporations in commercial debt recovery, small business and nonprofit startups throughout the state of Florida. To find out how the firm may help your company, please contact A. Wayne Gill, Esq. via email at email@example.com or by phone at (561) 454-0301.
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