Page 14 - August 2022

COMMERCIAL LANDLORDS’

COMMON LAW

REMEDIES

AND DUTY TO MITIGATE

By Brian Womac

early 1 in 5 businesses in the U.S. fail a landlord when a tenant breaches a lease. The four (4)
within the first year, according to the common law remedies are as follows:
1
U.S. Bureau of Labor Statistics. Approx-
imately 50% of businesses fail within five 1) Decline to repossess the property: the landlord
years and about 65% within ten years. may decline to repossess the property electing instead
NNaturally, landlords run into the situa- to maintain the lease in full force and effect. Under this
tion where a tenant’s business fails in the middle of their option, the landlord can sue on the contract for the rent
lease term. This often results in the non-payment of rent as it becomes due. This option is now somewhat suspect
and abandonment of the leased premises. What options with the Supreme Court’s indication of a requirement
does this leave the commercial landlord? Texas common to mitigate damages. Austin Hill Country Realty, Inc. v.
law has afforded the landlord four possible remedies, in Palisades Plaza, Inc., 948 S.W.2d 293, 300 (Tex. 1997).
addition to any remedies that were expressly contracted 2) Anticipatory breach/own purposes: the landlord
for in the lease. Today, we look at the common law reme- may treat the tenant’s conduct as an anticipatory breach
dies and the landlord’s duty to mitigate. of contract and repossess and retain the property for its
own purposes. Under this option, the landlord recovers
Landlord’s Four (4) Common Law Remedies the present value of the rentals to accrue under the lease
In Texas, a landlord may pursue any of its common law contract reduced by the reasonable cash market value of
remedies for a tenant’s default or any remedy contracted the lease for the unexpired term;
to by the parties. Speedee Mart, Inc. v. Stovall, 664 S.W.2d 3) Anticipatory breach/relet: the landlord may treat
174, 177 (Tex. App.BAmarillo 1983, no writ.). Under Texas the tenant’s conduct as an anticipatory breach of con-
law, there are four (4) common law remedies available to tract, repossess the property, and lease it to another

14 NBIZ ■ August 2022