Worth the Paper It's Written On

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Anyone thinking about moving out of your apartment before the lease is up? You may want to reconsider.

A state Appeals court ruled over the summer that a landlord has no duty to mitigate damages in the case of a tenant breach. In other words, a landlord is not required to find a new tenant, and can sue for the rent due for the remainder of the lease. This may be what many tenants thought, anyway – but with an opinion issued in July, it’s official.

The opinion, Rios v. Carrillo, was written by Judge Robert A. Lifson of the New York Appellate Division, Second Department, and involved Queens tenant Alfred Carrillo, who vacated his apartment before the lease expired and ceased paying rent. Landlord Maria Rios later sued for the unpaid rent for the entire lease term. The court ruled that the lease provided that the tenant remained liable for the rent if there was a cancellation of the lease. This type of clause is included in most standard lease agreements used in New York City – but the court went even further to hold that even absent such language, a landlord still has no duty to mitigate damages.

Victorious landlord’s attorney Peter Piddoubny of Astoria, Queens – whose previous defeat in state Supreme Court was reversed with this ruling – indicates the decision is a warning to tenants. “The tenant believed he could just walk away and it was up to the landlord to re-rent the apartment,” Piddoubny said.

Landlord Rios explored re-renting the apartment, but found no takers and decided to sell the unit, keeping it vacant to make it more marketable. Piddoubny asserted that (although it was not mentioned in the court’s written decision), the tenant moved out of the apartment at a time when rents were falling in order to move into a similar apartment in the same building at a lower rent.

“The decision represents an exception for landlord-tenant matter from general contract principles whereby the victim of a breach is obligated to minimize damages,” said tenant’s attorney Robert Goldberg, from the Manhattan law firm of Goldberg, Scudieri, Lindenberg & Block. “For instance, if I promise to buy a barrel of oil for $100 and don’t follow through, the seller is obliged to find another buyer.”

The ruling represents a divergence from the decisions of courts elsewhere in the area; Connecticut and New Jersey both impose a duty to mitigate on residential landlords. In fact, under New Jersey law the burden of proof rests on the landlord to show the use of “reasonable diligence in attempting to re-let the premises.” In the recent appeal, however, the legal theory guiding the decision was a determination that a residential lease is a transfer of an estate in property rather than a contractual relationship. This distinction, while seemingly an obscure legal point, made all the difference in the outcome.

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