Landlords Must Mitigate Damages (Unless…)

In Austin Hill Country Realty, Inc. v. Palisades Plaza, Inc., 948 S.W.2d 293, 299 (Tex.1997), the Supreme Court of Texas recognized that a commercial landlord has a duty to make reasonable efforts to mitigate damages when the tenant breaches the lease and abandons the property. The rule in Palisades Plaza has since been made a law in a statute : “A landlord has a duty to mitigate damages if a tenant abandons the leased premises in violation of the lease .” Tex. Prop.Code Ann. § 91.006(a). The landlord’s duty to mitigate requires him to use “objectively reasonable efforts” to re-lease the premises to a tenant “suitable under the circumstances.” Palisades Plaza, 948 S.W.2d at 299. If the landlord fails to use reasonable efforts to mitigate damages, his recovery from the tenant is barred to the extent that damages reasonably could have been avoided. Id.

The reasonableness of the landlord’s efforts to avoid damages is an issue for the fact finder. See Hunsucker v. Omega Indus., 659 S.W.2d 692, 698 (Tex.App.-Dallas 1983, no writ) (“issues such as reasonableness and foreseeability are inherently issues for a jury”). The tenant bears the burden of proof to demonstrate that the landlord has failed to mitigate damages and the amount by which the landlord could have reduced his damages. Palisades Plaza, 948 S.W.2d at 299. So you need to make sure you get your facts together and go knock on the door and see if the place was rented out. Get a friendly neighbor to keep an eye out as to how quickly they are moving on cleaning and marketing the property.

However, none of this matters if there is a liquidated damages provision. The lease would control if there is a liquidated damages provision. I had a case where we used it to beat the landlord at their own game.

You need to look at that.

1. Get facts together, did they lease again, (go knock on the door)

2. Tell them they need to mitigate (actions taken to market?)

3. They probably went up on the rents and would don’t get to double dip unless there is a liquidated damages provision.

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