Owner Made Reasonable Efforts to Minimize Damages
Facts: A tenant signed a commercial lease with a three-year term. Before the three years expired, the tenant and owner had agreed to extend the lease for another three years. After the extension, the tenant assigned the extended lease to a new tenant. The original tenant and the new tenant's agreement extended the original lease for yet another three years, but the new tenant defaulted on the lease before the second extended term was up. The owner locked the new tenant out of the space, leased the space to another party, and sued the original tenant for the remainder of the lease. A trial court ruled for the owner.
The original tenant appealed, claiming that the trial court had failed to make the owner minimize damages, because the court had not forced the owner to accept the new tenant that the original tenant provided.
Decision: A Texas appeals court ruled for the owner.
Reasoning: An owner has a duty to make reasonable efforts to minimize damages when a tenant defaults on a lease and abandons the space. However, the owner is not required to fill the space with just any willing tenant; the replacement tenant must be suitable.
In this case, the court ruled that the owner had no duty to accept the tenant offered by the original tenant and made reasonable efforts to minimize damages. The court also pointed out that the owner offered to assist the original tenant by giving him a rent credit when the space was leased to a new tenant.
- Narsi v. Weingarten Realty, November 2007