Landlord’s Options When Tenant Abandons Premises Prior to Lease Expiration
Unlike in some jurisdictions, Georgia does not require mitigation of damages in lease contracts. This gives landlords several options when a tenant abandons the premises before the lease term is up. First, the landlord may enter and obtain another tenant holding the original tenant liable for any deficiency. Alternatively, the landlord may leave the premises vacant and collect the agreed upon rent each month. Or, the landlord may terminate the lease under the terms of the lease. Lamb v. Decatur Fed. S & L Assn., 201 Ga.App. 583, 587(2) (1991). Note that in the event the landlord chooses this third option and terminates the lease, then he will be required to mitigate damages and make reasonable efforts to re-lease the premises. However, a landlord presumably can avoid triggering this duty to mitigate where the landlord terminates only the tenant’s right of possession without terminating the lease. Georgia Color Farms v. K.K.L., Ltd. P’ship, 234 Ga. App. 849 (Ga. Ct. App. 1998).
Recovery of Rent
Landlords have two methods to recover future rent: (1) the landlord may accept the abandonment and sue at once for the excess of the rent reserved under the lease agreement over the reasonable rental value of the premises at the time of the breach; or, (2) may elect not to accept the abandonment and to treat the lease as remaining in full force and effect. If pursuing the latter method, then landlord may either permit the premises to remain vacant while collecting the agreed upon rent from the original tenant or obtain another tenant while holding the original tenant liable for any deficiency that may occur.
Rent Acceleration Clauses
Many leases contain rent acceleration clauses which are treated like liquidated damages by Georgia courts. Provided the lease contains an express acceleration clause, and upon tenant default, the landlord may accelerate rent for the balance of the lease term. Such clauses are generally enforceable if reasonable. A rent acceleration clause will be enforceable if it meets the three-part test in Southeastern Land Fund, Inc. v. Real Estate World, Inc., 237 Ga. 227 (1976) (“First, the injury caused by the breach must be difficult or impossible of accurate estimation; second, the parties must intend to provide for damages rather than for a penalty; and third, the sum stipulated must be a reasonable pre-estimate of the probable loss.”) Thus, landlords wanting to enforce a rent acceleration clause should be careful in crafting the language of the provision to sound in liquidated damages rather than in penalty. For instance, provisions that reduce accelerated rent to present value and deduct from this amount the reasonable rental value for the premises for the remainder of the lease term are more likely to be enforced than provisions that otherwise make no attempt to take the future rental value and the likelihood of re-letting into account. See Peterson v. P.C. Towers, L.P., 206 Ga. App. 591 (1992).
Note that a landlord may pursue a handful of consistent or inconsistent remedies against a defaulting tenant. For instance, a landlord may seek specific performance of a lease or recover additional sums owed under contracts including default interest, late charges, or other monies. Special Georgia rules and statutes may govern these proceedings. Contact an experienced Georgia contract attorney to discuss your options.