Early abandonment of property by a tenant

A tenant, for various reasons, mainly financial, may abandon a property before the end of the rental period specified in their rental agreement and cease paying the rent. The question that arises when this happens is how the landlord should act, what are their rights and any obligations? Should they hold the tenant to the agreement until its expiration and claim the payment of the rent or should they make reasonable efforts to find another tenant in order to mitigate their damage?

Under the circumstances, the owner must regain possession of the premises without prejudice and at the same time has a duty to take all reasonable measures to mitigate loss and damage, since they are the innocent party and not responsible for the breach of the agreement.

Actions, such as appointing a real estate agent to find another tenant, placing an advertisement in newspapers that the premises are for rent, placing signs on the premises that it is for rent and informing the public at large that the owner is looking for a tenant, are considered reasonable efforts.

Landlord’s right and tenant’s liability

A tenant who leaves the premises prematurely is considered to be in breach of the rental agreement, written or oral, and is liable to the landlord for compensation for the losses and damages suffered, such as loss of rent, renting the premises at a lower rent, as well as any other related damage.

The matter is regulated by article 73 of the Contracts Law, Cap. 149, which provides that: (1) when a contract has been broken, the party who suffers is entitled to receive from the party who has broken the contract compensation for any loss or damage caused to them thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it, (2) such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach, (3) in estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by the non-performance of the contract must be taken into account.

A similar issue arises in the case of an owner legally terminating a tenancy prematurely due to non-payment of rent and as a result suffers a loss until a new tenant is found. This issue is addressed through the provisions of article 75 which provides that a person who legally withdraws from the contract is entitled to compensation for any damage suffered as a result of the non-fulfillment of the contract.

Supreme Court decision

The case of Pantziaris v. Aquarian, C.A. 8010, concerned notice of termination of a contractual tenancy before its expiry due to non-payment of rent and the tenant abandoning the lease. It was held that in order for the landlord to be entitled to claim damages for the remaining period of the contractual tenancy, he must prove that he made reasonable efforts to find another tenant.

The only basis for claiming damages after the termination of the contract is that provided by article 75, which preserves the right of the contracting party, who terminates the contract for a valid reason, to claim damages for loss suffered due to early abandonment of the property or non-performance of the contract.

The Supreme Court upheld the first-instance decision that dismissed the landlord’s claim for damages for early termination of the tenancy, because he had not proved that he had made reasonable efforts to find another tenant.

The landlord invoked the rule that places the burden on the defendant to prove that the plaintiff was not entitled to the ordinary damages under the circumstances but to a lesser amount, due to the failure to fulfil the duty to mitigate the damage, and claimed an amount equal to the lost rents.

However, his submission was not accepted, because it was up to him to prove any damage he suffered due to the termination of the contract, by presenting evidence (if he did not need the store for his own use) that reasonable efforts to rent it were fruitless, in which case he was entitled to claim the lost rent due to the early termination of the lease.

The landlord’s duty was to prove that he suffered damage due to the termination of the contract by him who was the innocent party.