rental-property florida commercial-lease
Early Termination of Non Residential Florida Lease: Security Deposit
<p>A tenant enters into a 24 month non residential office lease, pays for months 1 though 5 and unilaterally indicates to move out in early month 7.   The tenants move out at approximately 7.5 months.   Assume:</p>
<ul>
<li>there is no provision in the lease for early termination</li>
<li>the landlord <strong>does not agree to early termination</strong></li>
<li>there is no material breach of the contract other than tenant non payment</li>
<li>the tenant has prepaid the last month's rent</li>
<li>the tenant has a prepaid security deposit in the amount of 2 months rent</li>
<li>the tenant returns the rental in perfect condition</li>
</ul>
<p>The tenant has effectively prepaid for 3 months of rent.  In the absence of a provision for termination in the lease:   Why should the landlord have cause to collect (keep the deposit):</p>
<ol>
<li><p>for month 6 and 7?</p>
</li>
<li><p>for any months subsequent to month 7?</p>
</li>
<li><p>if yes to subsequent, how many months?  Months 8, 9, ... until new tenant is found?</p>
</li>
<li><p>By moving out early without landlord agreement, did the tenant abandon month 24 and its corresponding payment?</p>
</li>
</ol>

<h2>The landlord is entitled to damages</h2>
<p>Damages under a contract are to restore the innocent party to the position they would have been in had the breach not occurred.</p>
<p>This means the landlord is entitled to rental payments of a monthly basis for the balance of the lease. However, the landlord is also obliged to reasonably mitigate the damage, typically by finding a new tenant as soon as possible.</p>
<p>Let’s make the example concrete.</p>
<p>Let’s assume the rent is $1,000 per month and that there is no pro-rata clause in the contract (as is typical). That means whether the tenant uses 1 day or 31 days of a month, they owe a full month’s rent.</p>
<p>When the tenant moves out, they owe $3,000 (plus interest). They also have an ongoing obligation to pay rent each subsequent month. This gives unmitigated damages of $17,000.</p>
<p>The landlord spends $500 to clean and get the property ready to rent. $1,000 commission to the agent and $500 on advertising. After 2 months they find a tenant at $800 per month.</p>
<p>Damages would be $3,000 for the unpaid rent, $2,000 for the out of pocket, $2,000 for the unoccupied months and 14 x $200 = $2,800 for the lower rent. So, $9,800.</p>
<p>Typically, a security deposit can be put against unpaid rent but might not be allowed to be deducted for economic loss from a breach.</p>
