When a tenant breaches a lease agreement, landlords may face financial losses. One form of compensation they can seek is loss of bargain damages, but what does this entail, and when is it applicable?
What Are Loss of Bargain Damages?
Loss of bargain damages compensate landlords for the financial loss incurred when a tenant fails to fulfill their lease obligations. This typically includes the unpaid rent for the remainder of the lease term or the cost of securing a new tenant.
Legal Principles
Under contract law, landlords are entitled to be placed in the position they would have been if the lease had been honoured. However, landlords must also mitigate their losses by taking reasonable steps to re-lease the property.
For example, if a tenant vacates early, the landlord cannot claim the entire remaining rent if they find a new tenant shortly afterward.
Factors Influencing Loss of Bargain Claims
- Lease Terms: The lease agreement should include clauses addressing early termination and damages for breach.
- Tenant’s Conduct: The landlord must prove that the tenant breached the lease and that this breach caused financial loss.
- Efforts to Mitigate: Courts will assess whether the landlord made reasonable efforts to reduce their losses, such as advertising the property or offering flexible terms to new tenants. In essence, making a real effort to re-lease the property.
Key Definitions
- Loss of Bargain Damages: Compensation for the financial loss incurred when a lease is prematurely terminated.
- Mitigation: The legal obligation to take reasonable steps to minimise losses.
- Breach of Lease: When a tenant fails to comply with the terms of a lease agreement.
This article is for general informational purposes and does not constitute legal advice. Please seek specific legal guidance from a qualified property lawyer.
If you’re a landlord dealing with a breached lease, let Skyline Lawyers assist you in claiming the compensation you deserve. On the other hand, if you are a tenant that is subject to a claim by the landlord, engage us immediately to efficiently and effectively resolve the dispute. Contact us today for expert advice and tailored solutions to protect your interests.
