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 Taking of keys by a landlord not inference of surrender of the premises.

Public Watch  Dog

 

The mere taking of keys to leased premises by a landlord does not give to an inference that the landlord has accepted surrender of the premises.

LANDLORD/TENANT; SURRENDER: The mere taking of keys to leased premises by a landlord does not give to an inference that the landlord has accepted surrender of the premises.

Sirdah v. North Springs Associates, LLLP, 2010 WL 2278184 (Ga.App 6/8/10.)

Even though Georgia law generally obligates an injured party to mitigate damages, this general rule to mitigate damages does not apply to lease contracts. In Georgia, the rule is: "if a tenant abandons leased premises without authorization prior to the expiration of the term, the landlord is not required to mitigate damages by releting the premises. Rather, he may allow the premises to remain vacant and hold the tenant responsible for accruing rent."


Patrick A. Randolph

Elmer F. Pierson Professorship and Professor of Law; B.A. (Yale University); J.D. (University of California, Berkeley)

There are two limited exceptions to this general rule: "[I]f the

landlord accepts the tenant's surrender or the tenant successfully terminates the lease, the landlord is required to make reasonable efforts to re-lease the premises and mitigate his damages." In this case before the Georgia Court of Appeals, it was undisputed that the tenant did not successfully terminate the lease.

Here, the tenant wrote to its landlord that it "would no longer be open for business." In that same letter the tenant returned the keys and specifically wrote: "I am turning in my keys to the premises." In response, the landlord, by certified letter, notified the tenant as follows: "be advised that although [the tenant] has given up possession of the premises through return of his key, [the landlord] has accepted same without terminating the Leases. The landlord [intends to hold the tenant] liable for all sums due and owing through the expiration of the term of the Leases, together with any damages to the premises, to be reduced only by sums received by [the landlord] through re-letting of said premises."

The Court rejected the tenant's assertion that he had "given up possession of the premises through his return of his key" and that the landlord "accepted same." In essence, the tenant argued that the landlord was then required to "have made reasonable efforts to re-let the premises."

The Court was unpersuaded. "The mere taking of the keys to the leased premises by a landlord does not give rise to an inference that the landlord accepted surrender of the premises. ... Likewise, '[t]he mere entry upon the premises to protect the property after abandonment by the lessee will not amount to an acceptance of a surrender of a lease.'" In addition to looking at the subjective intent of the landlord, the Court pointed to the landlord's response letter wherein it expressly said that it was not terminating the leases. Fundamentally, to the Court, there was uncontradicted evidence that the landlord neither expressly nor impliedly accepted the tenant's surrender of the leased premises.

To reinforce its reasoning, the Court pointed to a Bankruptcy Court decision in the Southern District of Georgia which recited: "surrender differs from abandonment, as applied to leased premises, inasmuch as the latter is simply an act on the part of the lessee alone; but to show a surrender, a mutual agreement between a lessor and a lessee that the lease is terminated must be clearly proved."

Comment 1: The Georgia court emphasized that there is is no duty to mitigate in that state, and that this contributes to its conclusion that simply returning the keys does not contribute to a surrender. Georgia, by the way, is one of fifteen states that recognize no commercial duty to mitigate. It is in company with New York, Pennsylvania, Missouri, and nine others, all listed in the appendix to Chapter 16 of the Randolph Edition of Friedman on Leasing.

But it should be noted that the same conclusion reach here might also be relevant in a mitigation state. Even under the mitigation rule, the landlord still can collect rent from the defaulting tenant when the landlord’s reasonable efforts to mitigate do not replace the defaulted rent for the balance of the term. A surrender, however, would mean that the lease was at and end, and therefore the landlord could not look to the defaulting tenant for those missing rents. Thus, the rule that simply giving the keys to the landlord is not, without more, a surrender, is relevant in mitigation states as well.

Comment 2: The rule here is consistent with other authorities elsewhere, as delineated in note 145 to Chapter 16 in the Randolph edition of Friedman and in an ALR annotation at 84 ALR 4th 183 (1991).




 
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