Mitigation

Mitigation

A statute in Illinois requires commercial tenants to mitigate their damages when a tenant has been evicted or has moved out before their lease term ended. Mitigation in this context means that the landlord should take reasonable action to obtain a substitute tenant. This has the effect of diminishing the claim against the departing or evicted tenant. There are public policies, like letting rentable space go vacant and avoiding punitive damages against someone not able to pay, that justify this statute.

In other words, if a tenant with a one year lease at $100/month left in violation of the lease after the seventh month, they would owe the landlord $500 for the remaining five months. But if the landlord was able to rent it for the last two months at the same price, the departing or evicted tenant would only owe $300. If, in a lawsuit in which the landlord seeks to collect $500, the tenant proves that the landlord exercising reasonable diligence could have leased the space for the last two months, the tenant would only have to pay $300 even though the landlord is out of pocket the whole $500. *

If the landlord reasonably spent $50 to advertise the space for a substitute lessee, the landlord would be entitled to collect that sum from the departing or evicted tenant whether it was actually able to find a substitute tenant or not. *

An Illinois case in 2019 held that if the lease disclaimed the landlord’s duty to mitigate, they did not have to look for a substitute tenant and could sue the tenant for the whole amount. Because of this, leases should be examined to see if such a provision is included and at least for now, such a provision overrules the statutory duty to mitigate.

* The figures are simplified to illustrate the point.

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