Consider the following scenario. A residential tenant has an annual lease that automatically renews. The tenant has been leasing the property for 2.5 years and has now started missing rent payments. The landlord files an unlawful detainer action and obtains possession of the property. The landlord is required to mitigate damages and obtain a new tenant for the property. However, market rent has increased significantly since the property was leased 2.5 years ago. Can the landlord meet the obligation to mitigate damages and market the property for an increased rent amount?  

This is a question we often get, and the short answer is yes. However, when mitigating damages, a landlord is required to use reasonable steps. Therefore, if the new rent price the landlord is marketing is not reasonable, then the landlord may fail to properly mitigate damages. In this scenario, reasonable means what an ordinary prudent person in the same scenario would do. Objective market prices should be considered reasonable. Yet, if the property sits on the market for an extended period of time, the old tenant could argue the landlord failed to mitigate damages because the new rent price was too high.  

The duty to mitigate damages does not prevent a landlord from charging a new rent price at market rate, but landlords also need to be cautious to ensure any increase in rent is reasonable and supported by current market conditions. Also, remember that any damages owed by the old tenant would be at the rent amount in the old lease, not the new market price.  

If you have questions about mitigating damages after a tenant defaults, you can contact us on the Virginia REALTORS® Legal Hotline.