Understanding Breach of Lease Contracts: Important Facts and Remedies

What is a Breach of Lease?

While it will come as no surprise to anyone, it is probably important to remind ourselves of what actions or inactions by a tenant or a landlord actually constitute a breach of a lease contract. These are the actions that lead you to the courthouse in the first place.
First of all, the tenant’s nonpayment of rent is the most common contractual breach that leads landlords to court. As described in the previous section, the tenant is clearly required to pay rent and if the tenant fails to pay rent as agreed, it’s a breach that will lead to a lawsuit . Note, however, that there are legal ramifications if you bring an eviction lawsuit against a tenant that is not behind in rent. That is because you cannot force a tenant to give up rights that they don’t have, even if some would say you can enforce rules that go beyond what the tenant agreed to in the first place. Second, if a tenant breaches or violates any of the other terms of the lease, you can bring an eviction lawsuit. For example, if the lease requires the tenant to maintain the property in good condition, their failure to do so can, and should, lead the landlord to bring an eviction lawsuit.

Common Reasons for Breach of Lease

Tenants or landlords can breach a lease for various reasons. The tenant may not pay rent. The property may be damaged. The tenant may not move out when they are supposed to. Any of these leases can be remedied through negotiation, but some breaches involve more complexities than non-payment.
Failure to Pay Rent
If a lease requires the payment of periodic rent and this rent is not paid, the lessee is in breach of the lease. The lessee may be able to cure this default by paying the rent before the property owner seeks to terminate the lease or dispossess the lessee. However, if the lease allows the lessor to terminate the lease without notice to the lessee for failure to pay rent, the lessor may proceed without notice.
Destruction of Leased Premises
The lessee must treat the property with care. If the lessee destroys, mutilates or damages property during the term of the lease, he may be liable for breach of contract. The lessor may be entitled to damages and to recover possession of the property.
Unauthorized Sublease
It is common for the lease to prohibit the lessee from subletting the premises without first obtaining written consent of the lessor. If the lessee does not obtain consent and any available remedy for the lessor does not include specific performance, the lessor can recover compensatory damages.
End of Lease Term
Sometimes the lessor shows up at the end of a lease term and finds that the lessee did not remove all personal property. This too may be a breach of contract because the lessee may have to pay for removal for the lessor’s property. If the property left on the lease premises was not otherwise known to the lessor, then the lessor may be liable to the lessee for conversion of the property.
In summary, any time there is a breach of contract, the lessor may be liable for breach of contract.

Legal Ramifications for Tenants and Landlords

The legal implications of breach can be considerable. For the tenant, litigation costs are a given. Moreover, financial liability is reasonable certainty. As a general rule, the tenant is on the hook for the cost of reletting the premises – all that a landlord has to do is mitigate its damages to limit the financial impact of a tenant’s breach (see, for example, manufactured home community cases). A landlord can also sue for compensation for other incidental losses (for example, lost sales in a retail scenario). In some instances, a tenant may be able to offset damages or liability with claims of its own against the landlord. In brief, the tenant often has to defend itself against monetary claims from the landlord while simultaneously seeking damages from the landlord (such as reimbursement of its move-out costs) as a result of the breach.
In some circumstances, the beleaguered tenant may be able to pursue claims against its landlord for breach of the duties of good faith and fair dealing and quiet enjoyment and/or for constructive eviction. However, it is extremely difficult to prove such claims when a lease is reasonably clear – especially if the lease allocates the risk of default in an express manner. A tenant that fails to fulfil its obligations under the lease, or any sublease, however, may well find that such claims are precluded by contract language convincing a court to apply the legal rules of construction in the landlord’s favor.

Steps to Take Following a Lease Breach

The first step in resolving a lease breach is understanding when and how a breach of contract has occurred. The second step in the process is for both parties to engage with one another and communicate to determine if the issue can be rectified before litigation is commenced. A less expensive and time-consuming method for litigation during a breach of lease contract is to submit the matter to mediation. Mediation is a dispute resolution process through which both parties attempt to resolve the issue(s) through concession and give-and-take. During the mediation process, both parties seek to amicably resolve the issue with the help and guidance of a mediator. If the mediation is successful, the parties will be able to enter into a lease amendment agreement that resolves the present issue or allows them to move forward under the continuance of the lease terms and conditions. If the breach cannot be resolved or the mediation is unsuccessful, the lease counterpart may need to exercise its rights and file a suit for breach of lease contract against the other party. In addition to seeking the general damages associated with the breach, the injured party may also seek subjective damages based on "lost profits." For example, under the Georgia Lease Agreements for commercial real estate, the lease contract provides that both parties have the right to sue in the event of a breach and seek compensatory damages and lost profits. However, prior to filing a lawsuit, a landlord or an injured party has the option to provide a notice of default to tenant, which gives them an opportunity to remediate their actions and prevent litigation from ensuing. If, after receipt of the notice of default, the tenant fails to remediate or cure the default, the landlord has the option of sending a Notice to Vacate the premises and begin evicting the tenant from the premises. The Georgia Landlord Tenant Act (O.C.G.A §§ 44-7-1 et seq.) provides the procedure for evicting a tenant and recapturing the premises during an eviction proceeding. When the landlord files the dispossessory action, they are forced to seize possession of the premises through the court system, which will allow them to access the property without further notification to tenant to obtain possession. In some cases, the breach of lease contract occurs when a tenant subleases the premises to a third-party without the consent of the landlord, or in situations where the lease explicitly prohibits subleasing. Under this scenario, the landlord must first place the occupant on notice by providing a Notice of Illegal Occupancy, which gives the occupant a reasonable time to vacate the premises.

How to Prevent a Breach of Lease

As they say, "an ounce of prevention is worth a pound of cure." The best way to deal with lease contract claims is to prevent them in the first place. This requires clear communication and guidance from the lessor, and also the willingness of the lessee to carefully review the terms and conditions of the lease prior to signing it. Both parties should have a keen understanding of what is expected of each of them, and what is not in the contract.
For example, if there is an unusual repair that must be performed that may be the responsibility of the lessor or lessor, there must be complete and clear communication between the lessor , the lessee and any third party vendor (if there is one). Apart from knowing all of the written terms and conditions of the lease or contract, the more prudent the parties are in discussing matters and keeping an open line of communication, the less likely it is that misunderstandings and other unforeseen issues may arise down the road. If the lessor is open to communicating with the lessee, taking the time to understand his needs, and working with the lessee in good faith toward a resolution, this will go a long way in preventing possible claims and breaches of the contract on both sides.

Legal Consequences and Implementation

Remedies. A breach of a lease contract by either the landlord or tenant gives rise to liability for the damages caused by the breach. For the landlord, these damages include unpaid rent, as well as damages related to the tenant’s breach of other provisions of the lease contract. These include damages resulting from the tenant’s failure to repair those repairs required to be made by the lease or its failure to pay damages suffered by the landlord or another tenant caused by the tenant’s failure to comply with the requirements of the lease to which he agreed in exchange for continuing use of the property. For the tenant, these damages include advance rent and, if the eviction was illegal, damages suffered as a result of the landlord’s illegal eviction.
Landlord’s Claim to Avoid Eviction. A landlord is entitled to damages arising from an illegal eviction or other breach of the lease contract on the tenant’s part. The amount of this damage can be recovered by a lawsuit against the tenant.
Tenant’s Claim to Avoid Eviction. A tenant who has been evicted illegally is entitled to recover pecuniary and consequential damages from the landlord. The measure of pecuniary damages is the value of the use of the property taken from the tenant, for the period of its use by the landlord or new tenant. The tenant is also entitled to an award of consequential damages, if the tenant can prove damage to a specific interest deserving protection.
Tenant’s Recovery of Unpaid Security and Advance Rent. The tenant is entitled to recovery of his security and advance rent if he has been wrongfully evicted. If the tenant is not entitled to the return of his security and advance rent, he has no other claim for the wrongful eviction. A landlord who evicts his tenant unlawfully, and retains the tenant’s property, may be liable to the tenant for its return, or be held liable for its market value, at the time it is taken from the tenant.
Enforcement. A judgment, rendered after trial, is enforceable by a writ of execution. A warrant conditionally awarding possession may be obtained by the landlord who prevails in an eviction suit.

The Role of Legal Counsel

As soon as you think a lease is or may be breached, you should consult with an attorney. There are several issues which may arise in a breach of lease situation to which a tenant or landlord will have no understanding of without the assistance of an attorney. First, the damages that can be recovered by the non-breaching party varies from case-to-case. A professional should assess your damages to determine whether seeking damages in court or through settlement is appropriate. The professional can help you assess whether pursuing the damages through the court system is cost effective and the likelihood of success. While damages are important, it is also a key factor in determining whether to pursue a case in court. Second, there are several different legal claims which may be available to the non-breaching party. Often parties in the middle of a lease dispute do not understand their rights under the contract and under various laws. A professional, who has litigated such disputes, knows various causes of action and defenses which become instrumental in helping you and your attorney determine the best avenue to pursue when taking action on your case. For example , it is not uncommon for even the most tenant friendly lease to contain provisions which are unconscionable and unduly favor one party. In these instances, the lease may become void or voidable under the law. An attorney can help you determine whether the lease may be unenforceable due to unconscionability. Third, an attorney is useful in documenting communications between the parties. If you are on the receiving end of a notice letter from an attorney you need to understand the potential consequences of ignoring the demand and whether the demand has merit. Proper responses to attorney demand letters require a thorough understanding of the lease and applicable statutory requirements. An attorney can help ensure you maintain your rights throughout the dispute and avoid the pitfalls one can encounter if proceeding without counsel. Lastly, litigation can be avoided. Attorneys help parties assess whether any non-judicial recourse may result in a beneficial outcome for all involved. For example, an early assessment of damages, rights and potential remedies has been instrumental in resolving several claims in mediation and through the preparation of detailed, level-headed correspondence to the breaching party. These practices are usually less costly than complete litigation through the court system.