New York City property owners in the residential rental market are likely facing increasing numbers of formerly stable renters who are breaking their leases and just walking away. The media is replete with stories about people who can no longer afford their apartments and are moving to suburban and rural places where rent is lower, consolidating their households with extended family or relocating because they now work from home full time.
When a New York residential tenant abandons the premises before the end of the lease without paying the rent that will become due until the lease is over, what can the owner do to collect this unpaid rent?
Mitigation of damages
New York law requires that when a residential tenant abandons the premises before the lease is over, the owner has the duty to mitigate damages. This means the landlord must “in good faith and according to the [owner’s] resources and abilities, take reasonable and customary actions to rent the premises at fair market value or at the rate agreed to during the term of the tenancy, whichever is lower.”
Reasonable, customary methods for renting the unit might be to show it virtually or in-person to potential renters, to list the opening with a broker and on Internet rental sites, and to use signage. If the owner re-rents it when the new lease begins the rent due on the abandoned lease would stop accumulating against the former tenant.
The duty to mitigate is absolute. Even if the lease – a binding contract – excuses the duty, that provision is void under New York statute. At any subsequent court proceeding for rent, the owner has the burden of proving that they engaged in reasonable mitigation.
In New York City, the laws that apply to this situation are precise and detailed. When rent is at least five days late, the owner must send a written notice to the tenant of the lateness using certified mail. The owner must also send a written demand for rent detailing the timeline and dollar amounts involved and giving the tenant 14 days to pay before the owner petitions the court for the unpaid rent.
Even though the tenant effectively terminated the lease early by leaving the premises, rent becomes due according to the lease’s timetable – rent is not accelerated, which would have made it all due at the time of abandonment. This makes sense considering the duty to mitigate, which can stop the accumulation of past-due rent a new lease term begins with a new tenant.
The owner may bring a court proceeding for nonpayment of rent against the tenant who abandoned the property and broke the lease. The nonpayment proceedings begin with the owner properly serving a notice of petition and the petition itself on the tenant. Service requirements are specific, and the owner must correctly adhere to them.
If they win a judgment and the tenant does not pay it, it may become necessary to enforce the judgment such as through court action to reach the tenant’s bank accounts or garnish their wages.