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Damages for Breach of Commercial Lease under Connecticut Law


What kind of damages should the landlord expect if the tenant breaches a commercial lease by vacating the premises before the lease expires? It depends.

It depends on whether the remaining term of the lease is short term (i.e., two years or less) or long term (i.e., over two years). In some instances, it may also depend on a specific default provision in the lease. In Connecticut, when a tenant breaches a lease, the landlord has two options: (1) it can terminate the tenancy and sue for damages; or (2) it can refuse to accept the tenant’s surrender and sue to recover the rent as it becomes due. Under the first scenario, the landlord has a duty to mitigate its damages. If the landlord opts for the second scenario, it is under no duty to mitigate its damages. This Update deals with damages under the first option.

Generally, when the landlord terminates the tenancy after a breach, it is entitled to seek as damages an amount that would place the landlord in the same position it would have been had the tenant not breached the lease. For example, if the lease is a ten year lease at $100,000 per annum, and the tenant vacates after only one year, then the landlord is entitled to seek $900,000 in damages (in addition to attorneys’ fees in most circumstances) regardless of whether the landlord is likely to lease the space to a new tenant during the remaining nine year period. As a practical matter, however, Connecticut courts will resist applying such a sterile analysis. Rather, courts will demand what the law requires when the landlord terminates tenancy: that the landlord demonstrate that it has mitigated its damages (and continues to do so) by taking responsible steps to relet the premises (i.e., print advertisements; putting up signage; retaining realtors; etc.). In Connecticut, the duty to mitigate does not require the landlord to “sacrifice any substantial rights of its own” or to “exalt the interests of the tenant above its own.” It merely requires “reasonable efforts to minimize damages.” Nothing more. Consequently, so long as the court is satisfied that the landlord has made reasonable efforts to relet the premises, the landlord will be awarded damages for the tenant’s breach of the lease. The ability of the landlord to acquire full judgment based on the unexpired term of the lease generally depends on the number of years remaining on the lease. As a rule of thumb, if the remaining term of the lease has two years or less, a court would likely order an unconditional monetary judgment equivalent to the total rental payments that the landlord would have received from the tenant had the tenant remained at the premises. However, if the unexpired term has more than two years remaining, Connecticut courts are generally apprehensive about granting unconditional judgments for the full rental value of the unexpired term of the lease. The rationale behind this is that a court expects that the landlord would likely relet the premises within a two-year span. So, in these long-term cases, a court may enter judgment for damages for the full term of the lease with the stipulation that “judgment may be re-opened on motion of either party at such time as the premises are relet so that judgment may be modified accordingly.” Although this conditional judgment may seem somewhat untidy to landlords, it is designed as a stop-gap for “double-dipping” and unjust enrichment scenarios. Specifically, it prevents a landlord from collecting a monetary judgment for the unexpired term of the lease, then reletting the premises soon thereafter to a different tenant for all or part of the unexpired term.

Ultimately, however, a conditional judgment for breach of a long-term lease places the burden on the judgment tenant to monitor the rental status of the vacated premises so that it is in a position to move to re-open a judgment in cases where the landlord finds a replacement tenant after judgment has already been entered.