In this article we are going to discuss what happens when a tenant informs you – for whatever reason –that he is moving despite being under an unexpired residential lease agreement.
A residential lease agreement is an installment contract for a fixed duration of time. Alabama’s Landlord/Tenant Act does not allow either party (the landlord OR the tenant) to unilaterally terminate that contract
when both parties are fully performing. Simply put, there is no “I changed my mind” provision or “I want to buy a house” provision codified into state landlord/tenant law.
However, Ala. Code 35-9A-423(c) requires that a landlord mitigate their damages if a tenant abandons a leased premises. If a tenant decides to abandon the leased premises in the middle of a lease agreement, the
landlord cannot simply charge the tenant for the full value of the contract. To properly mitigate, an Alabama Landlord is under an affirmative obligation to make reasonable efforts to rent the leased
premises at a fair rental. This can become complicated when a landlord seeks to sell the property rather than rent it, but in most cases demonstrating mitigation is as simple as showing that the landlord treated it like she would any other vacant rental property. Mitigation does not require that a landlord rent the leased premises over other available units. Once the landlord is able to re-rent the premises, it cuts off the prior
tenant’s obligations under the lease agreement. Further, you cannot contract around your statutory duty to mitigate your damages.
Practically speaking, this means that if a tenant decides to move mid-lease, a landlord has to attempt to rerent the property. Once it re-rents, state law allows the landlord to charge the tenant for his lost rent, but
nothing else.
The mitigation requirement leaves both the tenant and the landlord in a state of flux and uncertainty because no one knows when the leased premises will re-rent.
A landlord can circumvent the mitigation problem by adding a “Buy-Out Addendum” to their lease agreement. Also referred to as a graceful exit provision, this Addendum clearly states the terms and conditions that a tenant must meet in order to terminate the lease agreement early. A Buy-Out Addendum typically requires that a tenant be current on their rent and give a sixty day notice (paying through that notice) as well as forfeiting any claim on their security deposit but the terms can run the gamut. A Buy-
Out Addendum may also address who bears the costs of “re-leasing” a property and issues relating to utility payments while the property sits vacant. You cannot require that the tenant agree to the Buy-Out
For a deeper discussion of a landlord’s options when a tenant fails to fulfill the terms of their Lease Contract, or for a copy of our Buy-Out Addendum, please contact the office at (256) 562 – 1999.

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