Lease Defaults and the Efficient Mitigation of Damages

16 Pages Posted: 2 Dec 2009

See all articles by Thomas J. Miceli

Thomas J. Miceli

University of Connecticut - Department of Economics

C. F. Sirmans

Florida State University - Department of Risk Management, Insurance, Real Estate & Business Law

Geoffrey K. Turnbull

Georgia State University - Department of Economics

Date Written: 2009-01

Abstract

The traditional law of leases imposed no duty on landlords to mitigate damages in the event of tenant breach, whereas the modern law of leases does. An economic model of leases, in which absentee tenants may or may not intend to breach, shows that the traditional rule promotes tenant investment in the property by discouraging landlord entry. In contrast, the modern rule prevents the property from being left idle by encouraging landlords to enter and re-let abandoned property. The model reflects the historic use of the traditional rule for agricultural leases, where absentee use was valuable, and the emergence of the modern rule for residential leases, where the primary use entails continuous occupation.

Suggested Citation

Miceli, Thomas J. and Sirmans, C. F. and Turnbull, Geoffrey K., Lease Defaults and the Efficient Mitigation of Damages (2009-01). Journal of Regional Science, Vol. 49, Issue 5, pp. 915-930, December 2009. Available at SSRN: https://ssrn.com/abstract=1516795 or http://dx.doi.org/10.1111/j.1467-9787.2009.00615.x

Thomas J. Miceli (Contact Author)

University of Connecticut - Department of Economics ( email )

365 Fairfield Way, U-1063
Storrs, CT 06269-1063
United States
860-486-5810 (Phone)
860-486-4463 (Fax)

C. F. Sirmans

Florida State University - Department of Risk Management, Insurance, Real Estate & Business Law ( email )

Tallahasse, FL 32306
United States
850 644-4076 (Phone)

HOME PAGE: http://www.cob.fsu.edu/rmi

Geoffrey K. Turnbull

Georgia State University - Department of Economics ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
United States
404-651-0419 (Phone)
404-651-2737 (Fax)

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