Q: Can landlord skip credit check and demand my legal fees?
I am the former owner of a small business incorporated in Kentucky with a physical presence in Ohio. I had to abandon the commercial property early. The landlord did not conduct due diligence when attempting to re-let the property and incurred $15,000 in legal fees only to find out, when preparing to execute a new agreement, that the new lessee could not obtain the financing needed for start-up capital. Can the landlord's failure to verify the lessee's credit standing be considered a violation of the doctrine of avoidable consequences under a lease clause that requires reasonable mitigation efforts? The landlord is now demanding that I pay these legal fees, despite not communicating with me during the re-letting process and previously requiring detailed financial statements from me while negotiating the original lease.
A: It is difficult to answer this question without knowing what your lease said about default and early termination by tenant. There is no “doctrine of unavoidable consequences” in the way you describe; mitigation is an affirmative defense that will probably not relieve you of liability from breaking your lease early. You may also have a liquidated damages clause. Contact an attorney and have them review the lease agreement to get a more clear answer.
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