Lease Defaults and the Efficient Mitigation of Damages

Thomas Miceli, C. F. Sirmans and Geoffrey K. Turnbull
Additional contact information
C. F. Sirmans: Florida State University
Geoffrey K. Turnbull: Georgia State University

No 2009-07, Working papers from University of Connecticut, Department of Economics

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.

Keywords: contracts; land development; leases; mitigation of damages (search for similar items in EconPapers)
JEL-codes: K11 K12 O18 R11 (search for similar items in EconPapers)
Date: 2009-01
New Economics Papers: this item is included in nep-agr, nep-law and nep-ure
Note: We acknowledge the helpful comments of Matthew Kahn and two reviewers.
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Related works:
Journal Article: LEASE DEFAULTS AND THE EFFICIENT MITIGATION OF DAMAGES* (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:uct:uconnp:2009-07

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