Commercial lease termination: the recovery of damages by a landlord

If a tenant breaches a lease by defaulting on the payment of rent resulting in the termination of the lease, a landlord will be entitled to recover damages for the rental arrears up to the termination date. In addition, the landlord may also seek to claim loss of bargain damages.

Loss of Bargain Damages

Loss of bargain damages represent the rent that the landlord would have been entitled to under the lease had the tenancy continued until the contracted expiry date.

A landlord who is seeking loss of bargain damages must make reasonable efforts to mitigate their loss. They would, for example, be expected to have advertised the premises to find a new tenant at an appropriate rent. In one particular case, a landlord advertised the vacant premises at a much higher rent than had been the case. It took over a year to find a replacement tenant, and then only after reducing the rent to its previous level. Because of the landlord's conduct, the tribunal hearing the case reduced the loss of bargain damages to the equivalent of three months’ rent rather than the fifteen months the premises were actually vacant.

Contact our Commercial and Leasing Dispute Lawyers based in Sydney, NSW

Szabo & Associates Solicitors are specialists in commercial property and lease dispute matters. If you require assistance in reviewing your commercial lease documentation or advice about your rights under a lease, please get in touch with us on 02 9281 5088 or complete the online contact form.