The phrase duty to mitigate is defined as, “A nonbreaching party’s … duty to make reasonable efforts to limit losses resulting from the other party’s breach … Not doing so precludes the party from collecting damages that might have been avoided.”  Black’s Law Dictionary (9^th Edition, 2009).

The Restatement of Contracts (Second) (“Restatement”) provides in pertinent part, “…damages are not recoverable for loss that the injured party could have avoided without undue risk, burden, or humiliation.  The injured party is not precluded from recovery by the rule stated in Subsection (1) to the extent that he has made reasonable but unsuccessful efforts to avoid loss.” Id at § 350 (1)-(2).  The approach cited in the Restatement is called the “modern approach.”  The modern approach imposes a general “duty” on the landlord to mitigate his/her/its damages by reletting or attempting to relet the premises.  The term duty is used loosely because the landlord’s failure to mitigate does not automatically result in liability to the landlord but rather the landlord’s damage award could be decreased for the failure to mitigate. The Restatement articulates the third approach, the modern trend, where the landlord has a duty to mitigate his/her/its damages in the event of a breach.

Pursuant to Fla. Stat. 83.595, if the tenant breaches a rental agreement and the landlord has obtained a writ of possession, or the tenant has surrendered possession to the landlord, or the tenant has abandoned the premises, the landlord has three options.

(1)Treat the lease as terminated and retake possession for his/her/its own purpose thus terminating any further liability of the tenant.  “This option results in the landlord’s not being able to sue for damages measured by the rent payments which accrue in the future after the landlord has retaken possession.” Hudson Pest Control, Inc. v. Westford Asset Management, Inc., 622 So.2d 546 (Fla. 5^th DCA 1993).  In Hudson Pest, the landlord took possession after breach and used the premises as his leasing offices.  Nevertheless, the court held that the landlord was not taking the property for the landlord’s own purposes because the landlord was attempting to rent the space and was willing to move his rental office when he found a tenant.

(2) The landlord may retake possession for the tenant. Under the second option the landlord must mitigate the damages by making a good-faith effort to release the property at a fair rental. Hudson Pest.

(3) The landlord can do nothing and hold the tenant liable for the rent as it comes due.  The Hudson court also stated that, no Florida appellate cases had dealt with an issue where the landlord chose the third option.

The landlord may charge liquidated damages if so provided in the written lease agreement.  

Florida follows the modified traditional approach which holds that the landlord generally has no duty to mitigate damages unless he/she/it re-takes possession for the tenant leaving the leasehold in effect.  Whether the landlord took possession for he/she/its own purpose or on account of the tenant is a question of fact.  The purpose for the landlord’s re-possession does not eliminate his right to damages; it simply marks the time in which the damages are calculated.  If re-possession is taken exclusively for the landlord’s purpose then the landlord’s damages cannot be calculated beyond the time of his re-possession.  If re-possession is taken for the tenant then damages are calculated from the time of breach but are offset by the proceeds of re-letting the premises.  The landlord’s efforts to mitigate his damages need not be successful; they merely need to be reasonable.  Litigation strategy would involve evidence of the landlord’s attempt to re-let the premises.

If you or a family member has received a Notice of Election and Demand for Sale, this signifies the beginning of the foreclosure process. You should consult with your lender, an attorney, financial adviser, accountant or other real estate expert to discuss your specific situation. The information contained here should be used only as a starting point for further discussion.

To identify your alternatives you must first determine your financial situation:

Solvent – Your monthly income exceeds your monthly expenses, and you have some savings or assets

Income = Expenses – Your monthly income equals your monthly expenses with little or no savings or assets

Insolvent – Your monthly expenses exceed your monthly income with no savings or assets

Next you need to determine the equity position on your property:

Positive – Your home is worth more than what you owe on your loan

Value = Loans – Your home value is equivalent to what you owe

Negative – Your home is worth less than what you owe

Now review the chart below to see what options might be available to you.

Definitions of Terms

Sale – Sell property, pay lender(s), may require cash to close

Refinance – Replace loan in foreclosure with new financing, may require cash to close

Loan Modification – A voluntary adjustment of the terms of a loan by the lender to enable the homeowner to continue making payments, may include repayment plan for missed payments

Short Sale – Sale transaction in which lien holders agree to accept less than full amount owed to release their liens against the property

Deed in Lieu – Process whereby lender agrees to take back title to property by way of voluntary transfer of title/deed to avoid the foreclosure process

Bankruptcy – Seek discharge of potential deficiency and other unsecured debts through Chapter 7 or Chapter 13, depending on qualification

In most cases the Plaintiff’s attorney is required to notify all of the affected class of people who might have been injuryed because of the conduct of the defendant lender.  That means if you have a loan, for example, with BOA and in an attorney in your state files a class action suit, you would most likely receive a notice that you “may” be included in the action.   And, if you are one of the “affected” mortgagors, in most cases are automatically included in the lawsuit unles you specifically opt out of the lawsuit.  Why would you opt out?   The reasons for opting out might be because perhaps you do not have the same claims as are alleged in the Complaint or perhaps you are already suing your lender. 

The best course of action is to not simply dismiss legal notices when you receive them in the mail.  While it is true that some notices may mean you are about top be sued, such notices may also result in good news like, your lender is being sued and if you are really lucky, maybe you will be one of the few whose mortgage is removed from the property.  Wouldn’t that be nice?

For over a year the four (4) major law firms specializing in foreclosure work have been under investigation by the Florida Attorney Generals Office.  The allegations are serious enough to cause the lenders to stop all foreclosure actions not already in the pipeline.  Moreover, these lenders have looked at their own foreclosure processes and realized that they too are complicit in the illegal and unethical conduct committed by the foreclosure mills.  Such illicit conduct includes forging documents, filing fraudulent documents with the court, committing perjury, and more.  Many lenders have tried to hide behind the acts of their counsel but unfortunately much is now surfacing about the lenders conduct.  Lenders have violated Pooling Serving Agreements, misplaced (either intentionally or unintentionally) loan documents making it impossible to determine who actually owns the notes and mortgages.

To make matters worse, our judicial system has let many homeowners wondering where the justice is in our system.  My favorite line from any movie comes from “The Star Chamber” where Michael Douglas, playing a Judge in the movie asks the Chief Judge, “Where is the justice?”  In response the Chief Justice says, “Justice is hidden within the law.”  So true.  Our judges are caught between a rock and a hard place in that, there are so many foreclosure cases clogging the system that it is impossible to hear the merits of every Motion presented before them.   What is worse, the volume of cases has forced many counties to bring retired judges back on a part time bases (four hours per day) just so they can clear 75 foreclosure cases from the docket.

With all that said, if you are unable to make your mortgage payment but believe you would be able to do so if the payment were lowered, we strongly recommend you work with your Lender to modify your mortgage.  If you have tried without success and you believe you cannot keep the house no matter the reduction, consider a shortsale.  You have options.