The Arizona Residential Landlord and Tenant Act, under A.R.S. § 33-1305(A), provides that in a dispute in which a party claims he was damaged, the aggrieved party has a “duty to mitigate damages.” What does this mean?
Mitigating damages means that the party who is wronged and who has incurred an expense has an obligation to minimize the effects and losses resulting from the injury. So if the party who was injured incurred expenses which could have been reasonably avoided, he would not be able to recover those expenses.
This is a very important principle that generally favors tenants. There are a variety of ways in which tenants damage landlords, and landlords routinely take advantage of those situations and increase the damages up as high as they can. For example, if a tenant moves out of his apartment before the expiration of his lease, the landlord has a duty to attempt to re-rent the apartment. But many landlords, particularly those in large complexes where there are vacancies, do not show the apartments to prospective renters of tenants who have moved but who still have a lease in effect. This is wrong.
One of the things we do at Arizona Tenants Union to help tenants terminate their leases. Generally this requires a series of notices to be given to the landlord prior to termination. But even if a tenant moves out of his apartment without sending the notices, we can often still help him minimize, or mitigate, his liability for future rent owing. This is because the landlord has an affirmative obligation to show the tenant’s vacant apartment. If he does not do so, the tenant is released from further liability because the landlord’s failed to mitigate the tenant’s damages.
In the 1960s, after the Civil Rights Act and fair housing laws were enacted, civil rights activists often sent testers to apartments to see if the landlord would rent to blacks tenants. They would send a white tenant with good credentials, and then a black tenant with slightly better credentials, to test how the landlord would react. If the landlord rented to the white person, they would then send a second and third tester until a pattern of discrimination emerged. They would then use this data to prosecute the landlords who were disobeying the law.
We have adapted that practice by using testers for tenants who have broken their leases to see if the landlord shows the tenant’s vacant apartment for rent. If he fails to show that apartment, he has failed to make an affirmative attempt to mitigate the tenant’s damages by showing the apartment to a prospective renter. If we can show a pattern of the landlord failing to show the apartment, we can craft a defense to the landlord’s claim.
This principle also arises in security deposit disputes. Landlords often hold the security deposit of a month-to-month tenant who is required to give the landlord a 30-day notice of his intent to terminate his tenancy and fails to do so. But if the landlord fails to make an affirmative effort to re-rent the apartment, he has failed to mitigate the tenant’s damages and he is not allowed to hold the security deposit, at least not for that reason.
The landlord’s failure to mitigate damages is the most common tenant complaint in security deposit disputes. Landlords routinely see security deposits as funds they can use to renovate apartments, and they try to find ways to justify withholding as much of the security deposit as they can. So if a tenant is living in an apartment and his dog chews up the carpet or he is otherwise responsible for damage, it is the standard practice of landlords to take the entire cost of new carpet out of the tenant’s security deposit after he moves. But under the mitigation of damages rule, the landlord is not allowed to do this. He is only allowed to recover the depreciated value of the carpet. So if the carpet is already three years old and has a lifespan of, say, five years total, the tenant would only be responsible for 2/5 of the cost of replacing the carpets.
Similarly, many leases provide that the tenant is responsible for for “liquidated damages,” meaning specific dollar amounts assigned to different types of damages to the apartment. So the lease may provide that a hole in the wall costs $10.00; a dirty carpet costs $150 to clean; a dirty sink costs $50.00. But those lease provisions violate the mitigation of damages principle. What if it only cost the landlord $75.00 to clean the carpet? What if the landlord used his handyman who was on salary to fix the hole in the wall, so that the landlord did not incur any additional expense? In those cases, the landlord is failing to mitigate damages, and the tenant has a claim for refund of the entire wrongfully withheld amount of his entire security deposit, and in some cases, an additional double that amount for the landlord’s misconduct.
Tenants, too, are required to mitigate the landlord’s damages. This comes up, for example, in a situation where a tenant, after giving proper notice to the landlord, uses a portion of his rent money to make a repair. In such situations the tenant is required to mitigate the landlord’s damages by making the repair using the least expensive method he can. So a tenant is not entitled to replace an entire window screen when one section of it is ripped; he must instead try to patch the ripped section at a reduced cost.
Mitigation of damages is a very important principle and it comes up in a variety of circumstances. The ones discussed above are just a few of those circumstances. If you think your landlord is unreasonably costing you money by inflating certain charges, for example, by trying to enforce a lease provision that you must pay a bounced check fee that is greater than that which the bank charges, call Arizona Tenants Union. We understand the principles that govern landlord/tenant relationships and we will make sure your rights are being enforced and you get what you are entitled to.