Acceptance of Surrender Eliminates Right to Collect Rent

Facts: In 2005, an owner and tenant entered into a five-year lease. In May 2007, after the tenant failed to pay its rent and placed a “Store Closing” sign in its window, the owner began looking for a replacement tenant.

The owner signed a lease with a new tenant for a period of five years and two months, with a start date of June 1, 2007. As part of the agreement, the new tenant was given possession of the premises on June 1, 2007, rent free for two months; the first rent payment was due Aug. 1, 2007.

The owner then sued the original tenant in small claims court for three months of unpaid rent. The original tenant argued that she owed rent for May only, because the new tenant took possession of the premises on June 1. After losing in small claims court, the tenant asked for a trial. At trial, the court ruled in favor of the owner. The tenant appealed.

Decision: A Wisconsin appeals court ruled in favor of the tenant.

Reasoning: According to Wisconsin state law, if an owner accepts the surrender of a lease from a tenant, it forfeits its right to collect any rent accruing after the date of acceptance. In the present case, the court ruled that because the owner accepted the surrender of the lease on June 1, 2007, the tenant was responsible only for May rent.

• Dean Puccetti and Wendee Puccetti v. Wendy Olsen, January 2009