Landlord Need Not Accept Defaulting Tenant’s Rent to Mitigate Damages

What Happened: At the start of the COVID crisis in February 2020, a restaurant tenant vacated its property and told the landlord that it wouldn’t pay rent in March, April, May, or June. The tenant offered to resume rent payments in July, but the landlord had already hired a broker to manage and re-lease the property by then. After signing a lease in September, the new tenant moved into the property in February 2021. The landlord then sued the restaurant and won $793,115 in damages, attorney’s fees, court costs, and other costs. While acknowledging liability for four months of unpaid rent, the restaurant claimed that the landlord’s rejection of the July rent offer violated its duty to mitigate and asked the court to reduce the damages award. The court refused.  

Ruling: The Texas appeals court upheld the lower court’s rejection of the restaurant’s mitigation of damages claim.

Reasoning: As in other states where landlords must mitigate damages, in Texas a landlord isn’t required to accept any willing tenant that comes along. The replacement tenant must be “suitable under the circumstances.” In Texas, tenants also have the burden of proving the landlord’s failure to mitigate. In this case, the restaurant tenant furnished no “law or explanation” as to how a breaching tenant that expressly refused to pay four months of rent was a suitable tenant under the circumstances. Accordingly, the landlord’s refusal to accept the July rent offer wasn’t a failure to mitigate. The court also found that the lease acceleration clause allowing the landlord to charge the defaulting tenant for unpaid rent during the remainder of the lease term (minus amounts received from a new tenant) wasn’t an unenforceable penalty. 

• AA Pollo, Inc. v. Bitters Jsel, LLC, 2025 Tex. App. LEXIS 8741, 2025 LX 596245, 2025 WL 3169331