Chapter 4 - § 4.1 • DUTY TO OCCUPY

• Jurisdiction: Colorado

§ 4.1 • DUTY TO OCCUPY

In the absence of an express covenant, a tenant under a lease providing for a fixed amount of rent is generally not required to occupy and use the demised premises. He may refuse to take possession, occupy only part of the premises, or abandon possession at any time, so long as he continues to pay the rent and avoids committing waste.

Robert S. Schoshinski, American Law of Landlord and Tenant § 5:1 (Law. Coop. Publ'g Co. 1980).

§ 4.1.1—Anticipatory Repudiation

Anticipatory repudiation of a contract occurs upon a party's definite and unequivocal manifestation of its intention that it will not perform as required by the contract. Johnson v. Benson, 725 P.2d 21 (Colo. App. 1986). In Highlands Ranch University Park, LLC v. Uno of Highlands Ranch, Inc., 129 P.3d 1020 (Colo. App. 2005), an anticipatory repudiation or renunciation of a lease occurred when a commercial tenant "unequivocally told landlord on two occasions that it would not perform under the lease and, thereafter, suggested that the landlord seek another tenant." Id. at 1023. The tenant did not take possession of the site and did not commence construction as required by the lease, and the tenant's statements clearly evidenced its definite intent not to perform.

Under these circumstances, the landlord was entitled to damages for the anticipatory breach. The Colorado Court of Appeals first recognized that "an innocent landlord is entitled to recover only the amount of damages required to place it in the same position it would have occupied had the tenant performed according to the terms of the lease." Id. at 1026 (citing Schneiker v. Gordon, 732 P.2d 603 (Colo. 1987)). The court then stated that "weighing a landlord's mitigation efforts against the tenant's liability for rental usually involves 'the reasonable rental value of the premises for the duration of the term of the lease.'" Id. However, there is nothing in the case law that precludes a landlord and tenant from establishing a different "temporal framework" for calculating damages. But because the lease did not contain any limitation on any offset against the tenant's liability, the tenant's liability for rent for the entire term of the lease had to be offset by the amount of excess rent anticipated from the replacement tenants. The court held that, on remand, the trial court had to (1) determine the extent that the present value of the replacement rental exceeded the present value of the rent payable under the lease, and (2) determine the extent that the value of the building that the landlord constructed, projected as of the termination date of the lease, exceeded the terminal value of the building that the tenant should have constructed, reduced to present value.

§ 4.1.2—Abandonment

Abandonment of the premises is shown by proof of the act of abandonment and of the intent to relinquish the premises. Under Martinez v. Steinbaum, 623 P.2d 49 (Colo. 1981), proof of the intent may be circumstantial and may be based on the parties' conduct. In Martinez, the court held that a landlord had met his burden of proof on the question of the tenant's abandonment of the premises by showing that the tenant had been absent for eight weeks without paying rent, and with evidence that the tenant's concern was limited to the fate of his possessions. The court concluded that abandonment had occurred even though the tenant had informed the landlord by telephone that he was stranded in Montana and was attempting to obtain funds to return to Colorado.

If a tenant abandons the premises and the payment of rent has not been made, a landlord is free to regain possession of the premises without the need to resort to judicial process. Ruple v. Taughenbaugh, 72 Colo. 171, 210 P. 72 (1922), overruled on other grounds, Schneiker v. Gordon, 732 P.2d 603 (Colo. 1987).

The continuing viability of the holdings in Martinez and Ruple must be measured against C.R.S. § 38-12-510, the statute that prohibits removal of a tenant from a dwelling unit without resort to court process except in limited situations. One of these situations occurs when the unit has...