## Facts

- Kenneth Cole Productions, Inc. leased commercial office space at 29 West 57th Street, Manhattan, for a term from January 1, 1985 through December 31, 1994.
- In December 1991, after a change in building ownership, Kenneth Cole vacated the premises, asserting deteriorated building services.
- The landlord obtained a judgment and warrant of eviction in a summary nonpayment proceeding on May 19, 1992.
- The landlord then sued for rent arrears and damages for the remaining lease term.
- The tenant asserted as an affirmative defense that the landlord failed to mitigate damages by not attempting to relet the premises.

## Issues

1. Whether, under New York law, a commercial landlord must mitigate damages by reletting or attempting to relet premises after a tenant abandons and is evicted for nonpayment.

## Decision

- The Court of Appeals affirmed judgment for the landlord.
- The court held a commercial landlord has no duty to mitigate damages after abandonment and eviction when the landlord does not accept surrender.
- The tenant remained liable for rent under the lease terms, without reduction based on the landlord’s failure to seek a replacement tenant.

## Legal Principles

- In New York, a lease is treated as a present transfer of an estate in real property, not merely an executory contract.
- Once a lease is executed, the tenant’s obligation to pay rent is fixed by the lease terms; absent acceptance of surrender, the landlord has no obligation to relet or attempt to relet for the tenant’s benefit.
- After abandonment, a landlord may: (1) do nothing and sue for rent as it comes due; (2) accept surrender and relet for the landlord’s own account, ending the tenant’s future rent liability; or (3) reenter and relet for the tenant’s benefit after notifying the tenant.
- A general contract-law mitigation rule does not apply to impose a reletting duty on commercial landlords where the landlord has not accepted surrender.

## Conclusion

The court reaffirmed the traditional New York rule that, in commercial leasing, a landlord may hold a tenant to the lease’s rent obligations after abandonment and eviction without undertaking efforts to mitigate damages by reletting, unless the landlord accepts surrender or otherwise elects to relet for the tenant’s benefit.


Holy Props. Ltd., L.P. v. Kenneth Cole Prods., Inc., 87 N.Y.2d 130 (1995)