FACTS: After only two months of occupancy, a tenant breached his 12-month lease.  The landlord, following A.R.S. §33-1305, attempted to mitigate the tenant’s damages but the only applicant that applied wanted a six-month lease.  However, the HOA rule is that leases must be for one-year or longer.

ISSUE: Do the HOA’s CC&Rs override the duty to mitigate?

ANSWER: Probably.

DISCUSSION:         

A.R.S. §33-1305(A): The remedies provided by this chapter shall be so administered that the aggrieved party may recover appropriate damages. The aggrieved party has a duty to mitigate damages.

Although the landlord is trying to follow the law and mitigate the tenant’s damages, the landlord is bound by the HOA’s CC&Rs, which only allow one-year leases. As such, the landlord cannot rent to the six-month applicant. 

As a best business practice, the landlord should note in every lease entered into on properties within this particular HOA, that mitigation is limited to one-year leases pursuant to the CC&Rs.

Independent legal counsel should be consulted.