The Re-Letting Cost Clause: Why Landlords Rarely Enforce This Harsh Remedy

Commercial leases often include a powerful-looking provision: if the tenant defaults, the landlord can recover the costs of finding a new tenant. That usually means brokerage commissions, build-out costs, and even the landlord’s attorneys’ fees for re-letting the space. On paper, it looks like an intimidating remedy. In practice, it’s rarely enforced.

What the Clause Says

A typical re-letting clause provides that, upon tenant default, the landlord may charge the tenant for:

• Brokerage commissions to secure a replacement tenant
• Architectural, design, or construction costs to modify the space
• Attorneys’ fees related to lease-up of the premises
• Other administrative or marketing expenses

Why It’s Rarely Enforced

• Defaulting Tenants Lack Resources: By the time a tenant defaults, they usually don’t have funds to satisfy even the unpaid rent, much less extra penalties.
• Judgments Already Cover Rent + Legal Fees: Courts routinely award back rent and attorneys’ fees for the enforcement action. Landlords are usually satisfied with that remedy.
• Practical Collection Limits: Even if a judgment includes re-letting costs, actually collecting those amounts from an insolvent tenant is unlikely.

The Real-World Practice

In my experience litigating commercial lease disputes, landlords almost always prioritize securing a judgment for unpaid rent and legal fees. While the re-letting clause might be pled in a complaint, it rarely drives the outcome. The practical reality is that courts (and landlords) focus on recoverable amounts that stand a chance of being collected.

What Tenants Should Know

Tenants shouldn’t ignore these clauses—they reflect the full scope of potential liability. But they should also understand that in practice, landlords rarely pursue every theoretical remedy. Still, the clause is leverage: it can influence settlement discussions and give landlords bargaining power.

Bottom Line

The re-letting cost clause is more sword than shield. It looms large on paper, but rarely cuts in real life. At JDE Law Firm, PLLC, I help both landlords and tenants cut through the legal language and understand what these remedies really mean in practice.

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