Written by attorneys · grounded in primary & secondary sources — see below
The amount of money for which the use of similar property could be obtained in the market. This objective exchange value of use measures damages for loss of use, supports proportional rent abatement when premises become unusable, and determines amounts collected by receivers or recoverable in restitution.
Sources & Authorities
How it applies
Common Examples
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Tenant Seeks Rent Abatement After Flood
Rita Russell leased fifty acres and a barn from Roberto Reyes for five years at two thousand dollars monthly. Heavy rains flooded twenty acres and rendered the barn unusable for four months. The fair rental value of the premises dropped proportionally because the flooded land and storage space could no longer support operations. Russell withheld one thousand dollars monthly during repairs, and the court abated rent to the proportion the post-flood rental value bore to the pre-flood value until repairs finished.
Junior Mortgagee Retains Collected Rents
Redwood Bank, holding a junior mortgage on an office building, obtained appointment of a receiver who collected fifty thousand dollars in net rents after taxes and maintenance. Riverside Healthcare, the senior mortgagee, then secured its own receiver. The junior receiver retained the fifty thousand dollars for the benefit of Redwood Bank because the senior receiver took possession only after those rents had already been collected.
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Statutes
Restatements
Hornbooks
Dictionaries
Landlord Disappointed by Fixed Rent During Inflation
Rebecca Ross leased commercial property to a tenant under a long-term lease with fixed monthly rent. Inflation raised the current rental value of comparable space well above the contract rent. Ross received only the original amount each month even though market rents had increased substantially. The fixed receipts created a growing gap between the lease income and the property's true rental value.
Aluminum Company of America v. Essex Group, Inc.499 F. Supp. 53 (W.D. Pa. 1980)
Common questions
Frequently Asked
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How is rental value used to calculate rent abatement?+
When a tenant is entitled to abatement, rent is reduced to the proportion that the fair rental value after the impairing event bears to the fair rental value before the event. Abatement continues until the default is cured or the lease ends. The comparison relies on objective market evidence of use value rather than the tenant's actual losses.
Supporting sources
Does a receiver appointed by a junior mortgagee keep rents collected before a senior receiver takes over?+
Yes. The junior receiver may retain net rents collected before the senior receiver is appointed, after paying taxes and reasonable maintenance expenses. Once the senior receiver is appointed, the junior receiver must account for any later rents or unauthorized prepayments to the senior receiver.
Supporting sources
When may a plaintiff recover rental value as damages for loss of use?+
A plaintiff may recover rental value when breach or tort delays use of property and loss in value cannot be proved with reasonable certainty. The measure is the objective exchange value of the property's use during the period of deprivation, regardless of whether the plaintiff would have rented the property to others.
Supporting sources
Is rental value relevant when a nuisance reduces a property's appeal to tenants?+
Yes. Evidence that a nuisance lowered the property's rental appeal supports a finding of substantial interference with use and enjoyment. Courts may award damages measured by the resulting decline in rental value for the period of the nuisance.
Supporting sources
499 F. Supp. 53 (W.D. Pa. 1980)Contracts
…of pocket loss due to inflation, but he may suffer serious disappointment if his rent receipts fall greatly behind the current rental value of his property. This sort of disappointment seems less serious and relief from it seems more destructive of contract expectations than the disappointment of serious out of pocket losses…