The Language of Real Estate – Learning Real Estate one word (or phrase) at a time…
Abandonment
Abandonment in real estate refers to the voluntary or involuntary relinquishment of a property by its owner or occupant, without vesting this interest in any other person.
It typically means that the property is no longer being used or maintained and is left vacant or in a state of disrepair. This can have legal and financial implications, including potential changes in property ownership or rights.
An overt act is usually needed to prove abandonment, such as an owner’s failure to pay real estate taxes.
Each case of possible abandonment must be evaluated to determine whether the property has indeed been legally abandoned.
Mere nonuse of the property is insufficient evidence that the possessor will not reclaim the property.
Abandonment can be distinguished from “surrender,” which requires some form of agreement (as between lessor and lessee), and from “forfeiture,” which occurs against the owner’s wishes.
A tenant who vacates leased property, no longer intending to perform under the terms of the lease, is abandoning the property. The landlord then regains full possession and control, but the lessee remains liable for rent until the lease expires. If the landlord accepts the abandonment (agrees to terminate the tenancy), it is recognized as a surrender, and the tenant is not obligated to pay future rents under the terms of the lease.
The Uniform Residential Landlord and Tenant Act, adopted by many states, provides that the landlord must make “reasonable efforts” to relet abandoned property at a fair rental. (See Uniform Residential Landlord and Tenant Act [URLTA].)
In states that recognize homestead rights, a claimant may abandon a homestead by filing a declaration of abandonment in the public record. Merely leaving such premises will not officially constitute an abandonment of a person’s homestead rights. (See homestead.)
An abandonment may have income tax consequences. The taxpayer-owner who abandons real estate may be able to treat the abandonment as a “sale” for which the taxpayer received no payment (other than relief from any mortgages or liens). In this case, the taxpayer may claim a loss to the extent of the adjusted basis in the property.
Most states have laws covering the rights and obligations of the government and various parties in cases of unclaimed or abandoned personal property. Landlords of miniwarehouses, for example, should carefully examine the possible liabilities involved in disposing of unclaimed property at the termination of a rental. (See escheat.)
