Frequently Asked Legal Questions
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Commerical Leasing & Evictions -- Does a landlord need to serve two notices when the lease requires the landlord to serve a five (or more) day notice to cure defaults (California law requires a landlord to serve
a three-day notice to pay or quit)?

No.  A landlord should serve one five-day notice to pay or quit unless the lease specifically requires the service of both notices.  Why?

The service of a notice to pay or quit in not less than three days satisfies California law.  The need to give a tenant at least three days to pay money due under the lease is obvious.  The need to demand a surrender of the leased premises is not.

California adopted the unlawful detainer laws to give landlords a speedy recovery of real property unlawfully held by a tenant, which in this case would be after a tenant failed to comply with one-last demand to pay money actually due under the lease.  An unlawful detainer action, therefore, enforces a landlord’s demand for possession of the leased premises from a defaulting tenant.

The service of a notice to pay or quit in five days (or whatever additional cure period the lease gives the tenant) satisfies the default provisions in the lease.  The notice to pay or quit includes a written demand for the payment of money due under the lease.  As long as the landlord gives the tenant the lease-required opportunity to cure monetary defaults, a notice to pay or quit satisfies the lease requirements.  Since the California contract law generally requires substantial compliance with lease provisions, a landlord can “save” a notice to pay or quit which fails to give the lease-required minimum time to cure.  All a landlord needs to do is to wait until the lease-required minimum time to cure has expired to file the unlawful detainer action.

Commercial Leasing & Evictions — Does a landlord need to demand the precise amount of rent actually due on the notice date?

Yes, for residential leases.  Not necessarily for commercial leases.  Why?

American law has evolved from English law, typically by first adopting English law and then changing it to accommodate changing social values, etc.  English law had required a demand for the exact amount owed, on the leased premises, on the date the rent was due.  California adopted the exact amount owed requirement in the late 1800’s.  That rule still applies to residential leases.

California law, in 1991, gave a commercial landlord the ability to recover possession after making a reasonable mistake in the demand for the payment of rent.  If the landlord demands the payment of what is identified in the notice as an estimate, the landlord can recover possession, even if the court determines that the amount actually due was less than the amount demanded, when:  (1) the landlord’s estimate was reasonable, and (2) the tenant failed to pay a reasonable estimate.

Regulation of Public Forum — Can a shopping center owner use an application and permit procedure to regulate the use of its property as a public forum? 

Yes.  Why?

The California Constitution (not the First Amendment of the US Constitution) protects the public’s right to use the common areas of a privately owned shopping center as a public forum.  The people who refuse to apply for a permit to use a shopping center as a public forum are ignoring the private property onwer's right to regulate the use of the common areas as a public forum.

A shopping center has the right to regulate the use of its common areas with an application and permit procedure.  The California appellate courts have twice approved the owner’s use of an application and permit procedure.  The owner has a right to know who is using the common areas as a public forum.  The owner has the right to participate in planning the time, place and manner of the public forum use to avoid interference with normal business operations.  And the owner also has the right to prohibit uses which threaten health and welfare as well as particularly offensive uses.

No one has a constitutional right to ignore the owner’s application and permit procedure.   This includes the people who gather signatures for referendum and recall petitions, and labor unions.

Regulation of Public Forum — Can a shopping center owner enforce unwritten rules regulating the use of the common areas as a public forum?

No. Why?

The California Constitution gives a shopping center owner the right to reasonably regulate the time, place, and manner of expressive activities (use of the shopping center as a public forum) to assure that such activities do not interfere with normal business operations.  This includes a discretionary regulation of the time, place, and manner of the public forum use.

However, a California appellate case has ruled that the owner cannot rely on unwritten rules to discretionarily regulate public forum uses.  The owner should expect the courts to apply the same rule to any other regulation of the use of the common areas as a public forum.

The only exception would be the “regulation” afforded by California criminal trespass laws.  That is, arresting a person who is obstructing or intimidating the customers or employees of a business.

Regulation of Public Forum — Can a shopping center owner arrest a person because he/she is using the common areas of the shopping center as public forum without applying for a permit?

No.  Why?

Using a privately owned shopping center as a public forum without applying for a permit is a civil trespass.  The owner has the right to secure a temporary restraining order, preliminary injunction, and permanent injunction to prevent continuing or repeated civil trespasses.  The owner also has a right to recover damages caused by a civil trespass, even if only nominal damages.

The California codes define criminal conduct.  The current definitions of criminal trespasses do not include using a shopping center as a public forum without applying for a permit.  To commit a criminal trespass on property generally open to the public, a person must obstruct or intimidate the customers or employees of a business.  This is why the only California appellate case to look this question decided that refusing to apply for a permit was not a criminal trespass.

Commercial Leasing & Evictions — Can a commercial landlord accept payments after serving a notice to pay or quit without waiving the right to evict?

Yes, but there are restrictions, etc.

First, the landlord must accept all payments prior to the expiration of the cure period.  If the tenant pays the amount demanded before the cure period expires, the landlord has no right to evict because the tenant has cured the default.

Second, the lease can prevent waivers.  Without an express reservation of the right to accept payments, the acceptance of a rent payment after the expiration of the cure period is the classical example of an implied waiver.  However, reservations of the right to accept rent without waiving rights (other than the right to collect the rent accepted) are enforceable.

Third, California law, in 1991, gave a commercial landlord whose lease does not prevent waivers the right to accept payments after the expiration of the cure period without losing the right to evict.  If the landlord accepts a payment before filing the unlawful detainer compliant, the landlord must account for the payment in the complaint.  If the landlord accepts a payment after filing the complaint, the landlord must either notify the tenant that the payment is accepted without waiving the right to evict, or must have informed the tenant in the notice to pay quit that such payments would be accepted without a waiver.  This is why many notices to pay or quit inform the tenant that the landlord has the right to collect such payments without waving the right to evict.

Fourth, the section of California law giving a landlord the right to accept payments can be read to include, in addition to the unpaid rent demanded in the notice, the rent awarded in an unlawful detainer action as the reasonable daily rental value of the premises between the date the notice expires and the date of judgment.  However, California unlawful detainer law, in certain contexts, carefully distinguishes between the “rent” due under the lease and the “damages” caused by the tenant’s remaining in possession of the premises after the notice to pay or quit expires.  When applied to the use of the term “rent” in this section of California law, this distinction would prevent the landlord from accepting payments in excess of the amount demanded in the notice to pay or quit.  This is why the landlord who is not relying on the anti-waiver provisions of the lease needs to think twice about accepting payments in excess of the amount demanded in the notice to pay or quit.

Fifth, nothing discussed above prevents the landlord, after accepting a payment, from starting over by serving a new notice.

Commercial Leasing — Is there a significant difference between a “breach” of the lease and an “Event of Default”?

Yes.  This sounds like an esoteric, legal question with little practical business significance.  It is not.

Many commercial leases condition multiple tenant rights on the absence of a default.  The examples valubale tenant rights include the rights to assign or sublease, and options to extend.  Landlords tend to add this condition to more and more tenant rights, and it is difficult for tenants to push an objection to condition targeting defaulting tenants.

The practical problem is that, when read literally, the condition in the typical commerical lease is the absence of a breach, not the existence of breach which the tenant failed to cure in the lease-required time after the service of the lease-required notice.

Most commercial leases include a defined term “Event of Default.”  “Events of Default” occur only after the landlord serves the required written notice of default in the negotiated manner, to the negotiated person(s) at the negotiated address(es), and the tenant fails to cure the default within the negotiated period of time.  The definition of an “Event of Default” presupposes the occurrence of a breach of the lease.  That is, the landlord is serving a demand to cure because the tenant has done, or failed to do, something required by the lease.  A careful reading of the “Event of Default” provision discloses that the term only identifies when the tenant’s breach of the lease justifies the landlord’s terminating the lease and recovering possession of the leased premises, or enforcing a right to collect money.

A careful reading of the typical "absence of default" condition discloses that the provision does not use the defined term “Event of Default.”  Rather, these conditions simply require the absence of a default, which of course means that the tenant has not breached the lease.  The landlord, therefore, can logically argue against the use of an “Event of Default” to define the condition which deprives the tenant of an important right.

The tenant is not without arguments for using the “Event of Default" to define the condition which would deprive the tenant of an important right.

  • The rules for interpreting the words in a contract favor the tenant.  If reasonably possible, the words in a contract are supposed to be interpreted to avoid a forfeiture of rights.
  • Case law supports a reading of the condition as implicitly requiring a breach of a material covenant.  This gives the court the opportunity to use the defintion of an "Event of Default" as the standard for determing whether the breach was material in the relevant context, or to otherwise conclude that the breach was not material in the relevant context.
  • If the lease does not include a provision which allows the landlord to accept rent without waiving rights, claims, etc., the landlord’s post-breach of acceptance of rent would be a waiver of that breach.
  • Even if the lease includes an anti-waiver provision, a tenant could rely on the subtle differences between estoppel and waiver to claim that the landlord post-breach conduct prevents the landlord from relying on a particular breach.

While litigators certainly appreciate the opportunity to help, there is little benefit to putting the resolution of this question in the hands or a judge or jury, or having to spend considerable time and money on the litigation of a legitimate dispute.  The better strategy is to avoid the problem when the lease is negotiated. 

The easiest solution would be to identify the condition as the absence of an “Event of Default.”  Since the rights to assign and sublease, and options to extend, are such valuable tenant rights, the tenant has the burden of requeting a clarifciation of the triggering condition.  There should be no doubt about or confusion over when the tenant has, or does not have, such valuable rights.  The breach should be a material one, which in this context means one that the landlord thought it was important enough to have objected in writing.  And, if the tenant cures the breach within the agreed upon time, the breach should be cured for all purposes.

Commercial Leasing & Evictions — Can a commercial lease waive the tenant’s right to relief from forfeiture?

That is a good question.  The court have not looked at this colllision between two legal principles.

As long as the tenant requests relief from forfeiture before the eviction date, the tenant has the right to request that the court reinstate the terminated lease on the condition the tenant cures the breach which caused the eviction and pays the court’s award for costs and attorney’s fees.  More and more commercial leases are including a waiver of this right to from forfeiture.  Is that waiver enforceable?

The appellate courts have yet to resolve the conflict between two legal principles.  First, the law abhors forfeitures.  Whenever reasonably possible, the courts are supposed to interpret leases to avoid a forfeiture of rights, and the courts have broad discretion to grant relief from the forfeiture of a commercial lease.  However, the courts are supposed to enforce commercial leases as written.

A landlord attempting to enforce a waiver can rely on the fact that the public policy of the State of California is to enforce commercial leases as written.  If there is no doubt about what the parties intended, the courts are supposed enforce that intent, and the that landlord can find several cases applying that rule.

A landlord, however, must convince the court that there is no doubt about what the parties intended.  As a practical matter, it is very difficult to convince any judge that he/she must follow any principle of law which requires him/her to reach an unfair result.  And, in this case, if there is any way to reasonably interpret the lease-language to find a loophole, that is how the courts are supposed to read the lease-language.  At least in the trial court, reaching what the trial judge sees as a fair resolution of the case may be all that is needed to make the reading the lease-language which finds a loophole a resonable one.

Many of the attempts to waive the right to relief from forfeiture invite a reading of the lease-language which avoids a waiver of the right to relief from forfeiture.  For example, a common waiver of the right to relief from forfeiture provision waives the tenant’s rights of redemption.  The landlord who wrote such a waiver of the right to redemption provision may be able to convince a trial judge that “redemption” is close enough to “forfeiture,” especially since the unlawful detainer statutes do not include a right to “redemption.”  However, the failure to unequivocally waive the relevant right will be all that many judges need to find that the tenant did not intend to waive the relevant right.

 
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