Our Los Angeles Eviction Attorneys were recently asked to research and brief an issue regarding when a tenancy actually legally terminates for nonpayment of rent. The Ninth Circuit Court of Appeal addressed this issue in Vanderpark Properties, Inc. v. Buchbinder (In re Windmill Farms, Inc.) 841 F2d 1467 (9th Cir. 1988). The Vanderpark Court held that “under California law a lease terminates for nonpayment of rent at least by the time the lessor files an unlawful detainer action, provided that a proper three-days’ notice to pay rent or quit has been given, and the lessee has failed to pay the rent in default within the three-day period . . . .” Id. at 1471. Thus, once a landlord has properly served a notice to pay rent or quit, and tenant fails to cure, and subsequently files an Unlawful Detainer action, as a matter of law, the lease has been terminated.
This issue is relevant to landlords who during the eviction process, are then faced with a tenant filing bankruptcy. The question becomes whether the bankruptcy trustee has any claim or equity in the leased premises and bankruptcy courts have held that they do not. See In re Flexipak, Inc., 49 B.R. 641, 642-643 (S.D.N.Y. 1985) (stay relief granted because debtor not regarded as having any equity in leased premises).
If you are a commercial landlord dealing with an eviction and a subsequent bankruptcy, contact one of our Los Angeles Commercial Lease Attorneys for a free consultation and case evaluation.