On an eviction for the failure to pay rent, the lease terminates at the point when the unlawful detainer complaint has been filed. Thus, upon a notice to pay rent or quit which expires and at the point an eviction action is filed, the lease, as a matter of law terminates. See In re Windmill Farms, 841 F.2d 1467, 1471 (9th Cir. 1988).
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Commercial Landlords – Relief From Forfeiture Under C.C.P. § 1179 Mandates The Full Payment Of Rent Due As A Condition Of Relief
Often times, Tenants, when facing an eviction action, seek relief from forfeiture pursuant to C.C.P. § 1179. This requested relief usually comes up in Bankruptcy proceedings where a landlord seeks relief from the automatic stay, and if the Lease has any value, a trustee will likely oppose the stay relief so as to assume and assign the lease.
Section 1179, which a Tenant can avail itself of, is clear: “In no case shall the application or motion be granted except on condition that full payment of rent due, or full performance of conditions or covenants stipulated, so far as the same is practicable, be made. Id; see also Gill Petrolium, Inc. v. Hayer, (2006) 137 Cal. App. 4th 826, 833 (“So long as the court imposes the statutory conditions, the full payment of rent due or full performance of conditions or covenants so far as practicable, the court has broad equitable discretion to determine the conditions upon which relief will be granted”) (Emphasis added.)
Cal. Civ. Code § 3275 carries the same condition of forfeiture. See Cal. Civ. Code § 3275 (“Whenever, by the terms of an obligation, a party thereto incurs a forfeiture, or a loss in the nature of a forfeiture, by reason of his failure to comply with its provisions, he may be relieved therefrom, upon making full compensation to the other party, except in case of a grossly negligent, willful, or fraudulent breach of duty.”); see also Kelley v. Olympic Pharmacy, 144 Cal. App. 2d 43, 54 (Refusal of trial court to grant lessees relief against forfeiture was not an abuse of discretion, where there were many violations of the lease, and absence of an unequivocal and positive tender of all rents due.); see also Cambridge v. Webb, (1952) 109 Cal. App. 2d Supp. 936, 938 (Affirming trial court’s exercise of discretion denying tenant relief from forfeiture under Section 1179 where tenant failed to pay rent for five months.)
If you are a commercial landlord and are dealing with a tenant seeking relief from forfeiture, contact one of our commercial lease attorneys for a free consultation and case evaluation.
Property Line Disputes – Permanent Encroachments and the Statute of Limitations
Property line disputes between adjacent property owners give rise to many issues including the parties’ respective rights regarding trespass and nuisance claims. The first issue that often must be explored is whether the encroachment is temporary or permanent in nature as California law distinguishes between the two. This article focuses on the statute of limitations with respect to a permanent encroachment as our Los Angeles Real Estate Attorneys have been asked recently to explore this very issue.
First, where an encroachment is permanent in nature, it is a trespass and not a nuisance. See Field-Escandon v. Demann, (1988) 204 Cal. App. 3d 228, 233. Second, California Courts have held that the encroachment of buildings, walls, foundations, pipes and vents erected on another’s property are permanent in nature and a cause of action for trespass would have accrued as of the date of completion of construction. Id; see also Castelletto v. Bendon, (1961) 193 Cal. App. 2d 64, 65 (“We are satisfied that where, as in this case, the location of the buildings was quite apparent, the failure of the owner of the property upon which the buildings trespassed to know that his line ran under the buildings, affords no reason for saying that the cause of action for trespass did not begin to run until he was aware that is was his property, in part, upon which the buildings stood.”); see also Troeger v. Fink, (1958) 166 Cal. App. 2d 22, 26 (“Under well settled California law plaintiffs’ causes of action for damages and for an injunction to compel removal of the allegedly encroaching structures are barred by the provisions of section 338, subdivision 2 of the Code of Civil Procedure, which require that ‘An action for trespass upon or injury to real property’ must be brought within three years after the accrual of the cause of action. Where one party so constructs a permanent building that it encroaches upon the land of another, the trespass is regarded as permanent in nature; causes of action for damages and for injunctive relief accrue when the trespass is committed and are barred three years thereafter.”).
Thus, under California law, where the encroachment is permanent in nature, the 3 year statute of limitations begins to run when the construction is completed on the encroachment. If you have a property line dispute or an encroachment dispute, contact one of our Real Estate Attorneys today for a free consultation and case evaluation.
When CA Courts Deem A Tenancy Terminated
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.
Good Faith Standard for Commercial Landlords in Considering Lease Assignments
As with all California contracts, there is a standard of good faith required by all parties. This standard of good faith comes into play when commercial landlords are asked by their tenants to consider a lease assignments. Most form commercial lease contracts (such as the AIR form commercial leases) provide language regarding good faith in accepting or rejecting a potential assignee, starting with the notion that a landlord’s consent shall not be “unreasonably withheld.”
Landlords and tenants are free to further define what constitutes reasonable or unreasonable withholding of consent beyond the boilerplate language found in most form leases. Landlord and tenant may choose to include factors such as an assignee’s experience, character, reputation, credit history and net worth.
It is important to note for Landlords that the issue of whether consent was reasonably or unreasonably withheld will be a question of fact for a jury. Thus, in anticipation of litigation, a landlord should have fact based reasons for withholding consent and those fact based reasons should be carefully scrutinized.
Medical Marijuana Business Landlords – City Attorney Actions In Civil Court
Our Firm currently represents a landlord who rented to a medical marijuana business for about a year. The landlord was named as a defendant in a lawsuit (one of several) currently pending in the Los Angeles County Superior Court. The City alleged violations of California’s Unfair Competition laws and also Prop D violations. Part of the City’s prosecution against the Landlord included the filing of a lis pendens.
Shortly after the City filed, our landlord evicted the medical marijuana tenant and has since rented to a non-marijuana business. Despite these facts, the City refused to remove the lis pendens. After filing a motion to expunge the lis pendens and oral arguments, the Court granted landlord’s petition and ordered that the lis pendens be expunged.
Case law supports the expungement wherein the offending or violating conduct has ceased. Despite the ruling, it is anticipated that the City will appeal the decision given the unfavorable precedence set by the trial court.
Landlords of marijuana businesses, be mindful about the potential for civil and criminal prosecutions by the City. Although this issue is both of political and social concern, the City Attorneys, at least in our case, are not sympathetic to a landlord, even when the landlord has fully complied and remains compliant. The City is currently aggressively seeking civil penalties despite the premises being marijuana free for several months and under a lease to a non-marijuana business for years to come.
If you are a commercial landlord and in need of a Commercial Lease Attorney, contact us for a free consultation and case evaluation.
Commercial Landlords – Security Deposits and Section 1950.7 Waivers
Cal. Civ. Code § 1950.7 governs security deposits for commercial leases and the disposition thereof after the termination of tenancy whether voluntarily or by eviction. Section 1950.7 limits the manner with which a Landlord may apply the security deposit. However, California Courts will uphold a Section 1950.7 waiver should the landlord and tenant agree to the same. Thus, with a waiver, Landlord could effectively apply security deposit to future rent for example, even though 1950.7 would prohibit such an application. See 250 L.L.C. v. Photopoint Corp. (USA), (2005) 131 Cal. App. 4th 703, 718 (“That conclusion is consistent with cases holding that commercial tenants may waive their rights under the Civil Code …and with California’s public policy of ‘enable[ing] and facilitate[ing] freedom of contract by the parties to commercial real property leases.’ Since the Legislature has expressly prohibited waivers of section 1950.5’s protections for residential security deposits…its failure to do so with respect to commercial security deposits indicates that waivers are permissible as to those deposits.”) (Internal citations omitted.) (Emphasis added.)
If you are a Commercial Landlord in Los Angeles and have questions or concerns regarding your commercial lease, contact one of our Commercial Lease Attorneys for a free consultation and case evaluation.
HOA Disputes – Hardwood Floor Complaints
We’ve recently had a string of hardwood floor complaints and are actively prosecuting CC&R violations stemming from illegal/improper hardwood floors for several homeowners in the Los Angeles area. Many HOAs have specific rules regarding hardwood floor installations in order to prevent circumstances causing a nuisance to homeowners in units below hardwood flooring. Unfortunately, sometimes the rules themselves are the problem. Often HOAs set minimum standards for hardwood flooring materials such as IIC ratings (Impact Insulation Class). However, an IIC rating for materials used don’t always translate to better sound attenuation because there are usually significant differences between the rating flooring materials achieve in the laboratory, which is controlled vs. in the field where floor/ceiling assemblies can vary from building to building and unit to unit.
Thus, if you are a homeowner contemplating installing hardwood floors in your condo, make sure you are first in compliance with the rules and second, maximizing the padding and sound insulation materials with your install so as to not subject yourself to a nuisance complaint or worse, being named as a defendant in a CC&R violation lawsuit. If you are a homeowner who is experiencing disturbances and nuisances stemming from hardwood floors from the unit above, contact one of our HOA Dispute Attorneys in Los Angeles for a free consultation and case evaluation.
Medical Marijuana Landlords – Prop D Prosecutions and Civil Penalties
Landlords in Los Angeles who are leasing their properties to Medical Marijuana Business need to be mindful of the very real chance that the City Attorney will also name the Landlord as a defendant in Prop D civil complaints, as well as criminal prosecutions. Medical Marijuana Businesses are illegal pursuant to LAMC 45.19.6.2. However, certain immunities are available to Prop D compliant collectives/dispensaries. Of those Marijuana Businesses that are not Prop D complaint, the City Attorney is currently pursuing both criminal and civil prosecution. What this means to a Landlord renting to a Marijuana business not compliant with Prop D, is that the landlord could be also named as a defendant pursuant to LAMC 45.19.6.2 and subject to civil penalties (up to $2,500 per day) and also faced with injunctions and clouds on title from a lis pendens filed by the City.
If you are a Landlord in Los Angeles facing a civil matter stemming from your lease to a Marijuana Business, contact one of our Commercial Lease Attorneys for a free consultation and case evaluation.
Co-Ownership of Real Estate in California Does Not By Itself Create a Partnership
Under well settled California law, “Joint tenancy, tenancy in common, tenancy by the entireties, joint property, common property, or part ownership does not by itself establish a partnership, even if the co-owners share profits made by the use of the property.” See Cal. Corp. Code § 16202(c)(1). “A person who receives a share of the profits of a business is presumed to be a partner in the business, unless the profits were received for any of the following reasons: (C) In payment of rent.” See Cal. Corp. Code § 16202(c)(3)(C). Thus, California’s Uniform Partnership Act would require something more than mere co-ownership to establish a partnership between two co-tenants. Furthermore, co ownership does not in and of itself create a joint venture unless the following is established: (1) the members must have joint control over the venture (even though they may delegate it), (2) they must share the profits of the undertaking, and (3) the members must each have an ownership interest in the enterprise. See Scottsdale Ins. Co v. Essex Ins. Co., (2002) 98 Cal. App. 4th 86, 91.
If you are a co-owner or co-tenant in real property and have questions or concerns regarding your rights as a co-owner, contact one of our Los Angeles Real Estate Attorneys today for a free consultation and case evaluation.