Tag: Commercial Lease Attorney Los Angeles; Los Angeles Commercial Lease Lawyer; Commercial Lease Landlord Attorney; Commercial Eviction Attorney Los Angeles

California Civil Code Section 1938 states that “A commercial property owner or lessor shall state on every lease form or rental agreement executed on or after July 1, 2013, whether the property being leased or rented has undergone inspection by a Certified Access Specialist (CASp), and, if so, whether the property has or has not been determined to meet all applicable construction-related accessibility standards pursuant to Section 55.53.”

Thus, the plain language of the statute appears to require that the commercial landlord: (1) disclose whether the Landlord has obtained a CASp of the “leased premises”; (2) and if a CASp inspection has been done, then the Landlord must disclose whether the leased premises was found to have met all construction related accessibility standards. The statute, as written, does not appear to require the Landlord to list out each and every accessible barrier identified in the CASp inspection; only whether Landlord has had a CASp inspection done, and whether that inspection revealed any accessibility barriers.

If you are a commercial property owner or manager and have questions about your requirements under Section 1938, please contact one of our commercial lease attorneys today for a free consultation.

Under California law, if a commercial lease provides for a specific purpose or use of the leased premises and restricts the use of the premises to that specified purpose, the tenant may retain the right to terminate the lease under the doctrine of “commercial frustration” if the commercial tenant cannot use the premises for that purpose. See Industrial Development & Land Co. v. Goldschmidt, (1922) 56 Cal. App. 507, 511. Under a subsequent California case applying the doctrine of commercial frustration, Lloyd v. Murphy, (1944) 25 Cal. 2d 48, the doctrine was held to apply in situations where performance under the lease would create an extreme hardship for the tenant and there is present a complete, or nearly complete, destruction of the purpose stated in the commercial lease. Thus, substantial frustration making performance under the lease for the tenant unprofitable or more difficult or expensive, is not enough to establish an excuse for the tenant not to fulfill the lease requirements. See Lloyd supra at 55. Additionally, a tenant would not be excused under the commercial frustration doctrine if the event frustrating the purpose was reasonably foreseeable or if another purpose under the lease remains available to the tenant, or if there is reference in the lease to the frustrating event. See Lloyd surpa; see also Glenn R. Sewell Sheet Metal, Inc. v. Loverde, (1969) 70 Cal. 2d 666, 676.

Thus, commercial lease tenants should be mindful that although the commercial frustration doctrine exists, its application is strictly construed and would require demonstrating a complete destruction of the purpose stated in the commercial lease.

Cal. Civ. Code § 1951.2 provides the general remedies available to landlords upon a breach of lease by the tenant. Section 1951.2 states: (a) Except as otherwise provided in Section 1951.4, if a lessee of real property breaches the lease and abandons the property before the end of the term or if his right to possession is terminated by the lessor because of a breach of the lease, the lease terminates. Upon such termination, the lessor may recover from the lessee: (1) The worth at the time of award of the unpaid rent which had been earned at the time of termination; (2) The worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that the lessee proves could have been reasonably avoided; (3) Subject to subdivision (c), the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that the lessee proves could be reasonably avoided; and (4) Any other amount necessary to compensate the lessor for all the detriment proximately caused by the lessee’s failure to perform his obligations under the lease or which in the ordinary course of things would be likely to result therefrom.

Thus, landlords are under a duty to mitigate (i.e., try to re-rent the premises) but may seek the available remedies upon a breach of lease.

The California Supreme Court issued its opinion today in the highly contested, private walkway/labor union picketing case and ruled that labor union picketing activities may not have constitutional protection but they do have statutory protection under the Moscone Act (C.C.P. § 527.3) and Labor Code § 1138.1. The case, Ralphs Grocery Company, v. United Food and Commercial Workers Union Local 8 was filed in Sacramento County Superior Court and has gone through the Court of Appeal and oral argument with the California Supreme Court issuing its ruling today.

The California Supreme Court’s ruling and disposition is summarized by the Court as follows:

“A private sidewalk in front of a customer entrance to a retail store in a shopping center is not a public forum for purposes of expressive activity under our state Constitution‘s liberty-of-speech provision as construed in Pruneyard, supra, 23 Cal.3d 899. On the private property of a shopping center, the public forum portion is limited to those areas that have been designed and furnished to permit and encourage the public to congregate and socialize at leisure. California‘s Moscone Act and section 1138.1 afford both substantive and procedural protections to peaceful union picketing on a private sidewalk outside a targeted retail store during a labor dispute, and such union picketing may not be enjoined on the ground that it constitutes a trespass. The Moscone Act and section 1138.1 do not violate the federal Constitution‘s free speech or equal protection guarantees on the ground that they give speech regarding a labor dispute greater protection than speech on other subjects.”

The Moscone Act in pertinent part, states that certain activities undertaken during labor disputes are legal and cannot be enjoined or prohibited, including peaceful picketing, peaceful assembly and publicizing a labor dispute. Labor code § 1138.1 in pertinent part prohibits a court from issuing an injunction during a labor dispute unless the court finds (1) unlawful acts have been and will be committed unless restrained; (2) That substantial and irreparable injury to complainant‘s property will follow; (3) That as to each item of relief granted greater injury will be inflicted upon complainant by the denial of relief than will be inflicted upon defendants by the granting of relief; (4) That complainant has no adequate remedy at law; and (5) That the public officers charged with the duty to protect complainant‘s property are unable or unwilling to furnish adequate protection.

The Court of Appeal ruled that these laws violated the federal Constitution’s general prohibition on content-based speech regulation but the California Supreme Court disagreed and did not find conflict with the Constitution, in that speech regarding a labor dispute is not afforded greater protection than speech on other grounds. The Moscone Act and Labor Code § 1138.1 were upheld and labor unions remain protected to facilitate pickets on a private sidewalk in front of a customer entrance to a retail store. The California Supreme Court’s Opinion can be read here:

Ralphs Grocery Company, v. United Food and Commercial Workers Union Local 8

There is a battle going on right now between the Federal Government and the City of Oakland centered upon a commercial property leased to a permitted Marijuana dispensary operating legally under current California laws regarding medical marijuana sales. The Feds filed what is referred to as a Forfeiture Action in July of this year seeking to seize the premises which the dispensary operates out of.

21 U.S.C. § 881 authorizes the Federal Government to initiate forfeiture proceedings for “All real property, including any right, title, and interest (including any leasehold interest) in the whole of any lot or tract of land and any appurtenances or improvements, which is used, or intended to be used, in any manner or part, to commit, or to facilitate the commission of, a violation of this subchapter punishable by more than one year’s imprisonment.” i.e., the sale of a controlled substance which in this case is marijuana, an illegal substance under Federal laws.

By way of these forfeiture proceedings, the Feds can effectively seize the real property at issue (including any leasehold interest) and shut the operations down. This is not the first property used by dispensaries targeted in California and it won’t be the last. What we have seen however, are landlords initiating eviction actions in State Court against their marijuana dispensary tenants, in order to avoid a seizure of their property by the Federal Government.

The target dispensary this time is the Harborside Health Center which claims to be the largest dispensary out there with over 100,000 patients. Interestingly enough, according to Harborside’s executive director Steve DeAngelo, as quoted in the Washington Post, Harborside pays about $3 million a year in federal, state and local taxes. Aside from other policy reasons continuously being debated on the subject matter of legalizing marijuana, the sizable tax revenue both at the state and local level could be one of the more prominent reasons why the City of Oakland has stepped in recently on behalf of the dispensary and asserted various defenses.

The Forfeiture proceeding is currently pending before the United States District Court for the Northern District of California, San Francisco Division in front of the Honorable Maria-Elena James, U.S.D.C. Case No.: 3:12-CV-03567-MEJ.

As Real Estate Attorneys in Los Angeles, dealing with property rights, evictions, transactions and fraud, we analyze and interpret state and local level laws. This is an example however of how federal laws dealing with property rights can play a part in determining property rights for California landlords who may be within the legal bounds of state or local laws but violating federal laws. At least it’s something to consider for Los Angeles landlords considering a marijuana dispensary as a tenant.

Is the payment of “key money” legal? Our Commercial Lease Attorneys in Los Angeles were recently asked this very question by a commercial lease landlord and the laws on the books would suggest that the payment of “key money” would not constitute a violation of California law as long as the amount of payment is stated in the written lease or rental agreement. California Civil Code § 1950.8(b) states the following:

It shall be unlawful for any person to require, demand, or cause to make payable any payment of money, including, but not limited to, “key money,” however denominated, or the lessor’s attorney’s fees reasonably incurred in preparing the lease or rental agreement, as a condition of initiating, continuing, or renewing a lease or rental agreement, unless the amount of payment is stated in the written lease or rental agreement.

Thus, as long as the amount of payment is stated in the written lease, then presumably, the “key money” demand is within the purview of California law. California Courts seem to interpret a violation of the “key money” statute as including (a) the demand for “key money” and (b) the failure to state the amount of the demanded payment in the resulting written lease or rental agreement between the parties. See Edamerica, Inc. v. Superior Court, (2003) 114 Cal. App. 4th 819, 822. The California Court of Appeal for the Second District held that “it is not unlawful for a landlord to merely make a demand for “key money.” Rather, in order for liability to attach under the statute, a plaintiff must allege that the landlord (1) made a demand for “key money” as a condition of initiating, continuing or renewing a lease or rental agreement, and (2) failed to state the amount of the demanded payment in the resulting written lease or rental agreement between the parties.” Id.

Therefore, as long as a commercial lease landlord makes a “key money” demand, and states the amount of the demanded payment in the lease agreement, there will be no “key money” statute violation as a matter of law.

The California Supreme Court issued its opinion recently in the highly contested, private walkway/labor union picketing case and ruled that labor union picketing activities may not have constitutional protection but they do have statutory protection under the Moscone Act (C.C.P. § 527.3) and Labor Code § 1138.1. The case, Ralphs Grocery Company, v. United Food and Commercial Workers Union Local 8 was filed in Sacramento County Superior Court and has gone through the Court of Appeal and oral argument with the California Supreme Court issuing its ruling today.

The California Supreme Court’s ruling and disposition is summarized by the Court as follows:

“A private sidewalk in front of a customer entrance to a retail store in a shopping center is not a public forum for purposes of expressive activity under our state Constitution‘s liberty-of-speech provision as construed in Pruneyard, supra, 23 Cal.3d 899. On the private property of a shopping center, the public forum portion is limited to those areas that have been designed and furnished to permit and encourage the public to congregate and socialize at leisure. California‘s Moscone Act and section 1138.1 afford both substantive and procedural protections to peaceful union picketing on a private sidewalk outside a targeted retail store during a labor dispute, and such union picketing may not be enjoined on the ground that it constitutes a trespass. The Moscone Act and section 1138.1 do not violate the federal Constitution‘s free speech or equal protection guarantees on the ground that they give speech regarding a labor dispute greater protection than speech on other subjects.”

The Moscone Act in pertinent part, states that certain activities undertaken during labor disputes are legal and cannot be enjoined or prohibited, including peaceful picketing, peaceful assembly and publicizing a labor dispute. Labor code § 1138.1 in pertinent part prohibits a court from issuing an injunction during a labor dispute unless the court finds (1) unlawful acts have been and will be committed unless restrained; (2) That substantial and irreparable injury to complainant‘s property will follow; (3) That as to each item of relief granted greater injury will be inflicted upon complainant by the denial of relief than will be inflicted upon defendants by the granting of relief; (4) That complainant has no adequate remedy at law; and (5) That the public officers charged with the duty to protect complainant‘s property are unable or unwilling to furnish adequate protection.

The Court of Appeal ruled that these laws violated the federal Constitution’s general prohibition on content-based speech regulation but the California Supreme Court disagreed and did not find conflict with the Constitution, in that speech regarding a labor dispute is not afforded greater protection than speech on other grounds. The Moscone Act and Labor Code § 1138.1 were upheld and labor unions remain protected to facilitate pickets on a private sidewalk in front of a customer entrance to a retail store.

Implied in fact modifications have been consistently recognized under California law in that the parties’ modification setting aside the written provisions will be implied wherein the subsequent conduct of the parties is inconsistent with and clearly contrary to provisions of the written agreement. See Diamond Woodworks, INc. v. Argonaut Ins. Co., (2003) 109 Cal. App. 4th 1020, 1038 (overruled on other grounds); see also Garrison v. Edward Brown & Sons, (1944) 25 Cal. 2d 473, 479 (“Before a contract modifying a written contract can be implied, the conduct of the parties according to the findings of the trial court must be inconsistent with the written contract so as to warrant the conclusion that the parties intended to modify the written contract.”); see also Wagner v. Glendale Adventist Medical Center, (1989) 216 Cal. App.3d 1379, 1388 (“When one party has, through oral representations and conduct or custom, subsequently behaved in a manner antithetical to one or more terms of an express written contract, he or she has induced the other party to rely on the representations and conduct or custom. In that circumstance, it would be equally inequitable to deny the relying party the benefit of the other party’s apparent modification of the written contract.”) Moreover, The existence of the implied modification is a question of fact to be proven by a preponderance of the evidence. See Keeble v. Brown (1954) 123 Cal. App. 2d 126, 132 (“Whether a writing has been modified by an executed oral agreement is a question of fact.”)

If you have a question concerning a contract such as a commercial lease agreement and its interpretation, contact one of our Commercial Lease Attorneys in Los Angeles today for a free consultation and case evaluation.