I am a commercial property manager for an office building in California. We have a tenant with a 12-month lease who recently defaulted for non-payment for the 2nd & 3rd month.
We issued a 3-day notice to pay or quit, but now we're wondering how we would collect on the remaining months in his lease term (in this case there are 9 months remaining). We don't want to maintain a non-paying tenant; however, he has breached his contract and is therefore legally responsible for the full term. What kind of notice can be issued without forfeiting the full lease-term rental amount?
Ramin Joseph KerendianBusiness AttorneyLos Angeles, CA ·
When a tenant is in default of a lease agreement, the landlord may proceed to evict the tenant by filing an unlawful detainer action.
Following the eviction, the landlord still has the available remedy of filing a civil action for breach of contract and seeking a judgment for the remaining period under the lease agreement.
Yes.
This is a two-step (or I should say two-lawsuit) process.
First, you would need to file an unlawful detainer action for the back rent. The monetary portion of the judgment in the unlawful detainer lawsuit is limited to the back rent owed, as reflected in the 3-day notice to pay or quit, plus "holdover damages" equal to the daily rent times the number of days from the date following the period covered by the 3-day notice until the date of judgment. Your complaint for unlawful detainer does not need to seek forfeiture of the lease in the prayer for damages.
Second, you need to file a separate lawsuit for breach of lease to claim the future rent which was not paid.
The issue is not "what kind of notice" you can issue (your typical Notice to Pay Rent or Quit will likely suffice). The issue is, what does the tenant's lease say?
In California, a commercial landlord has two options when a tenant fails to pay rent: (1) they can elect to terminate the lease and retake possession and sue for damages, or (2) they can keep the lease in place and sue the tenant as rent comes due.
The two remedies are codified under the Civil Code (sections 1951.2 and 1951.4, respectively).
The ability to get the rent for the remainder of the term when the landlord elects to terminate and retake possession is governed by 1951.2. If the language in the lease allows it, the landlord can seek all past-due rent and all future rent due under the lease, less any amounts the landlord collects from a replacement tenant or what the tenant shows the landlord should have received had he/she reasonably mitigated their damages. (1951.4 doesn't require the landlord to take steps to mitigate the rent obligation because the tenant remains in possession of the leasehold.)
1951.2 also allows other consequential damages to be recovered, including the unamortized TI's of the tenant (if any), brokerage costs, damage to the premises, costs associated with reletting that the landlord would not have incurred but for the breach, etc.
Landlords have different reasons for electing a 1951.2 or a 1951.4 remedy but, by far, 1951.2 is more common.
Your notice to pay rent or quit needs to conform to statutory requirements for other reasons unrelated to the landlord's ability to recover the future rent. A review of the lease should tell you whether the lease language supports a 1951.2 remedy or not.
