Commercial tenants are businesses that rent their property space, like a store or office, from a commercial landlord. Businesses are presumed to be sophisticated, knowledgeable, and savvy about the law. Therefore, business tenants are not afforded as much protection by state statutes as residential tenants. It is very much caveat emptor, or "buyer beware," in an alabaster jungle. Because there is not much statutory protection for commercial tenants, the subject of eviction of a commercial tenant is very much an issue of contract law.
In California, a commercial tenant can be evicted for failing to pay a demanded amount up to 20% in excess of the rent. Businesses only have three days after being informed of the eviction to correct the violation. The Landlord may also evict a commercial tenant if the tenant breaches the nature of the lease, which can mean anything from altering the property or using the property in a way that is not allowed. (Example: the property is not licensed to sell alcohol and the tenant did not get a license.)
Unlike a residential lease, in a commercial lease there is no warranty of habitability. which means if the roof leaks or the heater quits, it is the commercial tenant’s problem. The tenant cannot force the landlord to repair and deduct rent due to damage of repair. However, it is important to look at the specifics in the lease as it could mention something about repairs and damages.
Some tenants may be able to argue that they are facing a constructive eviction, which means that the conditions of the place they are renting are so horrible that no reasonable person would pay for it. Some landlords, especially for rent-controlled buildings in a high priced neighborhood, deliberately ignore conditions of their buildings with hopes that tenants will leave on their own. If the tenant successfully argues that they faced a constructive eviction, then the landlord will face penalties and liability for the situation.
- Send a “3-day notice”: Send a “3-day notice” to the tenant. This is a legal document that states that legal action will be taken in 3 days if the tenant continues not to pay rent or discontinue the lease agreement violation. The notice must include amount due and name of person in violation and notice of forfeiture of the lease if payment is not made within 3 days of the 3 day notice receipt.
- Give the tenant opportunity to remedy the issue: The tenant has 3 full days after they have been served with the 3-day eviction notice to remedy the issue or they must leave the premise.
- File an Unlawful Detainer Complaint: If the tenant still has not paid the rent due or stopped the violation of the lease agreement within the three days, the landlord now has the right to file an Unlawful Detainer Complaint.
- Allow the tenants to move out: The commercial tenant will be served a Summons by a registered process server. Once the Summons is delivered and received by the tenant, the tenant has 5 days to vacate the property.
If the tenant still has not vacated the premises after you have successfully won the unlawful detainer, you must take the issue to trial. You cannot evict the tenant yourself by any forceful means in California.
In California, landlords must follow the correct procedures when they want to evict a commercial tenant. The landlord must properly serve the commercial tenant with proper notice and cannot force the commercial tenant out of the premises without notice or forcefully. The landlord also cannot change the locks on the tenant’s property or remove any of the tenant’s personal property from the premises in order to force the tenant out.
California commercial tenants must remember that all protections and rights should be spelled out expressly in the rental contract. The law assumes that anything not in the contract was not meant to be there.
Here is a list of defenses the tenant may have:
- Forum Selection and Remedies: These clauses declare how a dispute over the lease will be resolved and by whom. The parties can choose to engage in litigation, settlement, mediation, or any other method they believe is preferable. The lease can spell out who will oversee the dispute resolution and what remedies a party may have if they win.
- Retaliatory Eviction: Tenant can assert the defense that the landlord is trying to evict the tenant because the tenant complained about problems with their rental.
- Landlord was also in Breach: Tenant can assert the defense that the landlord initially defaulted on the lease agreement which excuses tenant’s obligation to pay rent
Landlord-tenant law is very difficult and constantly undergoing changes. An experienced real estate lawyer in California can review the terms of a lease, help you understand your duties and responsibilities, and represent you in court.