Commercial tenants are renters who use property or real estate specifically for business or commercial purposes. This is in contrast to residential tenants who rent places to live. For instance, a commercial tenant rents property, such as office space, malls, and restaurants, whereas residential tenants primarily rent apartments and houses.
Since commercial tenants tend to be businesses and organizations, they are seen as being savvier and more sophisticated than residential tenants in the eyes of the law. Thus, they are often afforded fewer legal protections and rights than residential tenants.
For example, unlike residential tenants, California commercial lease law permits commercial tenants to negotiate the terms of a lease with a landlord. This is because California commercial lease law is centered on contract principles and the notion of equal bargaining power when renting to commercial tenants. On the other hand, leases for residential tenants must conform to California state laws and leave little opportunity for negotiations.
When Can a Commercial Tenant Be Evicted?
As discussed above, commercial tenants are not afforded ample legal protections or rights when it comes to renting commercial real estate and leases. Thus, it is much easier for a landlord to evict a commercial tenant than a residential tenant.
The covenant to pay rent supersedes all lease terms as a commercial tenant. This is especially true if the tenant has entered into a commercial lease agreement in California. According to California state law, even if a commercial tenant pays half the rent, the landlord can keep the payment and still legally evict them. Once an eviction notice is issued, a business will only have three days to correct a violation.
In California, a landlord may also evict a commercial tenant if they breach a condition of the lease agreement. This can mean anything from altering the property or using the property in a way that is not permitted by the lease. For instance, if a particular property is not licensed to sell alcohol and the tenant does not obtain a liquor license, then the landlord may evict them for selling alcohol on the premises.
One final important distinction to keep in mind about commercial leases is that unlike residential leases, the implied warranty of habitability does not apply to commercial leases. This warranty requires a landlord to maintain suitable living conditions. Since commercial real estate is not considered a dwelling, commercial landlords do not have to abide by this legal principle.
Therefore, if the roof leaks or a window breaks and the commercial lease says nothing about repairs, then it is up to the commercial tenant to fix the problem. This also means that a commercial tenant cannot withhold rent to force a landlord to make repairs. If they do, the landlord can evict them.
What are the Steps for Tenant Eviction in California?
In general, the commercial eviction process in California requires a commercial landlord to complete the following steps:
- Provide notice: First, the landlord must provide the commercial tenant with a “3-day notice.” This is a special legal document that states the landlord will take legal action if the tenant does not remedy the issue or lease violation within three days. The notice must contain the name of the person in violation, the monetary amount due (if any), and a statement regarding forfeiture of the lease if the tenant fails to comply.
- Wait Three days: After the landlord has served the tenant a 3-day eviction notice, the landlord must wait a full three days before they can evict them. This gives the tenant an opportunity to fix the issue before they are forced to vacate the premises.
- File a complaint: If the tenant has not remedied the situation after three full days, then the landlord should file an “unlawful detainer” complaint. Filing an unlawful detainer complaint initiates eviction proceedings.
- Allow tenant to vacate: If the landlord succeeds in evicting the tenant, then the tenant will be served a Summons. Once they have received the Summons, the tenant will have five days to vacate the property. Should the tenant refuse to leave after five full days have passed, the landlord must ask a court to intervene by taking the tenant to trial.
It should be noted that it is illegal for a landlord to forcefully evict a tenant in the state of California. Hence, the landlord’s need for court intervention.
What Are the Landlords Forbidden to Do?
Commercial landlords in California are forbidden from taking certain actions against commercial tenants. For example, a landlord cannot forcibly remove a tenant by changing the locks or removing personal property from a rented space. Instead, the landlord must request legal intervention by filing an unlawful detainer complaint and/or potentially going to trial.
A commercial landlord must also give a commercial tenant notice and three full days to remedy an issue before they can file an unlawful detainer complaint. If it has been less than three full days or the tenant fixes the problem within that time frame, then the landlord cannot move forward with the eviction.
Lastly, a commercial landlord must give the tenant five full days to vacate the premises. This means they cannot change the locks, call law enforcement to remove them, or put their personal belongings on the curb before that time is up. However, once five full days have passed, the landlord is only required to keep personal property for 18 days. If the tenant has not claimed it after 18 days, then the landlord can do what they want with that property.
What Defenses and Rights Do Commercial Tenants Have?
As previously mentioned, any commercial defenses or rights that a commercial tenant may have will be provided in the terms of their lease. California law assumes that any conditions left out of the lease agreement were not meant to apply. Thus, legal defenses and commercial tenants rights in California tend to be limited.
Some defenses that commercial tenants in California may be able to argue include:
- Lack of proper notice: If the landlord fails to notify the tenant (i.e., 3-day notice) about the eviction or does not allow them three full days to remedy the situation, then this may act as a defense against the eviction.
- Improper eviction: If the commercial landlord fails to follow the proper requirements for evictions in California or they attempt to forcibly remove the tenant themselves, the tenant can show that the landlord improperly evicted them as a defense.
- Retaliatory eviction: Although this defense is not as common in commercial eviction actions, commercial tenants may still raise it if they can show that the landlord is attempting to evict them because they rightfully complained about issues with their property.
- Landlord in breach: If the tenant can prove that the landlord breached the lease agreement as well, then this may serve as a defense against the eviction.
- Landlord discriminates against tenant: A federal law known as the “Fair Housing Act”, makes it illegal to discriminate against a tenant based on race, origin, gender, disability, and so forth. Thus, if a landlord tries to evict a tenant for discriminatory reasons, then the tenant can raise this as a defense.
Depending on the facts of a case, which defense was asserted, and whether or not the defense was successful, a commercial tenant can receive several remedies, such as legal permission to stay on the property, extended time to fix a violation, or monetary damages.
In addition, some commercial tenants rights that can help to defend against an action for eviction include:
- Right to sublet and assign property;
- “Going dark” rights (e.g., right to cancel or get rent reduction if shuttered business is part of larger shopping center or strip mall);
- Right to certain repairs (like water supply stubs and electrical connections);
- “Key money” prohibitions (e.g., landlords cannot force a commercial tenant to pay extra or accept bribes in exchange for leasing coveted property); and
- Various other rights provided by a lease.
Should I Consult a Lawyer about a Commercial Tenant Eviction?
Commercial real estate matters are a very complex area of the law that often require legal expertise. Specifically, commercial landlord-tenant issues can be even more complicated due to the fact that commercial tenants receive almost no legal rights or protections. Therefore, if you have any questions or concerns regarding commercial tenant evictions, then you should contact a California real estate lawyer for further advice.
Your lawyer can review the terms of your commercial lease, determine whether any conditions in the lease will work in your favor, and can represent you in court on the matter if it becomes necessary. Additionally, if you are a landlord, your lawyer can help you navigate the eviction process and ensure that you are complying with California eviction laws.