Commercial tenancies and evictions
Commercial real estate disputes are business disputes. The lease, the default and the economics of recovering possession should all inform what happens next.
Start with the lease.
When a commercial tenancy runs into trouble, one of the first questions we ask is simple: What did the parties agree to?
Commercial leases can define everything from rent and operating expenses to permitted use, insurance, maintenance, assignment and subletting, guarantees, defaults and remedies. When a dispute arises, those negotiated terms can carry enormous weight.
But enforcing the lease is only part of the analysis. A commercial property is an investment, and the legal strategy should take into account the owner's larger business objective — collecting what is owed, correcting a default, negotiating a workable resolution or recovering possession of the space.
What does the lease say?
In a commercial tenancy, the written agreement can define much of the relationship. Rent, operating expenses, permitted use, maintenance, insurance, assignment, subletting, guarantees and remedies may all be governed by negotiated lease terms.
Before deciding how to respond to a problem, we want to understand what the lease requires of both parties and what rights it provides when those obligations are not met.
What exactly is the default?
Nonpayment of rent is only one reason a commercial tenancy can break down. A tenant may violate a use restriction, allow insurance to lapse, improperly assign or sublet the premises, fail to maintain the property or breach another material obligation.
Identifying the precise default matters because the lease and the nature of the violation can affect the notice, opportunity to cure and enforcement strategy that follows.
Do you actually want the space back?
Eviction may be legally available without necessarily being the best business outcome. Before pursuing possession, an owner should consider what happens after the tenant leaves.
How difficult will the space be to re-rent? What is the current market rent? Is there another tenant waiting? Would a negotiated workout preserve cash flow while the tenant gets back on its feet? Sometimes keeping a commercial tenant in place makes more economic sense than creating a vacancy.
Possession and money are different objectives
Recovering the premises and recovering what the tenant owes are not necessarily the same problem. An owner may need the space back quickly, pursue substantial unpaid rent or damages, enforce a guarantee, or accomplish some combination of those objectives.
The strategy should begin with what the owner actually needs to accomplish — and then use the lease and available legal remedies to pursue that result.
Consider the downside of a vacancy.
A commercial tenant may be in default, but recovering possession is not always the best economic outcome. If the space could remain vacant for months, a negotiated workout may preserve cash flow while the tenant addresses the problem.
The objective isn't simply to enforce the lease. It's to determine which outcome best protects the owner's investment.
When eviction becomes necessary
Sometimes the business decision is straightforward: the default cannot continue and the owner needs to recover possession.
A commercial eviction still requires careful attention to the lease, the nature of the default and California's unlawful detainer procedures. The notice should accurately identify the breach and satisfy the requirements that apply before an eviction action is filed.
If the tenant does not cure the default or surrender possession, the owner may proceed with an unlawful detainer action to recover the premises. Getting the groundwork right matters — a defective notice or other procedural error can delay an otherwise valid case.
Commercial doesn't mean unregulated
California has traditionally given commercial landlords and tenants considerable freedom to negotiate their relationship. But the rules continue to evolve.
California now provides additional protections for certain “qualified commercial tenants,” including requirements that can affect rent increases, building operating costs, lease translations and the termination of some tenancies.
That makes it important to understand not only what the lease says, but who the tenant is and which laws apply before changing the terms of the tenancy or pursuing enforcement.
How Bornstein Law helps
Commercial landlord-tenant problems require legal analysis, but the solution should also make business sense.
Bornstein Law helps commercial property owners interpret and enforce lease agreements, address tenant defaults, negotiate resolutions and recover possession when eviction becomes necessary.
We look beyond the immediate dispute to the owner's larger objective — protecting cash flow, recovering the property, collecting what is owed and preserving the value of the real estate investment.
When a commercial tenancy runs into trouble, start with the business objective.
Whether the goal is enforcing the lease, resolving a default, recovering what is owed or getting the space back, we can help determine the most practical path forward.