Ask a Business Lawyer. Get Business Law Questions Answered ASAP.
Hello. Thank you for using JustAnswer.
The first thing you need to do is look closely at your lease to determine what it says, if anything, about damage claims.
If the lease addresses the issue, the lease controls for commercial rentals under California law.
If the lease is silent, then you have a right to take immediate action to preserve your property and protect it from further damage.
This would include repairing the water damage in order to limit the impact on your business. Not only can you do this, but you must do this in order to "mitigate damages".
Once you have preserved your property, you then need to determine who is liable for the damage. If your lease makes you responsible for interior plumbing serving your unit, then the upstairs unit is likely to have the same responsibility in their lease. Or, if the damage resulted from another source that was the responsibility and in the control of the upstairs renter, then that renter is liable for your damages and you can charge them for the lost product, lost business, and cost of mitigation.
If the landlord is responsible for the plumbing (and it was the source of the leak) or whatever the leak source was, then the landlord is responsible and you can charge him for the damages/mitigation efforts. If necessary, you can seek a credit against your rent.
If the upstairs tenant is responsible and won't pay, then you will have to take them to court.
If it is the landlord who is liable, then you either take a rent credit. If he challenges you, you can escrow your rent with the court and let the court do it. This will keep you from having any claim against you that you were in breach of your lease.
I see that you are offline. Please let me know, if you have follow-up questions.