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socrateaser
socrateaser, Lawyer
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Experience:  Retired (mostly)
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Calif. Lawyer only Im facing breaking a 10 year lease and

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Calif. Lawyer only: I'm facing breaking a 10 year lease and a 3 day notice to pay rent or quit. I'm trying to get a break in rent. After this rent reduction I think we are going to get out. Would our mitigation costs go down because of the new reduced long term rent obligation? Are there exact California commercial codes specific to a landlord that is seeking a retail lease mitigation like: cost of returning the space to a vanilla shell, costs of the difference between the lease and a potential of future rent losses, length of time of claim, landlord costs of the initial 45 day rent abatement, landlord costs of the initial Tenant improvement build out costs? Business if way off and after 8 months of losses we're out of working cash. I can't afford a lawyer for court, so after I'm served the eviction notice do I just show up and say what is going on? When should I move my machines out? Do I just show up on his mitigation portion of the claim?
Submitted: 4 years ago.
Category: Legal
Expert:  socrateaser replied 4 years ago.

Would our mitigation costs go down because of the new reduced long term rent obligation?

 

A: If you arrange a new lease with lower rent, and then break it, then your obligations will be mitigated by virtue of the fact that your rent will be less. Other than that, everything is the same.

 

Are there exact California commercial codes specific to a landlord that is seeking a retail lease mitigation like: cost of returning the space to a vanilla shell, costs of the difference between the lease and a potential of future rent losses, length of time of claim, landlord costs of the initial 45 day rent abatement, landlord costs of the initial Tenant improvement build out costs?

 

A: As a general rule, unless the lease otherwise provides, fixtures on rented premises belong to the landlord owner of the realty; even if installed by the tenant, they become the landlord's property at the end of the lease term. Civil Code § 1013; Peiser v. Mettler (1958) 50 Cal.2d 594. Thus, the tenant has no obligation to do anything, because the vacated premises are the landlord's property, in whatever condition returned.

 

Business if way off and after 8 months of losses we're out of working cash. I can't afford a lawyer for court, so after I'm served the eviction notice do I just show up and say what is going on?

 

A: You can avoid the eviction by just telling the landlord you are abandoning the tenancy -- assuming you can't negotiate a settlement. If you're gone, then the landlord doesn't need an unlawful detainer action, and will be happy to not have one, because there will be no litigation costs.

 

When should I move my machines out?

 

A: Whenever you want, but if the landlord has a security interest in the personal property created by the lease, then the landlord could "clawback" the property. Otherwise, it's yours and you can take it at your leisure. The landlord can't legally restrain your property, but sometimes the doors just seem to always be locked -- if you know what I mean.

 

Do I just show up on his mitigation portion of the claim?

 

A: If landlord files a UD, then you must answer. But, if you're out, then the UD is moot, and the case will be converted to a regular civil case for damages under Civil Code 1951.2.

 

Hope this helps.

 

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Customer: replied 4 years ago.

 

Before I tell him I'm out, should I disassemble and roll out our 6 machines before we possibly get locked out? On the other hand, the machines are a big deal to clean up, dissemble and move out. However, he'll know we're serious about moving out. It is difficult to negotiate with the store intact, and he want rent now, if we're served with another 3 day notice, could he just bolt the door even though we would be only 2 days late on rent?

I understand that the fixtures installed are the landlords. They are expensive. Does the landlord have any obligation to give me an accounting of the salvage value of what's left when he mitigates? They just might use the space for their own restaurant build out purposes and this would cloud the numbers.

Are there exact California commercial codes specific to a landlord that is seeking a retail lease mitigation

I read "Civil Code § 1013; Peiser v. Mettler (1958) 50 Cal.2d 594." and it does not relate to the above question. Please advise.

Do I just show up on his mitigation portion of the claim?
We're an LLC that has a personal guarantee, the landlord never writes to the LLC, he only writes to us personally, does he have to sue the LLC 1st or all at the same time.

Expert:  socrateaser replied 4 years ago.

Before I tell him I'm out, should I disassemble and roll out our 6 machines before we possibly get locked out?

 

A: Only you can decide what you "should" do. I "justanswer" questions about the law.

 

If we're served with another 3 day notice, could he just bolt the door even though we would be only 2 days late on rent?

 

A: He doesn't serve you a second notice (unless he's accepted a rent payment since the last notice was served). Once is enough.

I understand that the fixtures installed are the landlords.

 

A: False. Absent express agreement otherwise, a tenant may remove at any time during the lease term anything affixed to the premises "for purposes of trade, manufacture, ornament, or domestic use" provided removal would not cause damage to the premises, unless the item, by reason of the manner in which it is affixed, has "become an integral part of the premises." Civil Code § 1019

Does the landlord have any obligation to give me an accounting of the salvage value of what's left when he mitigates?

 

A: If you leave fixtures after you vacate, then that implies that they are the landlord's property -- so he owes you not duty, because it's not your property anymore.

 

Are there exact California commercial codes specific to a landlord that is seeking a retail lease mitigation?

 

A: Civil Code 1951.2.


Do I just show up on his mitigation portion of the claim?

 

A: If you remain in the property, the landlord must decide to either (1) sue you for the continuing unpaid rent, as it comes due, or (2) file a UD action, evict you and then sue you separately under Civil Code 1951.2 for the remainder of the lease (this is the typical route). If you abandon the lease while the UD is in progress, then the court will convert the case to an ordinary civil suit under Civil Code 1951.2, and that would be your "mitigation" portion. It's up to you to decide whether or not to fight the UD. There are independent damages that come with that portion of the case (attorney's fees, etc.).


We're an LLC that has a personal guarantee, the landlord never writes to the LLC, he only writes to us personally, does he have to sue the LLC 1st or all at the same time?

 

A: Efficiency suggests suing the primary obligor and guarantor simultaneously.



Edited by socrateaser on 6/1/2010 at 4:36 PM EST
socrateaser, Lawyer
Category: Legal
Satisfied Customers: 33803
Experience: Retired (mostly)
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Customer: replied 4 years ago.
We breached the lease on Monday 6-14 moved out and sold 80% of our things until the landlord found out what we were donig, then he stopped us and changed the locks the next morning. He threatened me and my family with a gun. He is a crazy person with money problems himself. I reported this to the local Police.

He may not be able to find another tenant in this market. I understand he can start an immediate law suit for breach of the lease and recover the full amount of the lease from now to another 9 years left on the lease if he can't rent it. That is hundreds of thousands of dollars. We don't have the money. We have 2 other stores doing fair only but surviving. We have very few things, we have a house and a rental property and 2 small stores. Besides bankruptcy, is there any California law that precludes the landlord from completely breaking me and sending me to the poor house for the rest of my life? I don't have the cash to have a legal bodyguard. I don't want to file bankruptcy because besides my business I do have 1 good rental asset remaining that is good and do not want a court to sell all my assets and now is a bad time anyway.
Expert:  socrateaser replied 4 years ago.

Under Civil Code § 1951.2(a)(3) "future damages" caused by the early termination of a lease may be awarded only if one of the following two conditions is satisfied (Civil Code § 1951.2(a)(3),(c)):

  1. The lease expressly authorizes such recovery to the extent it exceeds what could have been avoided by reasonable efforts to relet. Civil Code § 1951.2(c)(1).
  2. The landlord in fact did relet the premises prior to the time of the § 1951.2 future damages award and proves that in reletting he or she acted reasonably and in good faith to mitigate the damages; but recovery of future rent in such event is further subject to any limitations specified in the lease. Civil Code § 1951.2(c)(2); see Danner v. Jarrett (1983) 144 Cal.App.3d 164, 166-167, 192 Cal.Rptr. 535, 536-537--landlord may seek such future damages after unlawful detainer judgment.

 

So read your lease and see if the landlord reserved the right to sue for future rent. If he didn't, then you're off the hook -- though, the landlord can wait until some future date and sue for accrued back rent. But, that would be limited by the four-year statute of limitations, so that knocks 5 years off your problem. Meanwhile, the landlord will probably find a new tenant at some point, and the you really will be off the hook.

 

Also, if your lease has a liquidated damages clause, then you could use that as a defense to liability greater than that amount.

 

Other than those options, bankruptcy is the last way out.

 

Customer: replied 4 years ago.

I don't see anywhere that the landlord reserved the right to sue for "future rent".
However:

 

Under our lease #23.2 Landlord's remedies: termination:
(a) the worth at the time of award of any unpaid rent which had been earned at the time of such termination; plus
(b) the worth at the time of award of the amount by which the uppaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus
(c) the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that Tenant proves could be reasonably avoided;plus
(d) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform ........all unamortized costs to landlord

Expert:  socrateaser replied 4 years ago.

The language you display is the same as that which is found applicable to reserving rights under Civil Code 1951.2(c). So, the landlord can sue immediately for future rent.

 

Which, leads you back to filing bankruptcy, in my view.

 

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