Commercial
Landlord Tenant Law
Commercial Landlord Tenant Law is very different from Residential Law. Many rights given to the residential tenant do not exist for the commercial tenant. Many business persons make serious mistakes applying laws which work for residences but do not apply with businesses. These mistakes can be very costly and could result in the loss of one's business. Great care must be taken in these matters.
SOME DIFFERENCES BETWEEN COMMERCIAL
AND RESIDENTIAL TENANCY LAWS
IN COMMERCIAL TENANCIES;
-Contrary to what some landlords/agents say, there is no single "standard" commercial lease.
-There is no implied right of habitability.
-There is no statutory right to "repair and deduct" for property defects.
-The 10% 60 day rent raise rule does not apply.
- The 60 day notice to quit rule (required for month to month tenancies over one year) does not apply.
-Statutory penalties for turning off utilities or changing locks (CC 789.3) do not apply.
-There is no limit to the amount of security deposit charged.
-The privacy protections of entry by landlord laws (CC 1954) do not apply.
-Landlords can accept a partial rent payment during an eviction and still successfully proceed with that eviction.
-Landlords can ask for too much rent in a 3 day notice to pay rent or quit and still successfully proceed with the eviction.
-Late charges which are excessive in residential tenancies may be acceptable for commercial ones.
-Landlords may shift maintenance responsibilities to the tenant.
-Many unwaivable rights in residential tenancies may be waived in commercial ones.
-Tenants may waive litigation rights including a trial by jury.
-Assignments and subleases may be prohibited.
-Landlords may restrict the tenant's use of the property even if it is an unreasonable restriction.
-Commercial leases (i.e. the value of your business and the space) may actually be cancelled and lost upon the tenant's attempt to sell their business ("recapture" of the lease) thus losing the business and the proposed sale!
-Rent control generally does not affect commercial rents.
-Many tenants sign away valuable rights by unknowingly signing improper (i.e. factually incorrect) "Estoppel Certificates" which materially change the lease and your rights.
-You may have to pay the rent even if the space becomes damaged by such events as flood or fire.
THE LAW FOLLOWS THE LEASE
In most commercial situations, the courts will uphold the lease, even when it is unfair and/or unreasonable. The general "automatic" or implied protections found in residential tenancies simply do not exist in these situations. For example, you may rent a space that is unusable for your business but you still have to pay rent. Also, be aware of personal guarantees the landlord wants you to sign if you are renting in a company name. They may be used in ways you did not imagine.
LEGAL ASSISTANCE IS VERY IMPORTANT
In commercial situations, where your business is at stake, seek legal advice from an attorney experienced in these matters before taking action with a lease matter. If you get important papers: i.e. eviction papers, estoppel certificates, 3 day notices for breach of lease, improper CAM charges, or any letters of demand etc., seek legal assistance ASAP! Failure to act timely can cause the loss of valuable rights or even the entire business.
At the Tenants Legal Center, we assist tenants in commercial matters as well as residential ones. We offer legal services at fees we believe to be significantly lower than the fees charged by traditional law firms while providing the same or a higher level of expertise for your matter than those firms.
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California law for San Diego is applied in these pages. Such laws may or may not be applicable in other jurisdictions. The information provided herein is of a general nature and is not intended to be taken as specific legal advice. For legal advice in a particular situation, promptly consult with an appropriate attorney.