Malcolm Rivera
Commercial lease abandonment in California is a complex issue that requires landlords to follow specific legal procedures. It involves a tenant abruptly leaving a rented property, often due to rental arrears or conflicts with the landlord, and can result in legal liabilities and penalties if not handled correctly. To reclaim possession, landlords must establish the tenant's intent to abandon, send the necessary notices, and handle any personal property left behind according to California Civil Code guidelines. Understanding these laws and maintaining open communication can help prevent abandonment and ensure proper resolution.
| Characteristics | Values |
|---|---|
| Commercial tenant leaves the premises without negotiating with the landlord | Common due to a lack of communication between landlord and tenant |
| Tenant is behind on rent | Must be at least 14 days behind in rent |
| Landlord has a reasonable belief that the tenant has abandoned the property | Tenant is closed for business, hasn't been seen on the premises for more than a month, and has stopped paying rent and communicating |
| Demonstrated intent to abandon the property | Tenant has stopped paying rent, is not responding to attempts to communicate, or has stopped paying utilities |
| Landlord's notice requirements | Must be in writing and served to the tenant's last known address(es) |
| Notice indicates that the property will be deemed abandoned | Unless the tenant provides written notice of their intent not to abandon before the date of termination |
| Notice indicates the date of termination | 15 days from the notice date if served personally and 18 days if served by mail |
| Notice indicates the landlord's belief of abandonment | Notice is being sent pursuant to California Civil Code Section 1951.3 |
| Notice identifies the leased property | |
| Notice states that rent has been due and unpaid for 14 consecutive days | |
| Landlord's rights to reclaim abandoned property | Landlord must serve a written Notice of Right to Reclaim Abandoned Property to the former tenant and anyone else with a reasonable ownership interest |
| Tenant's rights to reclaim abandoned property | Tenant has 15 days to reclaim property if hand-delivered and 18 days if mailed |
| Value of abandoned property | If worth less than $2,500 or one month's rent, the landlord may keep, sell, donate, or destroy the property. If worth more, the property must be sold at public auction. |
| Abandoned vehicles | Landlord can contact a towing company to tow the vehicle, and if the owner does not claim it, it can be sold to cover towing and storage costs |
| Abandoned business records | Landlord must list these on the notice of abandonment given to the tenant |
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What You'll Learn
The definition of abandonment
In California, a commercial property is considered abandoned when a tenant is at least 14 days behind in rent, and the landlord has a reasonable belief that the tenant has abandoned the property. This belief can be based on factors such as the tenant being closed for business, not being seen on the premises for an extended period (often over a month), and ceasing to pay rent and utilities. However, it is important to note that there must also be a demonstrated intent to abandon the property when considering all the circumstances.
To establish this intent, landlords can look for indicators such as a "Closed" sign, piled-up mail, or reports from neighbouring businesses that the tenant hasn't been seen recently. While these signs may seem obvious, the law requires a more comprehensive approach. For example, if a landlord discovers that the tenant's property remains on the premises or utility bills are still being paid, it may not be considered abandonment.
To legally reclaim possession of the property, landlords must follow specific procedures. They must first send a Notice of Belief of Abandonment of Real Property (NBARP) under California Civil Code § 1951.3. This notice can help avoid a formal eviction process. The NBARP expires 15 days after it is served, and if the tenant does not communicate their intention to remain, the landlord can retake possession without further delays.
Additionally, California Civil Code §1993 et. seq. outlines steps for landlords to dispose of abandoned personal property safely. This process includes serving a written Notice of Right to Reclaim Abandoned Property to the former tenant and any other potential owners. The notice informs them that they have 15 days (if hand-delivered) or 18 days (if mailed) to retrieve their belongings. If the property is worth less than $2,500 or one month's rent (whichever is greater), the landlord has more flexibility in handling it. However, if it exceeds this value, a public auction is required.
To summarise, abandonment of a commercial lease in California involves a tenant falling behind on rent and exhibiting clear signs of abandoning the property. Landlords must follow specific legal procedures, including providing notices and allowing response periods, to legally reclaim possession and handle any abandoned personal property.
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Notice of abandonment
In California, a commercial property is considered abandoned when the tenant is at least 14 days behind in rent, and the landlord has a reasonable belief that the tenant has abandoned the property. While this may seem obvious in some cases—for example, if the tenant has a "Closed" sign hanging, mail has piled up, or neighbouring businesses haven't seen anyone on the property for days—the law requires demonstrated intent to abandon the property when taking all circumstances into account.
To legally reclaim possession of the property, a landlord must first send a Notice of Belief of Abandonment of Real Property (NBARP) to the tenant's last known address(es). This notice must:
- Be in writing;
- Indicate that the property will be deemed abandoned pursuant to California Civil Code Section 1951.2 and the lease terminated unless the tenant provides written notice of its intent not to abandon before the date of termination;
- Indicate the date of termination (15 days from the notice date if served personally and 18 days if served by mail);
- Indicate the landlord's belief of abandonment and that the notice is being sent pursuant to California Civil Code Section 1951.3;
- Identify the leased property; and
- State that rent has been due and unpaid for 14 consecutive days.
The NBARP expires 15 days after the notice is served. If the tenant does not communicate their intention not to abandon the property in writing before that time, the landlord can retake possession of the commercial rental without having to go through a formal eviction process.
If the tenant does not respond to the NBARP, the landlord may post a 24-hour Notice of Intent to Enter the premises to determine whether the property has been abandoned. If it is still unclear whether the tenant has vacated, the landlord can either proceed with an unlawful detainer process or utilise the NBARP procedure.
In lieu of the NBARP procedure, if the tenant has breached the lease by failing to pay rent, for example, a landlord may proceed with an eviction by first serving a notice to pay rent or quit. Serving a notice will sometimes prompt a tenant to communicate with the landlord.
In the case of abandoned personal property, a landlord should follow the steps described in California Civil Code §1993 et. seq. to avoid potential claims of wrongful disposal. This involves serving a written Notice of Right to Reclaim Abandoned Property to the former tenant and anyone else reasonably believed to have an ownership interest in the property. The notice must state that they can retrieve the property within 18 days from the date the notice is mailed, or 15 days if hand-delivered.
If the abandoned property is worth $2,500 or more, or an amount equal to one month's rent, it must be sold through public auction. If it is worth less than this threshold, the property may be kept, sold, donated, or destroyed if not reclaimed within 18 days of the notice being served.
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Landlord's rights
In California, landlords have certain rights and protections in the event of a commercial lease abandonment. Here are the key points outlining a landlord's rights:
Rights Regarding Lease Termination
In the case of lease abandonment, a landlord has two primary options: they can either accept the tenant's abandonment as a surrender, or they can ignore the surrender and treat the lease as continuing. If the landlord accepts the abandonment, the lease is terminated, and the tenant is released from their rental obligations. However, the landlord may then seek to recover unpaid rent and deal with issues related to the abandoned property. On the other hand, if the landlord chooses to ignore the surrender, they may recover the remaining rent payments as they become due until the end of the lease period. This option allows the landlord to hold the tenant responsible for the full rent owed under the lease.
Rights Regarding Abandoned Property
When a tenant abandons a commercial lease, any belongings left behind are considered abandoned property. Landlords cannot immediately dispose of these items. Instead, they must follow specific procedures outlined in California Civil Code §1993 et. seq. This code requires landlords to serve a written "Notice of Right to Reclaim Abandoned Property" to the former tenant and anyone else with a potential ownership interest in the property. The notice should describe the property adequately, inform the recipient of storage costs, specify where and by when the property can be claimed, and outline the potential costs involved.
The value of the abandoned property determines the course of action a landlord can take. If the value exceeds $2,500 or one month's rent, the property must be sold at a public auction. The proceeds from the auction go to the county, and landlords can deduct reasonable storage and management costs. If the property is worth less than $2,500 or one month's rent, the landlord has more options. They may retain, sell, donate, or dispose of the items if the former tenant does not reclaim them within the specified timeframe.
Rights Regarding Early Lease Termination
Commercial leases in California often contain specific clauses addressing early termination, including any notice requirements, penalties, or financial obligations for the tenant. As a landlord, understanding your rights in these situations is crucial. In some cases, negotiating an early termination agreement may be beneficial, especially if market conditions have changed or if there is an opportunity to lease the space to a more desirable tenant. Financial compensation, security deposits, and outlining the tenant's remaining obligations are all factors to consider during these negotiations.
Rights Regarding Eviction
Landlords in California have the right to evict commercial tenants under certain circumstances. Eviction may occur if a tenant breaches the lease agreement, such as by altering the property or using it for unauthorized purposes. Additionally, California law does not require landlords to maintain commercial properties in a habitable condition, as is the case with residential leases. This means that commercial tenants cannot withhold rent payments to force repairs, and they are often responsible for issues like broken windows or roof leaks. However, landlords should be cautious and follow proper procedures to avoid potential wrongful eviction claims by tenants.
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Tenant's rights
Tenants in California have certain rights that protect them from unlawful evictions by landlords. Here are some key tenants' rights to be aware of in the context of lease abandonment:
Notice of Belief of Abandonment
If a tenant fails to pay rent for a certain period, the landlord may serve them with a "Notice of Belief of Abandonment". In California, this can occur after rent is unpaid for three days or a longer period specified in the lease for declaring a default. This notice indicates the landlord's belief that the tenant has abandoned the property.
Right to Reclaim Abandoned Property
If a tenant leaves personal property behind, the landlord must follow specific procedures to avoid claims of wrongful disposal. California Civil Code §1993 et. seq. outlines a process for the landlord to notify the former tenant and any other potential owners of the property. The notice informs them of their right to retrieve the property within a specified timeframe, typically 15 to 18 days.
Disposal of Personal Property
If the abandoned personal property is worth less than $2,500 or one month's rent (whichever is greater), the landlord has several options. They may retain the property, sell it, donate it, or dispose of it if the tenant fails to reclaim it within the specified timeframe. If the property is worth more than the threshold, it must be sold through a public auction.
Business Records and Private Information
Landlords must handle abandoned business records and private customer information with care. California law now designates the tenant as the presumed owner of business records. Landlords should include these records on the notice of abandonment given to the tenant. If the tenant does not claim these records, the landlord must destroy them securely to protect private information.
Defenses Against Eviction
Tenants have certain defenses against eviction. If the tenant can show that the landlord breached the lease agreement or engaged in discriminatory practices prohibited by the federal Fair Housing Act, they may have grounds to defend against eviction. Additionally, tenants have the right to sublet and other protections outlined in their lease agreement.
It is important for tenants to thoroughly review their lease agreement to understand their rights and obligations. Consulting with a real estate attorney can provide guidance on specific tenant issues and lease terms.
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Handling personal property
Confirm Abandonment
Before considering the property abandoned, landlords should first confirm that the tenant has truly abandoned the property. While signs such as a "Closed" sign, piled-up mail, or lack of activity may indicate abandonment, it is important to follow up with emergency contacts to confirm. This step is crucial to ensure that the tenant has not just gone on a prolonged vacation or encountered unforeseen circumstances.
Provide Notice of Belief of Abandonment
If the tenant cannot be reached and the property is believed to be abandoned, the landlord must provide a "Notice of Belief of Abandonment of Real Property" (NBARP) under California Civil Code § 1951.3. This notice informs the tenant that the landlord intends to retake possession of the property. The NBARP expires 15 days after it is served, and if the tenant does not respond in writing within this period, the landlord can proceed without a formal eviction process.
Notify About Personal Property
Once the lease is considered negated, landlords must provide written notice to the tenant and any other presumed owners of the personal property left behind. This notice should include a detailed description of the items, the date by which they must be claimed (at least 15 days after personal delivery or 18 days after mailing), and information about potential storage costs. It is important to keep records of all attempts to contact the tenant.
Handle and Dispose of Personal Property
If the tenant does not respond to the notice within the specified timeframe, the landlord can legally remove, sell, or dispose of the belongings. Items valued over $700 or one month's rent (whichever is greater) must be auctioned publicly, and the proceeds, after deducting reasonable costs, must be turned over to the county. Landlords should properly assess the value of the items to avoid potential liability for conversion. For abandoned vehicles, landlords should follow the California Vehicle Code, which may involve contacting a towing company.
Document and Store Safely
Throughout the process, landlords must document all actions, maintain proper inventory, and store the personal property securely. This paper trail is essential if any legal disputes arise. It is also recommended to keep copies of all notices and communications.
By following these steps, California landlords can effectively handle personal property left behind by commercial tenants while complying with the state's abandoned property laws.
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Frequently asked questions
A commercial property in California is considered abandoned when the tenant is at least 14 days behind in rent, and the landlord has a reasonable belief that the tenant has abandoned the property. This includes the tenant closing down their business, not being seen on the premises for a month, and ceasing to pay rent and other utilities.
Under California Civil Code § 1951.3, a landlord must first send a Notice of Belief of Abandonment of Real Property (NBARP) to the tenant's last known address. This notice will expire 15 days after it is served, and if the tenant does not communicate their intention to not abandon the property, the landlord can retake possession without a formal eviction.
Any belongings left behind by a tenant are considered abandoned property and are still the tenant's personal property. Landlords must inventory and store these items until the tenant is contacted. Tenants have 18 days following a notice of abandonment to reclaim their items. After this period, landlords can remove, sell, or dispose of the belongings.
A landlord may either accept the tenant's abandonment as a surrender, terminating the lease, or ignore the surrender and treat the lease as continuing. If the lease is treated as continuing, the landlord may recover the remaining rent payments until the end of the lease period. It is always best to consult a qualified real estate attorney for proper documentation and to avoid future rent claims.
