California property owners and developers should be well aware of the requirements in place for real estate tenants and rental repairs. There are sublease restrictions, prohibitions on key money, prohibitions against rent control, regulations on the use of eviction notices, etc.
Any commercial lease that requires a tenant obtain approval from the landlord before they sublet the property, or rent to another individual or family for the duration of their agreed upon lease, carries the implication that the landlord cannot withhold consent to sublease without a valid reason. According to Section 1995.260 of the California Civil Code places the burden of proving the landlord is acting unreasonably regarding a refusal to approve a sublease request on the commercial tenant. Any tenant who requests that their landlord explain their refusal in writing may be allowed to use the landlord’s failure to respond in writing as proof that the landlord was in violation of the law.
No Key Money:
“Key Money” is a phrase that is used to denote bribes and other similar forms of under the table payments to landlords in exchange for renting a property. Landlords and their representatives are prohibited from accepting or requiring “key money” from commercial tenants or prospective commercial tenants as a condition to entering into, starting or renewing a lease. This is stated in Section 1950.8 of the California Civil Code. If a tenant is asked for key money, they are then entitled to three times the amount of damages caused by the denial of a rental.
Rent Control Prohibited:
The capping of rents in a specific area at a certain amount by a public entity is known as rent control. This activity is prohibited by California law (in relation to commercial real estate). According to Section 1954.25 of the California Civil Code, commercial rent control would not encourage a competitive environment for businesses and could provide one business with an unfair advantage over another. Under Section 1954.27 of the California Civil Code, public entities are not allowed to enact or enforce any form of commercial rent control. Commercial landlords are allowed to enter into a capped rental agreement with public agencies voluntarily.
California commercial tenants are evicted for a variety of reasons. Some common reasons for commercial tenant eviction include: nonpayment of rent, breaches of the lease agreement, subletting when prohibited, etc. If a tenant is in breach of a commercial lease, they only have three days upon receipt of the eviction notice to correct any lease violations (according to Section 1161 of the California Code of Civil Procedure). If the commercial tenant eviction is a result of nonpayment of rent, the landlord has the right to use an estimate of rent owed for the notice as long it is clearly designated as an “estimate.”
If you need assistance with California commercial real estate or tenant issues, contact the southern California real estate attorneys at The Law Office of Retz & Aldover LLP today.