Can a CA Commercial Tenant Stop Paying Rent Via Constructive Eviction?

If you have spent anytime in the world of landlord-tenant law and/or rental property management, you are probably no doubt familiar with the concept of “constructive eviction.” This legal principle dates back hundreds of years in the common law and essentially states that a tenant can be relieved of the obligation to pay rent on a lease if a landlord’s acts or omissions in managing the property make the property unfit for habitation, so long as the tenant gives proper notice and vacates the property. Constructive eviction can be a legal nightmare for landlords while remaining a powerful legal tool for tenants, but the use of constructive eviction in the commercial real estate context in California presents options and challenges for landlords and tenants like.

Constructive Eviction Generally in CA

Under California Civil Code Section 1927, a tenant has the following right: “An agreement to let upon hire binds the letter to secure to the hirer the quiet possession of the thing hired during the term of the hiring, against all persons lawfully claiming the same.”

While this may sound vague or even archaic, California courts have ruled that this means all landlords (or “letters”) owe their tenants an implied duty “that a tenant shall have quiet enjoyment and possession of the premises during the continuation of the term” of lease. Courts have further explained that this means that, if an issue arises that impairs the ability of the tenant to enjoy the property – such as noxious fumes, infestation, major property defects, and so on – and the landlord failures to remedy the issue, the tenant can consider himself “constructively evicted” and then stop paying rent due on the lease, but only after the tenant has moved out.

Contracting Out of a Constructive Eviction Option for Commercial Tenants

With regard to commercial leases, however, the courts have honored the right of commercial landlords to essentially contract with a commercial tenant via the lease to opt out of allowing the option of pursuing a constructive option. Although the courts have said that it is against public policy for landlords to create residential leases which include a clause requiring a residential tenant to waive his right to pursue a constructive eviction, this public policy does not apply to commercial tenants.

Thus, commercial landlords may choose to include a clause in a commercial lease which requires the tenant to waive this right (e.g. “In no event shall Tenant have the right to terminate this Lease as a result of Landlord’s default and Tenant’s remedies shall be limited to damages and/or an injunction.“) and such a clause will be upheld by the court. Although a commercial tenant may be able to pursue other legal remedies such as damages, the courts will not permit a tenant who agrees to this clause to pursue the constructive eviction defense to paying rent on the lease.

Work With an Experienced Los Angeles Real Estate Attorney

Attorney Laine T. Wagenseller of the Wagenseller Law Firm has published numerous articles on real estate law and works with individuals and businesses across Southern California in resolving real estate matters, including lease matters that result in litigation. Contact the Wagenseller Law Firm today to schedule a consultation.