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  1. #1
    Join Date
    Jul 2015
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    3

    Default Commercial Tenant Broke its Lease

    My question involves criminal law for the state of: California

    In January 2015 I rented out an office I own to a business (LLC) and signed a contract with it for 3 years with personal liability. Rent was being paid on time every month until June 2015. In June, they told me their business wasn't doing well and requested extra time to pay rent, I agreed and received June's rent 2 weeks late. Early July, the business closed, told me they are no longer going to pay rent and gave me the keys back. We started negotiating for a few weeks (I also threatened to sue the business owner and hold him accountable for rent) until I recently found out that the business owner recently sold his home (I checked public records), left town and most probably traveled overseas.

    Now that he's overseas, is there a way I can sue him for breaking the contract and garnish his bank accounts to pay for rent? What if he doesn't have any money or assets?

    Thanks
    TN

  2. #2
    Join Date
    Oct 2006
    Posts
    16,474

    Default Re: Business Broke Rent Contract

    Are you making a diligent effort to mitigate you damages by getting the office re-rented as soon as possible? You cannot sue him until you know what your actual damages are and you won't know what those will be until you get the office re-rented.

    However, realistically if he sold his house and disappeared, your odds of ever collecting on a judgment won't be strong.

  3. #3
    Join Date
    Jul 2015
    Posts
    3

    Default Re: Business Broke Rent Contract

    Yes I'm making a diligent effort to mitigate. What is the statute of limitations? What if he comes back to California in a year or two?

    btw, thank you for the quick reply.

  4. #4
    Join Date
    Mar 2013
    Posts
    18,340

    Default Re: Business Broke Rent Contract

    Sure, there's a way. There's always a way. It's just going to cost you a small fortune to sue somebody in a foreign country. Even it you win you might still never collect. Chances are that he's probably cleaned out his bank account, too.

    Besides, you have to re-rent the office as soon as reasonably possible or he could claim lack of mitigation if you don't so you might end up getting awarded only a month or two's worth of rent for your efforts.

    The only thing in your favor is that the statute of limitations stopped running when he left the state so you can sue him whenever he comes back even if it's years from now.

    Bottom line, though, chalk it up to experience, get the place rerented and move on.

    If you are going to stay in the landlord business you have to expect this kind of thing to happen once in a while.

    Suggestions for the future. Take large security deposits, include daily late charges, and NEVER cut a tenant any slack on the rent. If it's not paid on the due date, serve your "pay or quit" notice right then.

  5. #5
    Join Date
    Jul 2015
    Posts
    3

    Default Re: Business Broke Rent Contract

    thank you adjusterjack again; lesson learned

    Side question (out of curiosity) isn't what he did considered fraud? clearing his bank accounts and leaving? Won't he get prosecuted if/when he gets back?

  6. #6
    Join Date
    Mar 2013
    Posts
    18,340

    Default Re: Business Broke Rent Contract

    Quote Quoting tony987
    View Post
    thank you adjusterjack again; lesson learned

    Side question (out of curiosity) isn't what he did considered fraud? clearing his bank accounts and leaving? Won't he get prosecuted if/when he gets back?
    No and no.

    It's just breach of contract.

    People frequently come here and say fraud like it's some sort of magic incantation that automatically brings divine punishment down on the perpetrator, when more often than not it's a simple breach of contract issue (if there was a contract). An allegation of fraud requires proof of intent to defraud, nearly impossible in most cases involving leases and rental agreements, and breach of contract requires only that there was a contract and that it was breached and that there where damages from the breach (much easier to prove). A lot of folks also mistakenly think anything sneaky, deceptive, or nefarious constitutes "fraud." FWIW, voiding a contract for fraud generally requires, among other things, a false, affirmative representation on which the other party relied in entering into the contract.

  7. #7
    Join Date
    Sep 2005
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    Behind a Desk
    Posts
    98,846

    Default Re: Commercial Tenant Broke its Lease

    Do you have a professionally drafted commercial lease? If so, I expect that it has a provision implicating your remedies under Civil Code Sec. 1951.4, and a provision permitting subleasing, such that you can sue for the full balance of rent for the remainder of the lease. (The details are in the statute). If you cooked up your own lease, or (I hope not) used a residential lease, all bets are off.

    Check your lease to see what you included.

    Note, suing him for rent and collecting what he owes are two different issues -- you can sue him, but if he and his assets are in another country you may never be able to collect.

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