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  1. #1
    Join Date
    Sep 2009
    Posts
    1

    Default Refund of Commercial Lease Deposit

    My question involves business law in the state of: California

    I know that in CA landlords have to refund lease deposits within 21 days. Is there a similar law for commercial leases? I sold my business and the new owner entered into a new lease (they released me from my existing lease) on Sept 1. I confirmed with the property manager that the space was left to the new owner in better condition than I received it in and she agreed that I was entitled to a full refund. (I have an email stating this.)

    The landlord is a public corporation and the jerk that I have had to deal with said that it would take 4-6 weeks to process the refund. But meanwhile, they already have the deposit for the lease that replaced mine. Is double-dipping legal? And if so, are there any laws regarding how fast they have to send me my refund?

    Thanks in advance.

  2. #2
    Join Date
    Sep 2005
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    Default Re: Refund of Commercial Lease Deposit

    The following statute should govern:
    Quote Quoting California Civil Code, Sec.1950.7.
    (a) Any payment or deposit of money the primary function ofwhich is to secure the performance of a rental agreement for otherthan residential property or any part of the agreement, other than apayment or deposit, including an advance payment of rent, made tosecure the execution of a rental agreement, shall be governed by theprovisions of this section. With respect to residential property,the provisions of Section 1950.5 shall prevail.

    (b) The payment or deposit of money shall be held by the landlordfor the tenant who is party to the agreement. The claim of a tenantto the payment or deposit shall be prior to the claim of any creditorof the landlord, except a trustee in bankruptcy.

    (c) The landlord may claim of the payment or deposit only thoseamounts as are reasonably necessary to remedy tenant defaults in thepayment of rent, to repair damages to the premises caused by thetenant, or to clean the premises upon termination of the tenancy, if the payment or deposit is made for any or all of those specific purposes.
    (1) If the claim of the landlord upon the payment or deposit is only for defaults in the payment of rent and the security deposit equals no more than one month's rent plus a deposit amount clearly described as the payment of the last month's rent, then any remaining portion of the payment or deposit shall be returned to the tenant at a time as may be mutually agreed upon by landlord and tenant, but in no event later than 30 days from the date the landlord receives possession of the premises.

    (2) If the claim of the landlord upon the payment or deposit is only for defaults in the payment of rent and the security deposit exceeds the amount of one month's rent plus a deposit amount clearly described as the payment of the last month's rent, then any remaining portion of the payment or deposit in excess of an amount equal to one month's rent shall be returned to the tenant no later than two weeks after the date the landlord receives possession of the premises, with the remainder to be returned or accounted for within 30 days from the date the landlord receives possession of the premises.

    (3) If the claim of the landlord upon the payment or deposit includes amounts reasonably necessary to repair damages to the premises caused by the tenant or to clean the premises, then any remaining portion of the payment or deposit shall be returned to the tenant at a time as may be mutually agreed upon by landlord and tenant, but in no event later than 30 days from the date the landlord receives possession of the premises.
    (d) Upon termination of the landlord's interest in the unit in question, whether by sale, assignment, death, appointment of receiver or otherwise, the landlord or the landlord's agent shall, within a reasonable time, do one of the following acts, either of which shall relieve the landlord of further liability with respect to the payment or deposit:
    (1) Transfer the portion of the payment or deposit remaining after any lawful deductions made under subdivision (c) to the landlord's successor in interest, and thereafter notify the tenant by personal delivery or certified mail of the transfer, of any claims made against the payment or deposit, and of the transferee's name and address. If the notice to the tenant is made by personal delivery, the tenant shall acknowledge receipt of the notice and sign his or her name on the landlord's copy of the notice.

    (2) Return the portion of the payment or deposit remaining after any lawful deductions made under subdivision (c) to the tenant.
    (e) Upon receipt of any portion of the payment or deposit under paragraph (1) of subdivision (d), the transferee shall have all of the rights and obligations of a landlord holding the payment or deposit with respect to the payment or deposit.

    (f) The bad faith retention by a landlord or transferee of a payment or deposit or any portion thereof, in violation of this section, may subject the landlord or the transferee to damages not to exceed two hundred dollars ($200), in addition to any actual damages.

    (g) This section is declarative of existing law and therefore operative as to all tenancies, leases, or rental agreements for other than residential property created or renewed on or after January 1, 1971.

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