If the most frustrating event for an owner of commercial property is a tenant not paying rent, the second most frustrating event must be a delay in evicting that tenant.
If the lease at issue is an AIR lease, here are three tips to facilitate a quick eviction:
1. Careful Preparation of the 3-day Notice: The 3-day notice must be carefully prepared. If it is not, the landlord may have to start the process over, or the landlord may lose an unlawful detainer case. Although California law gives a tenant 3 calendar days to pay the amount demanded in the notice to pay rent, Paragraph 13.1(b) of the AIR lease provides the tenant with 3 business days. The landlord must comply with this longer period provided in the AIR lease, otherwise it may lose its unlawful detainer case.
Tip: The notice to pay rent or quit should clearly state that tenant has 3 business days to pay the amount due. In fact, it can be included in the title of the notice itself, such as “Three (3) Business Day Notice To Pay Rent or Quit.” There are numerous requirements for notices to pay rent, and landlords must follow those requirements to avoid the possibility of delay.
2. Compliance With Lender Requirements: Landlord should make sure that there is no agreement with tenant’s lender which requires, for example, landlord to deliver the notice to tenant’s lender or give tenant’s lender the opportunity to cure. If tenant has obtained financing for its business, tenant’s lender sometimes asks landlord to sign a “landlord waiver” which can give such rights to tenant’s lender.
3. Application of Payments: Before issuing the 3-day notice, landlord should determine whether payments by tenant have been applied in accordance with Paragraph 4.3 of the AIR lease: “Payments will be applied first to accrued late charges and attorney’s fees, second to accrued interest, then to Base Rent and Common Area Operating Expenses, and any remaining amount to any other outstanding charges or costs.” Landlord should consult its attorney on whether the 3-day notice should be adjusted based on this provision. It is highly recommended that landlord’s counsel draft the 3-day notice.
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