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A Reasonable Estimate of Rent Due in Commercial Unlawful Detainers

Our commercial unlawful detainers frequently deal with complex demands for rent due. In fact, we recently had a case where the landlord sought over $1 million in past rent allegedly due from our client over the course of less than one year. When the numbers are this large or the rent calculations are complex it can be difficult to determine the exact amount of rent due as is required in residential unlawful detainer action. There general rule is that “because of the summary nature of an unlawful detainer action, a notice is valid only if the lessor strictly complies with the statutorily mandated notice requirements.” (Bevill v. Zoura, (2001) 27 Cal.App.4th at 697). In order for a lease to be forfeited at common law, the landlord was required to have first made a demand for the precise sum of rent due. (Gage v. Bates (1870) 40 Cal. 384). However, in a commercial unlawful detainer setting, a landlord can elect to invoke Section 1161.1 of the Code of Civil Procedure, which provides that a landlord of commercial property may prevail in an unlawful detainer action even if the demand for rent is incorrect as long as the demand is a reasonable estimate of the amount due. (WDT-Winchester v. Nilsson (2005), 27 Cal.App.4th 516, 526). In order to invoke section 116.1, however, a notice must be clearly identified as an estate and the estimate must be reasonable. (Id.; See Code Civ. Proc. § 1161.1). Stating a reasonable estimate of the amount due is a prerequisite to an unlawful detainer cause of action. (SeeCACI No. 4302 (“To establish this claim, [plaintiff] must prove all of the following:…The Notice stated a reasonable estimate of the amount due…”); See also CACI No. 4304 (Sufficiency and Service of Notice of Termination for Failure to Pay Rent)).

Pursuant to Section 1161.1(e), if the plaintiff demands an amount in its notice to pay rent or quit that is 20 percent more or less than the amount that the Court determines to be actually due and owing, the burden of proof to prove that the amount of rent demanded in a notice is a reasonable estimate shifts to the plaintiff. (See Code Civ. Proc. § 1161.1(e)). If plaintiff cannot establish that its estimate was reasonable, the notice to pay rent or quit is defective and cannot support a judgment for unlawful detainer. (WDT-Winchester, supra, 27 Cal.App.4th at 535).

In WDT-Winchester, the Court of Appeals strictly applied the requirement that the notice state a reasonable estimate of the amount due. In that case, the tenants appealed from an unlawful detainer judgment entered in favor of landlord on the basis that landlord’s notice to pay rent or quit premises was defective because the amount of rent claimed was not reasonably estimated. The landlord served a notice seeking rent in the amount of $40,493.75, which included property taxes of $10,165.30. (Id. at 523). Pursuant to the term of the lease, landlord was obligated to first pay the property taxes and then seek reimbursement from tenant. (Id. at 529). Accordingly, the lease did not intend to permit advance billing of property taxes. (Id.) Based thereon, the notice for $40,493.75 exceeded the amount of rent actually owed by $10,165.30, a differential of approximately 25%. (Id. at 531). Because the margin of error exceeded the 20% figure contemplated by subdivision (e) of Section 1161.1 of the Code of Civil Procedure, the burden shifted to the landlord to prove its estimate was reasonable. (Id.) After review the record, the court determined that record did not support a finding that the demand in the notice was reasonable. (Id.) Based thereon, the court held that the notice failed to comply with the requirements set forth in Section 1161.1 in that the amount of rent was not reasonably estimated and reversed the judgment for unlawful detainer and entered judgment in favor of tenants. (Id. at 535)

Understanding the ins and outs of unlawful detainer actions both in the commercial and residential context is the foundation for maximizing your chances of success. To inquire about a free consultation on your commercial unlawful detainer action contact us at (310) 954-1877, info@schorr-law.com or by filling in the contact box on this page.

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