Failing to Pay Rent Could Terminate Month-to-Month Tenancy

September 14, 2018
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Q: After my lease for retail space came to an end, I stayed in the space without renewing the lease. The landlord continued to collect rent from me so I assumed I was then on an implied month-to-month tenancy. I started to negotiate a lease for space in a different shopping center so I shut down my business and stopped paying rent, but left my inventory there until I could move to the new space. During that time, my inventory was damaged by a leak in the roof above my space. The landlord is refusing to pay for damages. I’d like to bring a claim against it. What is the likelihood that I’ll prevail in a lawsuit?

A: It could be very difficult for you to win your lawsuit and get damages from the landlord. That’s because your failure to pay rent likely terminated the month-to-month tenancy, leaving the owner without an obligation to protect whatever items you left behind. That was the case in a recent California case dealing with a similar situation. 

There, a medical tenant clinic signed a lease that it renewed for an additional five-year term. During the initial and renewal term, the tenant paid monthly rent on time. After the renewal term was over, the tenant didn’t renew the lease formally; it continued to stay in the space and pay rent on a month-to-month basis. The landlord didn’t object to this arrangement and the “implied” month-to-month tenancy continued for several months, until the tenant stopped paying rent and stopped using the space, but didn’t remove any medical equipment. The landlord served the tenant with a three-day notice to pay rent or quit, but the tenant didn’t comply. The landlord named the tenant in an unlawful detainer action, which would allow it to evict the tenant lawfully. At some point while the unlawful detainer claim was pending, but the space wasn’t being used, sewage from a clogged pipe damaged all of the medical equipment. The tenant sued the landlord for the cost of the damage. The landlord asked a trial court for a judgment in its favor without a trial. The trial court ruled in favor of the landlord, and the tenant appealed.

A California appeals court affirmed. The appeals court determined that the tenant’s failure to pay rent terminated the implied month-to-month commercial tenancy and was a material breach of the tenancy, which rendered the tenant’s possession unlawful and relieved the landlord of any liability for the sewage backup that damaged the tenant’s equipment while the unlawful detainer action was pending.

The appeals court also addressed the tenant’s allegations that the landlord was negligent concerning the plumbing. The appeals court concluded that the month-to-month tenancy was terminated by the tenant’s failure to pay rent coupled with the landlord’s filing of the wrongful detainer action; therefore, as of the filing of the wrongful detainer action, the tenant was a “tenant at sufferance” who had no lawful right to possession of the premises. Accordingly, the landlord was not liable for damage to the tenant’s property left on the premises when that damage was not caused by the landlord’s intentional act or negligence. “Absent proof the landlord knew of plumbing problems, failure to repair was not negligent,” said that appeals court [Multani v. Knight, May 2018].