January 14, 2002

On December 21, 2001, the California Court of Appeal for the Second Appellate District ruled that a commercial landlord’s acceptance of a partial rent payment after the landlord filed an unlawful detainer action (i.e., a form of eviction proceeding in California) did not waive the landlord’s rights when the lease provided that acceptance of partial rent would not waive breaches. Woodman Partners v. Sofa U Love.

FACTS
After a dispute over a tenant’s failure to pay rent under a commercial lease, the landlord served the tenant with a “Three-Day-Notice to Pay Rent or Quit,” which is the first-step in California’s unlawful detainer process. This notice did not mention whether the landlord could accept partial payments without waiving its rights. After the three-day period expired, the tenant made a partial payment. The landlord’s counsel then sent the tenant a letter stating that the landlord accepted the partial payment, but was still proceeding with the eviction action. The trial court allowed the landlord to evict the tenant and awarded the landlord damages.

THE APPEAL
On appeal, the tenant contended that the landlord could not evict the tenant because the landlord failed to provide advance or concurrent notice that its acceptance of partial rent would not waive the landlord’s rights. The tenant noted that California Code of Civil Procedure Section 1161.1(c) specifically provides that a landlord’s acceptance of partial rent after filing an unlawful detainer action does not waive any rights or defenses if the landlord provides actual notice to the tenant that the acceptance will not be a waiver of any rights, including the right the landlord may have to recover possession of the property.

The appellate court held that the letter from the landlord’s attorney failed to satisfy Section 1161.1(c)’s notice requirement because the notice was sent after the landlord had accepted the partial payment. The lease expressly stated, however, that “[t]he acceptance of rent hereunder by Lessor shall not be a waiver of any preceding breach by Lessee of any provision hereof, other than the failure of Lessee to pay the particular rent so accepted….” The appellate court declared that this provision satisfied Section 1161.1(c)’s requirements (even though the provision spoke in terms of a nonwaiver of “breaches” rather than a nonwaiver of “rights”). Consequently, the landlord was able to evict the tenant.

SIGNIFICANCE OF CASE
To preserve an ability to collect partial rent payments after filing an unlawful detainer action, commercial landlords should state in both their form lease and in any Three-Day Notice that acceptance of partial rent will not waive any rights or remedies, including the right the landlord may have to recover possession of the property. Such a statement in either document may be sufficient, but cautious commercial landlords should include such nonwaiver language in both documents.

For more information or to arrange an interview, please contact Leeza Hoyt or Katie Rampen, The Hoyt Organization, (310) 373-0103 or the following attorney at Pircher, Nichols & Meeks: Aaron Friedland (310) 201-8900.

Founded in 1983, Pircher, Nichols & Meeks is a national real estate law firm with a diversified real estate practice that includes litigation, bankruptcy, corporate, tax and public finance matters. Based in Los Angeles, the 45-attorney firm also maintains a full-service office in Chicago. The Los Angeles office is located at 1925 Century Park East, Suite 1700, Los Angeles, CA 900067; phone: (310) 201-8900.