California Laws on Abandonment of Personal Property with Commercial Leases

It happens more often than people think.  A commercial tenant who is behind in rent suddenly abandons the property without any notice to the landlord, leaving personal property behind.

There may be a history of conflict between the tenant and landlord, or bad communication.  But for whatever reason, the tenant believes this is the only viable way to get out of the lease. To simply disappear to avoid the hassle.

How does a landlord legally get his commercial rental property back? And what do you do with the personal property that was left so you don’t have any legal liability mishandling the abandoned property in case the former tenant reappears and suddenly demands its return?

Two new California Laws greatly benefit property owners who find themselves in these circumstances with commercial leases.

AB 2847 reduces the number of days a landlord must wait before beginning proceedings to terminate a lease for commercial property that appears to be abandoned.  AB 2173 increases the threshold of the value of the abandoned personal property a commercial landlord may dispose of without a public sale.

The first step for a landlord in this situation is to clearly establish and document that the commercial property is actually abandoned.  This is very important to follow the letter of the law or face potential legal liabilities and penalties that apply to commercial leases.

While it may seem to be intuitively obvious the commercial property is abandoned if there is a “Closed” sign hanging on the door, mail has piled up or neighboring businesses haven’t seen anyone on the property for days. The tenant has stopped paying rent, is not returning any attempts to communicate with them, or has stopped paying utilities.

All of these findings contribute to establishing the fact that the rental property is abandoned. However, following the letter of the law is more complicated because there must also be a demonstrated intent to abandon the property when taking the totality of all these circumstances into account.

For the landlord to legally reclaim possession of the property, under California Civil Code § 1951.3, a Notice of Belief of Abandonment of Real Property, or NBARP must first be sent which can be used to avoid an eviction lawsuit having to be filed.  If the landlord simply locks the commercial tenant out without fist giving this NBARP notice, the landlord may be found guilty of self-help wrongful eviction and be liable for punitive damages no matter how bad the actions of the tenant were.

The NBARP expires 15 days after the notice is served, and unless the former tenant communicates in writing before that time that they do not intend to abandon the property, the landlord can then retake possession of the commercial rental without having to go through the costs and lost time of a formal eviction process. Under current California law, it is acceptable to serve both a 3 Day Notice to Pay Rent and a NBARP together, which can save valuable time and lost rent if the tenant does not pay the rent but responds to the NBARP.  /3-day-notice-to-pay-rent-or-quit-commercial

What can be done with any abandoned personal property left behind depends upon the property’s estimated value.  

California Civil Code §1993 et. seq. requires that a commercial landlord serve a written Notice of Right to Reclaim Abandoned Property to the former tenant and anyone else they reasonably believe has an ownership interest in the abandoned property.  If the property consists of records, the tenant shall be presumed to be the owner of the records.  

The notice shall describe the property in a manner reasonably adequate to permit the owner of the property to identify it unless it is bound or sealed in a manner that prevents easy access to the contents. The notice shall advise the person to be notified that reasonable costs of storage may be charged before the property is returned, where the property may be claimed, and the date before which the claim must be made.

The personal property must be sold at auction if the value exceeds $2,500 or one month’s rent. Any abandoned personal property which is worth less than that may be retained by the landlord or thrown away if it is not claimed by the tenant after the expiration date of the Notice of Right to Reclaim Abandoned Property.

If the value of the property is less $2,500 or one month’s rent, the notice must contain the language: “Because you were a commercial tenant and this property is believed to be worth less than either two thousand five hundred dollars ($2,500) or an amount equal to one month’s rent for the premises you occupied, whichever is greater, it may be kept, sold, or destroyed without further notice if you fail to reclaim it within the time indicated above.”

For example, if the commercial tenant was a restaurant that left behind $10,000 worth of cooking equipment, and the monthly rent was $10,000, the landlord is entitled to dispose of that property without holding a public auction.

The date specified in the notice shall be a date not less than 15 days after the notice is personally delivered.

The notice must be served to the tenant’s last known address or addresses.

If it is an automobile which is the abandoned property, the California Vehicle Code should be followed which allows the landlord to contact a licensed towing company who will tow the vehicle and contact the owner. If the vehicle is not claimed, it can be sold to satisfy the towing and storage expenses.

The best way to always prevent this situation of abandoned commercial property from happening, and having to deal with abandoned personal property, is to keep open the lines of communication with the tenant to keep the situation from getting out of control and being left with a major problem – as well as lost rent!