WHAT HAPPENS WHEN A TENANT ABANDONS AN INDUSTRIAL SPACE?

November 21, 2009 on 12:40 am | In FASCINATING INDUSTRIAL REAL ESTATE INFORMATION, Legal, Problem Solving, Problems, Uncategorized, all | 4 Comments

WHAT HAPPENS WHEN A TENANT ABANDONS AN INDUSTRIAL SPACE?

Edited by Jodi Summers

Hey landlords, have you ever had this happen to you –

You decide to visit a tenant whose rent is past due, and while passing by the front window of the property, you notice that the space appears to be vacant.

Do you know what to do? Can you, as the owner, just assume that the tenant abandoned the property, change the locks, and lease out the property to the next person?

Yeah right, if only it should be so simple. Being a landlord is just not that easy.

According to the California Association of Realtors legal department:

California law provides a procedure that the owner or the property manager of the rental real property must follow before assuming that the rented property has been vacated. The focus of this legal article is on this procedure for regaining possession of abandoned real property. A copy of the notice that the owner must send to the tenant is included. However, this article does not address the issue of recovery of damages by the owner.

FAQ

Q 1: If a landlord believes the rental property has been abandoned, what is the notice that the landlord must provide to the tenant?

A: The Notice of Belief of Abandonment (“Notice”) goes as follows:

Notice of Belief of Abandonment

To:

______________________________________________________________________

(Name of lessee/tenant)

______________________________________________________________________

(Address of lessee/tenant)

This notice is given pursuant to Section 1951.3 of the Civil Code concerning the real property leased by you at ____________________ (state location of the property by address or other sufficient description). The rent on this property has been due and unpaid for 14 consecutive days and the lessor/landlord believes that you have abandoned the property.

The real property will be deemed abandoned within the meaning of Section 1951.2 of the Civil Code and your lease will terminate on ____________________ (here insert a date not less than 15 days after this notice is served personally or, if mailed, not less than 18 days after this notice is deposited in the mail) unless before such date the undersigned receives at the address indicated below a written notice from you stating

Both of the following:

(1) Your intent not to abandon the real property.

(2) An address at which you may be served by certified mail in any action for unlawful detainer of the real property.

You are required to pay the rent due and unpaid on this real property as required by the lease, and your failure to do so can lead to a court proceeding against you.

Dated: __________________________________________________________

(Signature of lessor/landlord)

___________________________________________________

(Type or print name of lessor/landlord)

___________________________________________________

(Address to which lessee/tenant is to send notice)

(Cal. Civ. Code § 1951.3(d).)

Q 2: Under what circumstances may a landlord give the tenant the Notice in Question 1?

A: The landlord may give the Notice only if two conditions have been met: (1) the rent on the property has been due and unpaid for at least 14 consecutive days and (2) the landlord reasonably believes that the tenant has abandoned the property (Cal. Civ. Code § 1951.3(b)).

Q 3: What if the landlord doesn’t want to wait the 14-day requirement mentioned in Question 2?

A: If a landlord wishes faster action, the landlord may use the unlawful detainer remedy. See California Code of Civil Procedure Sections 1161-1179a. See also, the C.A.R. legal article, Unlawful Detainer: The Eviction Process in California < http://www.car.org/index.php?id=MTg4Ng >

Q 4: What if the landlord believes the property to have been abandoned and there’s been a breach of another covenant under the lease but the rent has been paid?

A: The landlord must use the unlawful detainer remedy if the landlord wants to get the tenant out of the property. See California Code of Civil Procedure Sections 1161- 1179a. See also, the C.A.R. legal article, Unlawful Detainer: The Eviction Process in California.

Q 5: What is a “reasonable” belief of abandonment?

A: Many residential as well as commercial tenants vacate the premises when behind in the rent without ever notifying the landlord. What some courts look for is whether or not the keys have been turned over to the owner. If turning over the keys establishes for the landlord a clear showing of abandonment, then the landlord may be able to take possession of the premises without providing the Notice as required by section 1951.3. Following the procedure of section 1951.3 provides greater certainty to the owner and provides protection against a tenant who later sues the landlord for legal possession of the rental property.

However, if the tenant has not made it clear—has not given over the keys—then the landlord is left guessing about the tenant’s abandonment. One way to get some idea of the tenant’s intention is to view the premises by looking through a window to see if there is anything left behind. For example, if the utilities have been discontinued, there is no refrigerator and no furnishings, abandonment seem clear.

What if some personal possessions have been left behind?

“Since many lessees who abandon real property leave personal property on the premises, the mere fact that the lessor knows that the lessee has done so should not, by itself, be held to establish that the lessor’s belief as to abandonment was unreasonable. Where the personal property left by the lessee appears to be of little value, it would be reasonable for the lessor to conclude in the absence of other evidence that the personal property, as well as the real property, had been abandoned. On the other hand, where the personal property is of substantial value and it appears that the lessee is the owner, these facts would be significant evidence that the lessee had not abandoned the real property.” (11 Cal.L.Rev.Comm. Reports 951 (1973); 12 Cal.L.Rev.Comm. Reports 571 (1974); (Cal. Civ. Code § 1951.3(e)(2).)

Note: if personal property has been abandoned too, there is another procedure to be followed. See the C.A.R. legal article, Abandoned Personal Property: Disposition of Items Left Behind After Termination of a Tenancy.

Q 6: What If the property is under a lease that doesn’t terminate for several months, what should be written on the Notice regarding the date of lease termination?

A: Assuming the landlord wishes to terminate the lease and rent it to another tenant, the date of termination of the lease specified in the Notice should be at least 15 days after the Notice is served personally or, if mailed, at least 18 days after the Notice is deposited in the mail (Cal. Civ. Code § 1951.3(b)).

Q 7: How should a landlord or property manager give this Notice to a tenant if the tenant has disappeared?

A: The landlord’s Notice can be personally delivered to the tenant (if possible) or, in the alternative, it can be sent by first-class mail, postage prepaid, to the tenant at his or her last known address (which may be the rental property address). If there is a reason to believe that the Notice sent to that address will not be received by the tenant (or will not be forwarded to a subsequent address), the landlord may also send he Notice to another address, if any, known to the landlord where the tenant may reasonably be expected to receive the Notice (e.g., a place of employment). (Cal. Civ. Code § 1951.3(c).)

Q 8: Can a landlord still assume that the tenant has abandoned the property if the landlord accepts all or partial payment of the rent due before or after giving the Notice?

A: No. If during the period of time beginning 14 days before the time the Notice was given and ending on the date the lease would have terminated in the Notice, the tenant pays all or a portion of the rent due on the real property, then the landlord cannot assume the property has been abandoned. (Cal. Civ. Code § 1951.3(e)(4).)

Q 9: What must a tenant do to prove that he or she has not abandoned the property?

A: Assuming the tenant doesn’t receive the Notice and wants to regain possession of the property, the tenant must establish that he or she hasn’t abandoned the property by proving (1) that rent was not due and unpaid for 14 consecutive days when Notice was given, (2) that it was not reasonable for the landlord to believe that he or she had abandoned the property, (3) that, within the permitted time, he or she gave written notice of his or her intent not to abandon the property, or (4) that, during the period specified in section 1951.3 (e) (4), the tenant paid all or any portion of the rent that was due. (Cal. Civ. Code § 1951.3.)

The burden of proof on these matters is placed on the tenant so that the landlord will be able to proceed to relet the property with reasonable assurance that the abandonment and termination will not later be set aside by a court. (11 Cal.L.Rev.Comm. Reports 951 (1973); 12 Cal.L.Rev.Comm. Reports 571 (1974).)

If the tenant receives the Notice, the tenant must respond in writing prior to the termination date in the Notice that the tenant has not abandoned the property and must provide a current address for the landlord. In addition, the tenant must pay current all rent that is owed. (Cal. Civ. Code § 1951.3(d).)

Q 10: Does the law discussed in this legal article pertain to all real property, commercial and residential?

A: Yes. The law applies to all real property (Cal. Civ. Code § 1951.3(a)).

Q 11: Does the law discussed in this legal article apply to mobilehomes?

A: No. For abandonment of mobilehomes, see the Mobilehome Residency Law; in particular, see California Civil Code Section 798.61.

Q 12: Where can I obtain additional information?

A: This legal article is just one of the many legal publications and services offered by C.A.R. to its members. For a complete listing of C.A.R.’s legal products and services, please visit C.A.R. Online at www.car.org.

Readers who require specific advice should consult an attorney.

**

Reprinted with permission of the California Association of Realtors. Credit for this piece is to be given to the C.A.R. Legal Department.

http://www.car.org/legal/2007articles/abandoned-rental-real-property

http://uas.osu.edu/slideshow/xml/189?1256748258

http://zombiestories.files.wordpress.com/2009/06/abandoned_office.jpg

http://i.pbase.com/o6/31/766831/1/80308129.Vs1GQRbg.4845.jpg

http://yalesustainablefoodproject.files.wordpress.com/2009/02/kk_space02.jpg

http://neatorama.cachefly.net/images/2006-05/toronto-don-valley-brickworks-ducts.jpg

http://farm1.static.flickr.com/62/197713774_292e538457.jpg

http://www.socalindustrialrealestateblog.com/wp-content/uploads/2007/12/abandoned%20industrial.jpg

REAL ESTATE DEVELOPERS IMPACT BY BERNIE MADOFF’S “PONZI SCHEME”

February 21, 2009 on 12:04 am | In FASCINATING INFORMATION, FUNNY...MONEY, LENDERS + VENDORS, Legal, Lenders, Uncategorized | 11 Comments

 

REAL ESTATE DEVELOPERS IMPACT BY BERNIE MADOFF’S “PONZI SCHEME”

Several major East Coast Real Estate Developers have been named as victims in Bernard Madoff’s complex Ponzi scheme, which is rumored to have stripped investors of $50 billion in assets.

According to GlobeSt.com this list includes:

· Larry Silverstein, the World Trade Center developer;

· The Wilpons and Rechlers families;

· Brokers at Newmark Knight Frank and CB Richard Ellis–including Stephen Siegel, chairman of worldwide operations there,

· New Jersey developer Fred Daibes is rumored to have lost a significant amount of money;

· Mort Zuckerman, the chief executive of Boston Properties;

· Fred Wilpon, who owns the Mets and is head of Sterling Equities;

· Steven Simkin, a partner at the New York law firm of Paul, Weiss, Rifkind, Wharton & Garrison and chairman of the firm’s real estate department;

· A number of limited real estate partnerships in DC are also among the supposed victims.

· Other recognizable names on the list include John Malkovich, Sandy Koufax and Tim Teufel, - if these are the actor and baseball players, respectively, is unconfirmed, as is Larry King, the talk-show host, Frank Lautenberg, the Democratic senator from New Jersey, and Mark Green, a former public advocate of New York City.

Madoff was known to have focused on the rich and famous, sometimes requesting as much as a $20 million minimum.

A large number of the developers who invested with Madoff are reported to have pledged securities held by him for development projects. It has yet to be determined whether the actions of one person, will again impact bank lending criteria.

The complete client list of Madoff has been provided by the Wall Street Journal:

http://online.wsj.com/public/resources/documents/madoffclientlist020409.pdf

Info courtesy of:

http://www.globest.com/news/1341_1341/newyork/176748-1.html

https://ecf.nyeb.uscourts.gov/

http://designdepartment.wordpress.com/2006/09/07/

http://marketplace.publicradio.org/display/web/2006/10/27/down_in_debt/

http://www.observer.com/term/25509

http://gothamist.com/2007/09/07/revised_vision.php

http://blog.lib.umn.edu/mcgin017/blog/fall_2008/honors_intro_to_philosophy_fall_08/

CONGRESS WANTS COMMERCIAL BUILDINGS TO GO GREEN

May 16, 2008 on 10:50 am | In Bravo, CHARTS + STATISTICS, FASCINATING INDUSTRIAL REAL ESTATE INFORMATION, FASCINATING INFORMATION, GREEN, Government, Legal, New Developments, Uncategorized | 13 Comments

Green Future for Commercial Buildings

 

Today’s interesting statistic… buildings account for 29 percent of all carbon dioxide emissions, according to Andy Ehrlich, senior vice president of B&D Consulting, a national advisory and advocacy firm.

 

Ehrlich spoke He spoke to commercial practitioners at the Commercial Legislative and Regulatory Subcommittee at the National Association of Realtors’ Midyear Meetings.

 

FYI - Congress has created an agency in the U.S. Department of Energy to evaluate ways in which commercial buildings could reduce emissions and save energy. A proposed bill (S. 2191) follows up green building themes set by cities like New York, Los Angeles and San Francisco, requiring commercial buildings to reduce energy use by 30 percent beyond the standard currently espoused by American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE).

 

After 2019, standards would get even tighter.

 

The bill also offers incentives to states to update their building and energy efficiency codes.

 

The goal of the legislation, according to Ehrlich, is to reduce greenhouse gas emissions by approximately two-thirds by 2050.

 

“Most scientists estimate that this level of reduction would be sufficient to prevent significant climate change,” observed Ehrlich.

 

Necessity is preceding regulation. Rising fuel prices and growing tenant demand are pushing the demand for green buildings in the U.S. Currently, green buildings account for about 2%  t of new commercial construction; it’s estimated that by 2010, that percentage will increase to 10% percent of new construction.

 

“There’s no perfect bullet to reducing green house gases; we’re all going to have to take part, including the owners and managers of commercial real estate,” he concluded.

 

http://www.realtor.org/RMODaily.nsf/pages/News2008051506?OpenDocument

10 REASONS IT MAKES SENSE TO BUILD GREEN

April 23, 2008 on 5:21 pm | In FASCINATING INFORMATION, GREEN, Legal, New Developments, PROPERTY WISH LIST, Uncategorized | 10 Comments

10 REASONS IT MAKES SENSE TO BUILD GREEN

 

The Urban Land Institute and the U.S. Green Building Council offer 10 reasons that green development makes smart business sense:

 

1) Upfront costs can be recovered

2) Integrated design lowers operating costs

3) Better buildings mean better employee productivity

4) Green technology provides healthier indoor air

5) Healthier buildings reduce owner liability

6) Tenants’ costs can be lowered

7) Property values will rise

8) Public and some private financial incentives are available

9) Recognition as a good community steward builds public relations and

10) Using best practices yields more predictable results.

 

The Urban Land Institute is a nonprofit education and research institute whose more than 20,000 members represent all aspects of land use and development disciplines.

The ULI uses a variety of media to clear up misinformation and help green and sustainable development become a standard practice.

Slip/falls still greatest risk

December 28, 2007 on 10:10 pm | In FASCINATING INFORMATION, Legal, Uncategorized | 3 Comments

Slip/falls still greatest risk

Identity theft may grab the headlines, but when you look at the numbers,

it’s still those pesky slip and falls on the property that are most likely to get

you into legal trouble. According to the 2007 Legal Scan survey sponsored

by the National Association of REALTORS

® and the Institute of Real Estate

Management, real estate management professionals were much more likely

to end up facing a suit than those engaged in other real estate activities, and

premises liability issues were the single biggest cause of lawsuits against

managers during the two years (2005 and 2006) covered by the Scan.

Real estate managers also have the dubious distinction of much higher

damage awards than other real estate specialties, with 23 percent of damage

awards reported in the management section of the Scan reaching at

least $500,000. This compares to only 7 percent of awards above that figure

in other real estate-related cases. Three of the five top damage

awards—totaling $18.9 million—resulted from cases addressing dangerous

conditions on a tenant’s property that the management company failed

to correct. In part, the emphasis on premises liability may reflect the fact

that some 39 new laws and regulations on the issue have been adopted by

states in the last two years. The laws range from smoke detector ordinances

to disclosure requirements relating to meth labs and airport noise.

The largest single management award reported in the Scan was $9 million

to a tenant who was raped in her apartment (Anonymous Female v.

EPT Management Co., 2005). The case focused on the fact that, although

numerous crimes had occurred at the property, the management company

failed to take steps to improve security.

Premises liability (with 57 percent) also topped the list of future legal

issues among the IREM members surveyed. Debt collection was also a big

concern for 53 percent of respondents. Legal disputes involving age discrimination

and wrongful termination were also on the radar.

Fair housing complaints, especially those focused on race and disability,

saw the biggest increases—28 percent and 31 percent respectively—in

court cases in 2005 and 2006, according to the Scan. Racial discrimination

cases, as well as discrimination cases based on national origin, may

also rise in the future, according to survey respondents, perhaps reflecting

the expansion in multiculturalism in the United States. Respondents also

expect discrimination cases based on sexual orientation to rise over the

next two years.

Again, the present may predict the future since fair housing received significant

legislative and regulatory attention in the last two years, with 44

new laws or regulations reported in the Scan.

Survey respondents also focused in on what training should be put in

place to reduce future legal liabilities. Unsurprisingly, concerns for training

closely tracked the hot issue list. Events at a property (54 percent),

national origin discrimination (52 percent), and property condition and

common areas (each 50 percent) were top topics for future staff meeting

agendas, said respondents. Training in wrongful termination of employees

also ranked high (48 percent).

While legal issues remain a source of concern and a financial burden to

the real estate community, perhaps the best news is that approximately twothirds

of all cases against brokers and agents were decided in their favor.

View the entire 2007 Legal Scan under the Law and Policy section of

REALTOR.org.

YOUR CHECK FOR $23,688.000 IS BEING RETURNED TO YOU

September 17, 2007 on 11:25 pm | In FASCINATING INDUSTRIAL REAL ESTATE INFORMATION, FASCINATING INFORMATION, FUNNY...MONEY, Legal, Transaction Issues, Uncategorized | 3 Comments

YOUR CHECK FOR $23,688.000 IS BEING RETURNED TO YOU

There’s a scam involving people who are trying to lease properties. The prospective tenant writes a check greater than the amount of the rent, says it’s an oversight, and then asks you to immediately wire back the difference – before your bank realizes the check is rubber.

We got to experience this firsthand with a lead that came off of Craig’s List…you’ll appreciate the dialogue, and please recognize it, in case someone tries it on you. It works particularly well if the landlord is in a hurry to rent the property.

the check.jpg

 —–Original Message—–
From: brandbrc12@xxx.com
Subject: $4200 / 2100ft²;  ~  INDUSTRIAL SPACE FOR LEASE ~ Good Location, Good Parking
  I would like to know if your lease property is available, what is your asking price for rent and other expenses.
 
J Packer
 
—–Original Message—–
From: brandbrc12@xxx.com
Subject: Re: New Low Lease Price - Great Location, good visibility…
 I will be paying for 6 months lease, as I will be moving from out of town to set up a new computer hardware supply business. Please get back with your contact address and phone number. The check will be mailed out to you.  I also want to alert you on the fact that you will be receiving an overdraft payment, which will cover the money for the lease and the furnishing of the unit to look more suitable.
 
Regards
J Packer
 

—–Original Message—–

From: J Summers

Subject: Re: Re: New Low Lease Price - Great Location, good visibility…

The details are as follows – it will involve three checks.

You had said you’d like to pay six months rent – That will be a total of $25,2000.

Please make a check out for $23,688 to the owner.

Pleas make a check for $1,512 to our realty company.

The owner would like one month’s security deposit – so that would be an additional check of $4,200 made out to them.

You can send them to me at my office.

I will email you a copy of the lease agreement – will the lease be in your name?

—–Original Message—–
From: brandbrc12@xxx.com  
  I just to let you know that the payment has been sent out to your location and it will get delivered to you tomorrow. Here is the status of the check through UPS (1z517w6y0194489244).
 

—–Original Message—–
From: brandbrc12@xxx.com  
 I think the money draw on J Summers was overdraft you will need to deduct your fund and have the rest sent to my client who will be coming to set some thing up there. Here is where the rest of the funds are to be sent to:
 

Name:Airica Asuquo
City:   Holbrook
Zipcode: 86025
State: AZ
 Get back to me as soon as the money sent today through Western Union so that I can forward the details to my client. Please advise ASAP.
—–Original Message—–

From: J Summers

Hi! J…

I am holding the checks. They will not be distributed for deposit until everyone signs off on the contracts. I can return the check or destroy it – your choice.

To secure the property, two more checks will be required.

1 - Please make a check for $1,512 to our realty company

2- Deposit will be $4,200, check made out to the owner.

Also, the landlord needs a contact address for you, as well as your company name.

We will also need to run a credit check on your tenant.

—–Original Message—–
From: brandbrc12@xxx.com  
 You need to get the money back to me as soon as possible.
 

—–Original Message—–

From: J Summers

Your check is in the mail.

—–Original Message—–
From: brandbrc12@xxx.com  
 Mind you if I didn’t the check back you will be the one to get responsible it.
 

!!!!!!!!!!!!!!!!!!! RED FLAG !!!!!!!!!!!!!!!!!!!!!! RED FLAG!!!!!!!!!!!!!!!!!!
We called the bank who kindly informed us that the account had been closed.
 

 —–Original Message—–

From: J Summers

Good day….

Union Bank of California says this account has been closed.

Your check for $23,688.000 is being returned to you.

How precious is heavy industrial property in the Los Angeles metropolitan area?

September 10, 2007 on 10:28 pm | In FASCINATING INDUSTRIAL REAL ESTATE INFORMATION, Investment Opportunities, LIGHTS…CAMERA…TRANSACTION, Legal, PROPERTY MAINTENANCE, Transaction Issues, Uncategorized | No Comments

How precious is heavy industrial property in the Los Angeles metropolitan area?
If an acre of M3 land in Wilmington is valued at $1.75m when it’s had positive Phase I + Phase II reports – what’s it worth with oil seepage?
Who has had favorable experience with property clean up?
Which company do you recommend?
Please let us know.

Jodi Summers

Sotheby’s International Realty

310. 260.8269

jodis@verizon.net
 

 

MOVING FORWARD AFTER THE SELLER DIES DURING A REAL ESTATE TRANSACTION

August 25, 2007 on 10:54 am | In FASCINATING INDUSTRIAL REAL ESTATE INFORMATION, FASCINATING INFORMATION, Legal, Transaction Issues, Uncategorized | 21 Comments

MOVING FORWARD AFTER THE SELLER DIES DURING A REAL ESTATE TRANSACTION

Each real estate transaction comes with its own unique twist that needs to be resolved in order to please all parties and successfully conclude the transaction.

This situation was quite exceptional. Two days after signing off on the purchase agreement, the seller went into the hospital. He passed on the following week.

Buyer is one of two tenants in the building, and has exercised their right of first refusal as per their lease contract. They were paying a precious price for ¾ of an acre of M-1 zoned property with warehouses east of the 110 Freeway. Both parties were represented by the same realtor.

The deceased seller had done his legal work, leaving the property was left in trust to the seller’s children. Escrow was to close in June.

There was no legal reason that the transaction could not go forward, yet the members of the trust were hesitant to proceed. Was the transaction still binding? Could they circumvent the realtor and go directly to the buyer? How could they best profit from the existing scenario. It was not emotional grief; it was more like business indecision. The transaction sat idle for several months. Each time the buyers requested to move forward, the estate asked for more time. The trust has had five months to review documents, and there was no time frame on when they might be ready to move forward.

This scenario was not pleasing to the buyer, who had put is money into the escrow. The estate would not even permit the monies to be transferred into an interest-yielding account while the transaction was in limbo.  They wanted to move forward on this transaction, before the end of the business year.

We needed to determine the best way to move the parties forward to conclude the transaction. We checked in with the California Association of Realtors Legal Department, where attorney Sunny Younglove was gave us insight into how to go forward in such a scenario.

“The buyer has rights as stated in the signed purchase agreement,” she stated succinctly. “The seller’s estate is in breach of contract.”

The solution was to sue the estate for non-performance.

The buyer was instructed to contact a probate attorney, and have the attorney send a letter threatening to sue if the parties do not move forward by a specified date. A suit filed against the property would force the property into probate. A judge would inevitably hold the seller’s estate responsible for their inability to move forward on the transaction and they would incur the legal fees.

This information is being shared with the estate as we write this blog post. We will let you know how it proceeds.

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