ARE YOU DOING EVERYTHING YOU CAN TO PROTECT YOUR CLIENT FROM LIABILITY IN PERSONAL PROPERTY DISPOSITIONS AFTER A TENANT VACATES?
by: Ronald K. Brown, Jr., Esq.
Despite recent up ticks in the economic recovery in the housing and stock markets, commercial landlords continue to be a target of tenants and subtenants seeking to “hit it rich” in lawsuits following the landlord’s disposition of an occupant’s personal property after a tenancy has terminated and the tenant or subtenant has vacated the premises.
One such case, which went thru a 4 ½ week jury trial in Riverside Superior Court this year demonstrates the point. In that situation, an unauthorized subtenant had stored personal property in an industrial warehouse after the subtenant lost his home in foreclosure. Having to “downsize” into an apartment, the subtenant decided to store all of his excess furniture, furnishings and other personal items in the warehouse.
A few months after the items were moved into the warehouse, the rent became overdue and the landlord initiated an eviction action naming the original tenant and the unauthorized subtenant in the unlawful detainer case. Judgment was entered for the landlord on a “default” or uncontested basis. The Sheriff proceeded with the lock-out and the landlord was placed in possession of the warehouse.
Much to the property manager’s surprise, when she surveyed the contents of the warehouse following the lock-out, she found tons of items ranging from musical instruments to costume clothing, dated (but broken) furniture, old pictures, inoperable bicycles, art and pictures and related furnishings and personal property.
Luckily, the manager prepared an extensive written inventory and took nearly 50-60 color photos of the contents of the unit before she did anything else. Thereafter, statutory notices of right to reclaim personal property and notice of sale were given according to the code. Neither the tenant or subtenant returned to reclaim the items in the warehouse. At the auction sale, no one appeared to bid on anything and all of the items were donated to a local charity.
Nine months later after the auction date, the subtenant appeared at the manager’s doorstep wondering where his “family heirlooms, antique furniture, performance costumes and valuable treasures” went. The manager explained that appropriate notices were given for the tenant and subtenant to reclaim the personal property, but no one reclaimed it and it was donated to charity.
Sure enough, a few months later, the subtenant sued the landlord for hundreds of thousands of dollars and punitive damages based on the alleged breach of the subtenant’s “implied contract to store the property in the commercial warehouse” and for “conversion.” Unfortunately, those claims were not covered by the landlord’s or tenant’s insurance, so the landlord had to fund the defense of the action (which we handled) out of its own pocket.
After 4 ½ weeks of trial, the jury returned a verdict for the landlord finding that the landlord had given appropriate notice of disposition and sale of the personal property in issue. In doing so, the landlord was found to have fallen into the “safe harbor” provisions of the code that insulate and protect a landlord from liability when the statutory procedures for disposition of such property are strictly followed and properly given after the end of a tenancy.
Do you know what notices to give in that situation? Are you taking pictures and preparing accurate inventories of personal property when a tenant or subtenant vacates? Are you protecting your clients from actions like the one that was brought by the subtenant above? They are expensive, risky and costly to defend.
At the end of the case, the jurors were polled after the verdict for the landlord was announced. Many of them said they felt the subtenant’s personal property was “just old junk” (based on the pictures the property manager took) and that the subtenant was just trying to capitalize on the commercial landlord’s “deep pockets” and “get rich” off a bogus claim. What are you doing to make sure your commercial landlords don’t find themselves in a similar situation? Help keep that “target off their back” by making sure you follow the “safe harbor” requirements of the law and consult competent legal counsel who can assist you thru this process.
by Ronald K. Brown, Jr., Esq.
LAW OFFICES OF RONALD K. BROWN, JR., APC
901 Dove Street, Suite 120, Newport Beach, California 92660
This article is reproduced with permission given by Ronald K. Brown, Jr., Esq. and is for information only about California law and is not the providing of legal services.