Commercial Lease Headaches: Demand Letters to Landlords and Tenants Before You Litigate

Published: June 11, 2025 • Dispute Resolution

The phone call usually starts the same way: “My landlord stopped returning my calls three months ago, the roof still leaks, and now they’re threatening eviction over late rent that I withheld because of the leak.” Or from the other side: “My tenant hasn’t paid rent in two months, they’ve subleased to a tattoo parlor without permission, and they’re threatening to sue me for harassment when I ask for payment.”

Commercial lease disputes occupy a unique position in business litigation. Unlike residential tenancies with strong statutory protections for tenants, commercial leases operate under contract principles with far less regulatory oversight. Unlike typical contract disputes where parties can simply walk away from a bad deal, commercial leases involve ongoing relationships with expensive real property, often spanning years or decades.

After more than 13 years representing both landlords and tenants in commercial lease disputes, I’ve learned that properly timed demand letters can resolve 60-70% of these conflicts without litigation. The remaining 30-40% require court intervention because the parties are genuinely at an impasse or the conduct is so egregious that only a judge can provide adequate remedy. The key is knowing which category your dispute falls into before you spend $15,000-$50,000 on commercial litigation that a $2,000 demand letter might have resolved.

This article walks through the commercial lease dispute landscape from both landlord and tenant perspectives, explains the legal framework that governs these relationships, identifies the specific scenarios where demand letters work versus where they fail, and provides practical guidance on drafting effective pre-litigation demands that protect your interests without unnecessary escalation.

Contents

The Commercial Lease Legal Framework: What Makes These Disputes Different

Commercial leases operate under fundamentally different legal principles than residential leases. Understanding this framework is essential because it determines what remedies are available, what procedures must be followed, and what leverage each party actually has when disputes arise.

Contract Law Versus Landlord-Tenant Statutes

The single most important distinction between commercial and residential leases is the level of statutory protection. Residential landlords must comply with extensive state and local habitability laws, rent control ordinances, eviction protections, and disclosure requirements. These statutes create minimum standards that override lease language and provide tenants with statutory damages, attorneys’ fees, and other remedies when landlords violate them.

Commercial leases, by contrast, are governed primarily by contract law. With limited exceptions for issues like discrimination or unconscionable terms, courts generally enforce commercial lease provisions as written. The parties are presumed to be sophisticated business entities capable of negotiating their own terms, and judges are reluctant to rewrite deals that seemed acceptable when signed.

This contract-heavy approach means that the actual lease document becomes critical in dispute resolution. Courts won’t import implied warranties of habitability or fitness for commercial premises beyond what the lease specifies. If your lease says the landlord has no duty to repair HVAC systems, that provision will likely be enforced even if the broken air conditioning makes your restaurant unbearable in summer.

From a demand letter perspective, this framework creates both opportunities and challenges. The opportunity is that negotiated resolution is often preferable to litigation where the strict lease terms may favor one party heavily. The challenge is that the party favored by the lease language has less incentive to compromise since courts will likely enforce the written terms.

California Commercial Lease Specifics

California provides one of the more tenant-friendly commercial lease frameworks compared to many states, though it’s still far less protective than residential law. Several California statutes and common law principles affect commercial lease disputes in ways that demand letters should address.

California Civil Code Section 1942 allows commercial tenants to repair and deduct for uninhabitable conditions in limited circumstances, though the scope is narrower than residential repair-and-deduct rights. The statute requires that the landlord received notice of the defect, the landlord failed to repair within a reasonable time, the defect substantially interferes with the tenant’s use, and the tenant notified the landlord of the intent to repair and deduct before doing the work.

California’s constructive eviction doctrine permits commercial tenants to terminate leases and vacate when the landlord’s breach makes the premises unusable for their intended purpose. This requires showing that the landlord’s conduct or failures were so substantial that they deprived the tenant of the beneficial use of the property, and the tenant actually vacated within a reasonable time after the breach.

The implied covenant of good faith and fair dealing applies to commercial leases in California, preventing landlords from interfering with the tenant’s quiet enjoyment or acting in ways that frustrate the fundamental purpose of the lease. This covenant can’t override explicit lease terms, but it prevents strategic bad-faith conduct designed to force breach or eviction.

California Code of Civil Procedure Section 1161 governs unlawful detainer (eviction) procedures, including the three-day notice requirements for non-payment of rent. Commercial evictions move faster than residential ones, with most contested cases resolving within 30-60 days of filing. This speed means that landlords with clear non-payment claims often prefer jumping straight to unlawful detainer rather than negotiating through demand letters.

The Security Deposit Problem

Security deposits in commercial leases create a common source of disputes with specific legal requirements that demand letters must address properly. Unlike residential security deposits with strict statutory return timelines and itemization requirements, commercial security deposit law in California is less prescriptive but still creates landlord obligations.

California Civil Code Section 1950.7 governs commercial security deposits and requires landlords to return deposits within a reasonable time after lease termination, though “reasonable” isn’t defined with the 21-day deadline that applies to residential deposits. Courts have held that 30-60 days is generally reasonable for commercial properties depending on complexity.

Landlords must provide an itemized statement of any deductions from the security deposit, though the level of detail required is lower than for residential properties. General categories like “repairs to premises” or “unpaid rent” are typically sufficient for commercial leases, whereas residential landlords need receipts and specific descriptions.

Many commercial leases include provisions allowing landlords to apply security deposits to unpaid rent during the lease term rather than waiting until termination. These provisions are generally enforceable if clearly written, though some courts scrutinize them to ensure they don’t give landlords unfair leverage over tenants.

From a demand letter perspective, security deposit disputes are ideal candidates for pre-litigation resolution because both parties benefit from avoiding the costs and delays of litigation. Landlords who withhold deposits unreasonably face potential bad faith claims and attorneys’ fees. Tenants who demand full return of deposits when legitimate damages occurred face counterclaims that may exceed the deposit amount.

Common Commercial Lease Disputes: The Situations That Generate Demand Letters

Commercial lease conflicts arise from predictable patterns. Understanding the typical dispute categories helps you evaluate whether your specific situation is a strong candidate for demand letter resolution or whether you’re facing a dispute that requires immediate court intervention.

Non-Payment of Rent: The Most Common and Most Clear-Cut

Unpaid rent is the most frequent commercial lease dispute and, paradoxically, both the easiest and hardest to resolve through demand letters. It’s easiest when the tenant genuinely lacks funds but wants to preserve the business relationship—structured payment plans, temporary rent reductions, or lease modifications often resolve these cases without litigation. It’s hardest when the tenant is using non-payment as leverage for unrelated disputes or is essentially defunct with no assets to collect against.

California landlords can serve a three-day notice to pay rent or quit under Code of Civil Procedure Section 1161, which starts the formal eviction process. The notice must specify the exact amount owed, provide the landlord’s address for payment, and give the tenant three full days (not counting weekends or holidays) to pay or vacate.

Before resorting to this statutory notice, many landlords send less formal demand letters attempting to preserve the landlord-tenant relationship while securing payment. These pre-notice demands work well when the tenant’s business hit temporary cash flow problems but has long-term viability. A letter offering a payment plan or short-term forbearance often gets paid where an immediate eviction notice would destroy the business and guarantee collection problems.

From the tenant side, demand letters in non-payment scenarios typically assert defenses or offsets. The tenant may claim constructive eviction due to uninhabitable conditions, breach of landlord’s repair obligations that justified rent withholding, or agreement to rent reduction that the landlord is now denying. These defensive demand letters lay the factual and legal foundation for opposing any subsequent eviction action.

The key determination is whether the non-payment is strategic leverage or genuine inability to pay. If strategic, demand letters often accelerate resolution because the tenant doesn’t want litigation expenses either. If the tenant simply has no money, demand letters accomplish little beyond documentation for eventual judgment collection.

CAM Charges and Operating Expenses: The Perpetual Source of Confusion

Common Area Maintenance charges, property taxes, insurance, and other operating expenses create constant friction in commercial triple-net and modified gross leases. These disputes rarely involve black-and-white right or wrong—instead, they center on ambiguous lease language about what expenses are includable and how they’re calculated.

Typical CAM disputes include landlords charging capital improvements as operating expenses when the lease supposedly limits charges to maintenance and repairs, landlords allocating an unreasonable share of expenses to a particular tenant, landlords failing to provide adequate documentation of actual expenses, or landlords charging administrative fees beyond what the lease permits.

Tenants confronting excessive or improper CAM charges have strong demand letter opportunities because most lease provisions require landlords to provide reasonable documentation supporting expense allocations. A well-drafted demand letter requesting complete documentation, pointing out specific charges that violate lease limits, and proposing either refunds or prospective corrections often resolves these disputes without depositions and expert witness battles.

From the landlord perspective, demand letters for unpaid CAM charges face the challenge that many judges view these charges skeptically, particularly if the documentation is poor or the allocation methodology seems unfair. Landlords are better served by proactive transparency—providing detailed annual expense reports with clear allocation methodologies—than by sending aggressive demand letters when tenants reasonably question charges that lack documentation.

The practical reality is that CAM disputes often settle through demand letter negotiations because litigation costs quickly exceed the disputed amounts. A $5,000 CAM charge dispute can generate $30,000 in legal fees if it goes to trial. Both parties recognize this, making them receptive to compromise if approached reasonably.

Maintenance and Repair Obligations: Who Must Fix What

Maintenance disputes arise from ambiguous lease provisions about repair responsibilities, landlord failures to maintain structural systems or common areas, tenant failures to maintain premises or equipment, and disagreements about whether damage requiring repair was caused by tenant abuse or normal wear and tear.

Commercial leases typically allocate maintenance responsibilities in one of several ways. Gross leases generally put most maintenance obligations on the landlord, though specific systems or interior improvements may be tenant responsibility. Modified gross leases split responsibilities, often with landlords handling structural and building systems while tenants handle interior maintenance. Triple-net leases make tenants responsible for essentially all maintenance including structural repairs, though the parties sometimes negotiate carve-outs for major systems like roofs or HVAC.

Demand letters work well for maintenance disputes when the lease clearly allocates responsibility but the obligated party is ignoring their duty. A tenant-to-landlord letter pointing to the landlord’s explicit obligation to repair the roof, documenting multiple notices of the leak, and demanding repair within 30 days or the tenant will repair and deduct often produces results where repeated phone calls failed.

Maintenance demand letters work poorly when liability is genuinely ambiguous or when the damage was caused by factors beyond either party’s control. If the lease doesn’t clearly state who must repair parking lot paving, arguing about it in demand letters wastes time better spent negotiating a cost-sharing arrangement or lease amendment clarifying future obligations.

The most effective maintenance demand letters combine legal analysis of lease obligations with practical business solutions. Rather than just demanding that the landlord fix the HVAC, propose that the tenant will contribute 50% of costs if the landlord arranges the repair within two weeks. This approach demonstrates good faith while protecting your legal position if litigation becomes necessary.

Use Restrictions and Lease Violations: Conduct Issues

Commercial leases contain numerous use restrictions and operational requirements that create violation disputes: restrictions on permitted uses or prohibited businesses, exclusive use clauses protecting certain tenants from competition, operating hours requirements, signage restrictions, assignment and subletting prohibitions, and various conduct restrictions around noise, parking, deliveries, or appearance.

These violations create ideal demand letter scenarios because court remedies are often either inadequate or too severe. A landlord who sues for an injunction against a tenant’s prohibited sublease might win the injunction but destroy the tenant’s business and ensure non-payment of rent. A demand letter offering the tenant 30 days to cure the violation by either unwinding the sublease or obtaining landlord consent (potentially with an increased rent or assignment fee) often produces better practical outcomes.

From the tenant side, landlords who violate exclusive use provisions or materially breach their own obligations face tenants who can either terminate the lease or sue for damages. Neither option is particularly attractive if the tenant’s business is otherwise viable at that location. A demand letter demanding cure of the violation or rent reduction as compensation often gets faster, better results than litigation that may take two years to conclude.

The challenge with use violation demand letters is that they require careful drafting to avoid waiving your rights. If you send a letter demanding cure within 30 days, you’ve arguably agreed that 30 days is reasonable. If the tenant doesn’t cure but offers to do so within 60 days, and you accept, you may have modified the lease. Work with counsel to draft these letters with appropriate reservations of rights.

Lease Termination and Holdover Tenancies

Disputes around lease end dates and holdover situations create time-sensitive scenarios where demand letters must be deployed strategically. Common situations include tenants holding over after lease expiration without clear permission, landlords attempting to evict tenants who claim they properly exercised renewal options, tenants attempting to vacate before lease expiration claiming constructive eviction, and disputes about whether notice requirements for termination or non-renewal were properly satisfied.

California law treats holdover commercial tenancies differently depending on whether the holdover is with or without landlord permission. Holdovers without permission generally create month-to-month tenancies at the same terms, though some leases specify increased “holdover rent” at 150% or 200% of the base rent.

Landlords facing unauthorized holdovers should send demand letters immediately because delays can be construed as acceptance of a new tenancy period. The letter should demand vacating within a specified timeframe, confirm that no new tenancy has been created, reserve the right to seek holdover damages, and provide notice of intent to re-lease the premises if applicable.

Tenants who are forced into holdovers due to delayed construction at new locations or other circumstances beyond their control should send demand letters explaining the situation, proposing a specific move-out date, offering to pay negotiated holdover rent, and requesting written confirmation. These proactive letters often prevent landlords from pursuing expensive unlawful detainer actions or claiming extended holdover penalties.

Early termination disputes—where tenants want to break leases before expiration—present particularly strong demand letter opportunities. Most commercial leases lack clear early termination provisions, creating negotiation opportunities around buyout amounts, subleasing assistance, or modified terms that allow both parties to move forward without destructive litigation.

Demand Letters from Landlords to Tenants: Asserting Property Rights Without Destroying Value

Landlords face unique considerations when sending demand letters to commercial tenants. The primary tension is between asserting your legal rights forcefully enough to be taken seriously and maintaining enough relationship flexibility to preserve the tenant’s business viability and rent-paying capacity.

When Landlord Demand Letters Work Best

The strongest landlord demand letter scenarios involve clear lease violations where the tenant has both the ability to cure and business reasons to want to preserve the tenancy. A tenant who started accepting deliveries at prohibited times, creating noise complaints from other tenants, has both the ability to change delivery schedules and strong motivation to remain in a viable business location.

Similarly, tenants who fall behind on rent due to temporary cash flow problems but have otherwise solid businesses are excellent demand letter candidates. A landlord letter offering a structured payment plan, maybe with slightly increased rent for six months to make up the shortfall, often succeeds where an immediate eviction notice would destroy the business and create a vacant property with negative cash flow.

Administrative or technical lease violations also respond well to demand letters. A tenant who made interior modifications without required landlord approval has already spent the money—a demand letter requiring payment of a reasonable consent fee plus approval of completed work as-built often produces better economic outcomes than demanding the tenant tear out the improvements and restore original conditions.

The Three-Day Notice Timing Decision

California landlords must decide whether to send a pre-notice demand letter or jump straight to the statutory three-day notice to pay rent or quit. This decision involves both legal and practical considerations.

The three-day notice is required before filing unlawful detainer for non-payment, and the clock doesn’t start running until it’s properly served. Sending a demand letter first adds 10-20 days to the timeline before you can even file an eviction. For landlords who need possession quickly—perhaps because a new tenant is lined up—this delay may be unacceptable.

However, three-day notices have technical requirements that make them vulnerable to challenge. The notice must state the exact amount due, exclude any amounts not yet due, provide proper payment instructions, and be served according to statutory requirements. Errors in three-day notices can defeat the entire unlawful detainer action, requiring the landlord to start over with a corrected notice.

A pre-notice demand letter allows negotiation without starting the formal eviction clock and without the technical requirements that can invalidate three-day notices. If negotiation fails, you can then serve a proper three-day notice with time to ensure compliance with all technical requirements.

My general recommendation for landlords is to send demand letters before three-day notices unless the tenant is clearly defunct, engaged in illegal activity, or you have a replacement tenant ready immediately. The few weeks spent attempting negotiated resolution rarely prejudice your ultimate position and often avoid the costs and risks of litigation.

Drafting Landlord Demand Letters: Key Components

Effective landlord demand letters should identify the property by address and legal description, reference the lease by date and parties, specify the exact violation or breach with citations to relevant lease provisions, quantify any money owed with supporting calculations, provide a reasonable deadline for cure or payment (typically 10-30 days depending on the nature of the breach), state the consequences of failure to cure, and reserve all legal rights and remedies without waiving any lease provisions.

Critical elements to avoid in landlord demand letters include threats of criminal prosecution, which are almost never appropriate for civil lease disputes; threats to lock out the tenant without court process, which is illegal in California and exposes landlords to substantial liability; threats to seize tenant property or equipment; statements about the tenant’s business viability or character that could support defamation claims; and copying other tenants or third parties on the letter beyond the tenant’s designated notice recipients.

Landlord letters should be firm but professional. The goal is to motivate compliance, not to vent frustration or humiliate the tenant. Angry, personal attacks in demand letters undermine your credibility if the case reaches court and can convert sympathetic judges into skeptical ones who question your own good faith.

The Rental Income Dilemma

Landlords must navigate a fundamental tension: you want the tenant to pay what they owe, but you also want them to continue operating a successful business that can pay ongoing rent. This tension is especially acute with anchor tenants or tenants in specialty properties with limited alternative uses.

A demand letter that destroys the tenant’s business or forces bankruptcy may win the immediate dispute but create a vacant property with months or years of negative cash flow. Re-tenanting costs, tenant improvement allowances, free rent periods, and lost revenue during vacancy often exceed whatever amount the demand letter was seeking to collect.

Smart landlords consider the total economic picture before sending aggressive demand letters. If the tenant owes $15,000 in CAM charges but pays $10,000 monthly in base rent, maybe negotiating a CAM payment plan or partial forgiveness produces better total returns than pursuing the full amount at the cost of losing the tenant.

This doesn’t mean accepting non-payment or violations indefinitely. But it does mean that demand letters should be crafted with the total landlord-tenant relationship in mind, not just the immediate dispute in isolation.

Demand Letters from Tenants to Landlords: Protecting Your Business Without Escalating Unnecessarily

Commercial tenants sending demand letters to landlords face different considerations than landlords. Tenants typically have less leverage—the landlord owns the property and can ultimately evict—but tenants also have meaningful legal rights that landlords ignore at their peril.

When Tenant Demand Letters Work Best

The strongest tenant demand letter scenarios involve clear landlord breaches of maintenance obligations, landlord violations of quiet enjoyment or access rights, improper CAM charges with inadequate documentation, security deposit withholding that violates lease terms or statutory requirements, and landlord conduct that interferes with the tenant’s business operations.

Maintenance demands particularly lend themselves to effective letters because landlords face potential liability for constructive eviction, habitability claims under Civil Code 1941.1 (which applies to commercial premises for safety issues), and tenant repair-and-deduct rights under Civil Code 1942. A well-documented tenant letter pointing to multiple repair requests, detailing business losses from the unrepaired condition, and warning of intent to exercise repair-and-deduct rights often produces faster landlord action than months of phone calls.

Tenants dealing with improper CAM charges should send demand letters before simply withholding payment, as payment withholding can trigger eviction proceedings even when the withheld amount represents disputed charges rather than base rent. The letter should request complete documentation of the charges, identify specific categories that violate lease limits, propose an escrow arrangement for disputed amounts, and establish a timeline for resolution.

The Rent Withholding Risk

California commercial tenants must be extremely careful about withholding rent, even when the landlord has materially breached the lease. Unlike residential tenants with clear statutory rent withholding protections, commercial tenants who withhold rent—even for valid reasons—risk immediate eviction proceedings.

The technically correct approach is to pay rent under protest while simultaneously sending a demand letter addressing the landlord’s breach. The payment under protest preserves your claim that the rent shouldn’t have been required while avoiding the legal vulnerabilities of non-payment.

Alternatively, tenants can seek court intervention through a declaratory relief action establishing that rent withholding is proper under the circumstances. This approach provides judicial blessing for withholding but requires upfront litigation costs before you even get to the merits of the underlying dispute.

The practical reality is that many tenants withhold rent anyway because they lack the cash flow to both pay disputed rent and repair breached conditions. If you’re in this position, your demand letter becomes even more critical because it documents that you’re withholding for specific legal reasons, not simply defaulting on obligations.

Drafting Tenant Demand Letters: Key Components

Effective tenant demand letters should identify the property and lease, document the landlord’s specific breaches with dates and details, reference relevant lease provisions creating landlord’s obligations, quantify any damages or losses the tenant has suffered, cite applicable legal authorities supporting the tenant’s position, demand specific corrective action with reasonable deadlines, and explain the tenant’s intended response if the landlord doesn’t cure.

Tenant letters benefit from attaching supporting documentation: photographs of maintenance issues, copies of previous repair requests, expert reports or estimates, records of business losses attributable to the breach, and relevant lease provisions highlighted.

The tone should be professional but firm. Tenants sometimes make the mistake of writing apologetic or tentative demand letters because they fear landlord retaliation. While you should avoid unnecessary hostility, you’re asserting legal rights you’re entitled to—own that position confidently.

The Constructive Eviction Threat

Tenants facing substantial landlord breaches sometimes include constructive eviction language in demand letters, warning that continued breach will force the tenant to vacate and terminate the lease. This is a powerful threat but also a dangerous one if not handled carefully.

To establish constructive eviction in California, the tenant must prove that the landlord’s breach was substantial and permanent, the breach deprived the tenant of beneficial use of the premises, the tenant notified the landlord and allowed reasonable time to cure, and the tenant actually vacated within a reasonable time after the breach became incurable.

The danger is that claiming constructive eviction and vacating without meeting all these elements converts you from a tenant with valid breach claims into a tenant who wrongfully abandoned the lease. You may lose your security deposit, face liability for future rent through the lease term, and get sued for breach of contract.

If your demand letter raises constructive eviction, be prepared to actually vacate if the landlord doesn’t cure. Don’t use constructive eviction as an empty threat—it’s a substantive legal position with serious consequences if you’re wrong about whether the elements are met.

The Documentation Foundation: Building a Demand Letter Case

Effective demand letters rest on solid documentation of the dispute. Both landlords and tenants should gather comprehensive evidence before drafting demands, as the strength of your documentation often determines whether the letter produces results or gets ignored.

The Lease Document Itself

Start with the actual lease agreement and all amendments, side letters, or modifications. You’d be surprised how often parties send demand letters asserting rights that the lease doesn’t actually grant or denying obligations that the lease clearly imposes.

Read the entire lease carefully, not just the sections you think are relevant. Commercial leases often contain interrelated provisions where rights under one section are limited by conditions in other sections. Notice provisions, default and cure requirements, remedies limitations, and arbitration clauses all affect how disputes must be handled.

Pay particular attention to notice provisions. Most commercial leases require written notice to specific addresses via certified mail or other specified methods. Demand letters that don’t comply with contractual notice requirements may not constitute legally effective notice, undermining subsequent litigation if the opposing party claims they never received proper notice of the issue.

Contemporaneous Communications

Gather all communications between the parties about the disputed issue: emails, text messages, letters, memos of phone conversations, and platform messages if you’re using property management software. These communications establish when problems were first reported, what responses were given, and whether the parties made any informal agreements modifying lease terms.

I’ve handled cases where landlords claimed they were never notified of maintenance issues, only to have tenants produce 15 emails over six months documenting detailed repair requests. Conversely, I’ve represented landlords whose tenant claimed surprise about lease violations when the landlord had sent multiple warnings via email that the tenant ignored.

Organize communications chronologically and create a timeline of key events. This becomes invaluable both for drafting your demand letter and for trial preparation if litigation becomes necessary.

Financial Records

Money disputes require detailed financial documentation. Landlords claiming unpaid rent should have ledgers showing charges, payments, late fees, and the exact amount due. Tenants disputing CAM charges should have copies of all CAM billing statements, reconciliation statements, and any supporting documentation the landlord provided.

For damages claims, gather evidence of financial losses: revenue records showing business income before and after the breach, estimates or invoices for repair costs, receipts for expenses incurred due to the breach, and expert reports quantifying damages if the amounts are substantial.

Security deposit disputes require documentation of the deposit amount paid, any interest accrued if applicable under the lease, itemized statements of deductions, invoices or receipts supporting the deductions, and photographs or reports documenting the condition requiring deductions.

Photographic and Video Evidence

For maintenance disputes, photographs and videos are often more persuasive than lengthy written descriptions. Document the problematic conditions thoroughly: date-stamped photos of leaking roofs, broken HVAC systems, damaged flooring, or parking lot hazards; video evidence of ongoing problems like water intrusion during rain; and comparison photos showing the progression of damage if the landlord has delayed repairs.

Take photographs from multiple angles and include reference objects for scale. A photo of “cracked concrete” might not look serious, but a photo showing a six-inch-wide crack next to a ruler clearly demonstrates the severity.

For use violation disputes, landlords should document the violation through photos of prohibited signage, unauthorized modifications, prohibited uses, or other breaches. Time-stamped photos from security cameras can be particularly powerful for proving ongoing violations.

Expert Reports and Estimates

For substantial disputes, consider obtaining expert reports before sending demand letters. A structural engineer’s report documenting that the landlord’s delayed roof repairs caused $50,000 in water damage to tenant improvements carries far more weight than the tenant’s own estimates.

Similarly, landlords claiming tenant-caused damage benefit from contractor estimates itemizing repair costs and attributing damage to tenant abuse rather than normal wear and tear. These reports don’t just strengthen your demand letter—they also signal that you’ve done the work necessary to prove your case in court if needed.

The cost of expert reports must be weighed against the disputed amount. A $2,000 engineering report makes sense for a $30,000 damage claim but not for a $4,000 CAM charge dispute.

When Demand Letters Fail: Recognizing Situations Requiring Immediate Court Intervention

Not all commercial lease disputes benefit from demand letters. Certain situations require immediate court intervention, either because delay prejudices your position or because the opposing party has demonstrated that negotiation is futile.

Imminent Property Damage or Safety Hazards

When the landlord’s maintenance failures create immediate safety hazards or ongoing property damage, tenants may need to skip demand letters and seek emergency court intervention through temporary restraining orders or preliminary injunctions.

A roof leak that’s causing daily water damage to tenant inventory and equipment shouldn’t wait for a 30-day demand letter response period. Similarly, electrical issues creating fire hazards or HVAC failures exposing temperature-sensitive inventory to damage may require immediate court orders compelling landlord action.

In these emergencies, file a complaint simultaneously with or immediately before sending a demand letter. The demand letter serves to document your attempt at resolution, but you’re not actually waiting for response before seeking court help.

Tenant Abandonment or Asset Removal

Landlords who discover that commercial tenants are abandoning the premises or removing trade fixtures and equipment need immediate legal action to prevent further losses. California law requires careful procedures for determining whether a commercial tenant has actually abandoned property versus temporarily vacated, but once abandonment is clear, delay in reclaiming possession costs money.

Similarly, if the tenant is systematically removing equipment or fixtures that secure the landlord’s interest or that are supposed to remain as tenant improvements, immediate court intervention through temporary restraining orders may be necessary to prevent removal of property.

Demand letters make little sense when the tenant has clearly given up on the business and is stripping assets. Move directly to unlawful detainer proceedings or attachment remedies.

Bankruptcy Filings

When either party files bankruptcy, demand letters become largely ineffective because bankruptcy’s automatic stay prohibits most collection activities and lease enforcement actions. The dispute moves into bankruptcy court under different rules.

Landlords whose tenants file bankruptcy face specific procedural requirements for lease assumption or rejection. Pre-bankruptcy demand letters may preserve claims that become part of the bankruptcy case, but post-bankruptcy demand letters without bankruptcy court approval violate the automatic stay and expose landlords to sanctions.

Tenants whose landlords file bankruptcy have different concerns around whether the lease will be assumed or rejected and whether security deposits are protected. These issues require bankruptcy counsel, not demand letters.

Fraudulent Conveyance or Asset Hiding

If you have evidence that the opposing party is transferring assets to avoid judgment, hiding money, or creating fraudulent transactions, immediate court intervention through attachment, preliminary injunctions, or fraudulent transfer actions becomes necessary.

A demand letter in these situations simply alerts the opposing party that you’re aware of their conduct and gives them opportunity to move more assets beyond reach. Work with litigation counsel to seek court orders that freeze assets or create liens while simultaneously pursuing the underlying lease dispute.

The Opposing Party Is Judgment-Proof

When the opposing party clearly has no assets to satisfy any judgment, demand letters often waste time and money. If the tenant’s business is defunct, the entity has no assets, and the principals have no personal liability under the lease, sending demand letters before confirming whether any collectible assets exist is putting the cart before the horse.

Run preliminary asset searches, check whether the lease contains personal guaranties, and evaluate the realistic collection potential before investing in demand letter preparation. Sometimes the hard reality is that you have valid legal claims but no practical remedy because the defendant is judgment-proof.

The Demand Letter Process: From Drafting Through Response

Understanding the practical process of demand letter negotiations helps set realistic expectations about timelines, costs, and likely outcomes.

Engagement and Case Evaluation

When engaging counsel for demand letter preparation, expect thorough case evaluation before drafting begins. The attorney should review the complete lease, all supporting documentation, relevant communications, and financial records. This review typically takes 3-6 hours for straightforward cases, more for complex disputes.

During evaluation, your attorney should provide candid assessment of claim strength, identify weaknesses or defenses the opposing party will likely raise, estimate the probable settlement range based on comparable cases, and discuss the cost-benefit analysis of litigation if the demand letter doesn’t produce resolution.

Be wary of attorneys who promise guaranteed outcomes or who are too eager to draft demand letters without careful evaluation. The goal isn’t to generate legal fees—it’s to resolve disputes efficiently.

Drafting Timeline and Cost

Expect 1-2 weeks for demand letter drafting in typical commercial lease disputes, longer for complex cases requiring significant legal research or expert consultation. The drafting process should include multiple drafts reviewed with you to ensure factual accuracy and that the letter’s tone and demands match your business objectives.

Costs for commercial lease demand letters typically range from $1,500 to $5,000 depending on case complexity, the attorney’s experience and billing rate, the amount of documentation requiring review, whether expert input is needed, and how much negotiation strategy planning is involved.

This cost should be viewed as an investment in dispute resolution. If the letter resolves a $20,000 lease dispute without litigation that would cost $30,000-$50,000 in legal fees, the $2,500 demand letter cost is money well spent.

Response Timeline and Follow-Up

Most demand letters specify 10-30 day response deadlines depending on the nature of the breach and cure required. Longer deadlines signal good faith and reasonableness. Shorter deadlines are appropriate for urgent situations or clear-cut breaches requiring minimal time to remedy.

Typical response patterns include immediate compliance or payment (rare but it happens); response through opposing counsel proposing negotiation or disputing claims; partial compliance with request for extension or modification; or no response within the deadline period.

When responses come through opposing counsel, expect several weeks or months of negotiation. Both attorneys will exchange positions, supporting documentation, and settlement proposals. This process often produces resolution even when initial positions are far apart.

If no response comes within the deadline, send a follow-up letter noting the non-response and providing one final opportunity to respond before filing suit. This demonstrates your patience and good faith while preserving your litigation timeline.

Settlement Documentation

If demand letter negotiations produce settlement, insist on comprehensive written settlement agreements rather than informal email confirmations or handshake deals. Settlement agreements in commercial lease disputes should specify the resolution of the immediate dispute, any payment amounts and timing, any lease modifications resulting from the settlement, mutual releases of claims related to the dispute, confidentiality provisions if applicable, and procedures for addressing future disputes.

Have your attorney draft or carefully review settlement agreements before signing. I’ve seen parties agree to settlement terms that seemed clear in conversation but later create new disputes over interpretation. Well-drafted settlement agreements prevent these second-generation disputes.

Template: Commercial Lease Demand Letter

Below is a template structure for a commercial lease demand letter. This template should be customized for your specific situation and jurisdiction. Consider working with counsel to ensure compliance with your lease’s notice provisions and applicable law.

[Your Name/Company] [Address] [City, State, ZIP] [Phone] [Email]

[Date]

SENT VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED AND VIA EMAIL

[Recipient Name/Company] [Address] [City, State, ZIP]

RE: Notice of Lease Breach and Demand for Cure Property: [Property Address] Lease dated: [Date]

Dear [Recipient]:

I write regarding the above-referenced commercial lease (the “Lease”) for the property located at [full property address] (the “Premises”). This letter provides formal notice of material breach of the Lease and demands immediate cure as detailed below.

FACTUAL BACKGROUND

[Provide chronological summary of relevant facts, including:

When the lease commenced
Relevant lease provisions
The specific breach or violation
When you first notified the opposing party
Any responses or lack of response
Current status of the breach]

LEASE VIOLATIONS

The [landlord/tenant] has materially breached the Lease through the following conduct:

[Specifically identify breaches with citations to lease sections, such as:

“Section 8.2 of the Lease requires the Landlord to maintain the roof in good repair. Despite written notice on [dates], the Landlord has failed to repair the roof, resulting in ongoing water intrusion.”
“Section 4.3 prohibits subletting without Landlord’s written consent. Tenant has sublet approximately [X] square feet to [entity name] without obtaining required consent.”]

LEGAL BASIS FOR DEMAND

[Cite relevant legal authority supporting your position, such as:

Specific lease provisions
California Civil Code sections
Common law principles
Prior court decisions if applicable]

DAMAGES AND LOSSES

[If applicable, quantify damages:

Unpaid amounts with calculation
Business losses due to breach
Repair costs incurred or estimated
Other consequential damages]

As a direct result of the above-described breaches, [I/we] have suffered damages including [specify damages]. [I/We] reserve all rights to seek additional damages that may become apparent as the breach continues.

DEMAND FOR CURE

[I/We] demand that you immediately take the following corrective action:

[Specific action required, e.g., “Complete roof repairs using a licensed contractor within 21 days”]
[If applicable: “Pay all outstanding amounts totaling $[X] within 10 days”]
[Any other specific remedial actions required]

CONSEQUENCES OF FAILURE TO CURE

If you fail to cure the above-described breaches within [X] days of your receipt of this letter, [I/we] will pursue all available legal remedies, including but not limited to:

[Specify intended legal actions, such as:

Filing suit for breach of contract and damages
Exercising rights under Civil Code Section 1942 to repair and deduct
Terminating the Lease pursuant to Section [X]
Seeking injunctive relief
Filing an unlawful detainer action]

All such legal action will seek recovery of all amounts owed, damages incurred, attorneys’ fees and costs as provided in Section [X] of the Lease and as permitted by law, and any other relief the court deems appropriate.

RESERVATION OF RIGHTS

This letter is sent in an attempt to resolve this dispute without litigation. Nothing in this letter should be construed as a waiver of any rights or remedies under the Lease or applicable law. [I/We] expressly reserve all rights and remedies, including but not limited to the right to seek damages for any continuing or future breaches.

[If applicable: This letter constitutes notice pursuant to Section [X] of the Lease and [statute section].]

[If applicable: All rent payments made during the pendency of this dispute are made under protest and without prejudice to [my/our] right to seek refunds or offsets.]

Please direct all correspondence regarding this matter to [specify preferred contact method].

I expect to hear from you no later than [specific date].

Sincerely,

[Signature] [Printed Name] [Title, if applicable]

cc: [Property manager, if applicable] [Guarantor, if applicable]

Enclosures: [List any attachments such as:

Photographs of damage
Prior correspondence
Invoices or estimates
Lease provisions referenced]

Frequently Asked Questions

Should I continue paying rent while sending a demand letter to my landlord about maintenance failures?

The safest approach is to continue paying rent in full while simultaneously pursuing your maintenance claims through demand letters and, if necessary, litigation. California courts are extremely strict about commercial tenant non-payment, and withholding rent—even for valid reasons—gives landlords grounds for unlawful detainer proceedings that can result in eviction within 30-60 days. You can explicitly state in your check memo or accompanying letter that payment is made “under protest and without waiving claims arising from landlord’s breach of maintenance obligations.” This preserves your right to seek refunds, damages, or rent offsets through subsequent legal action while protecting you from eviction for non-payment. The alternative approach is to file a declaratory relief action asking the court to confirm that rent withholding is proper under the circumstances, but this requires upfront litigation costs before getting judicial blessing for withholding. Some tenants withhold anyway due to cash flow constraints, but understand you’re taking substantial legal risk of losing possession even if your underlying maintenance claims are valid. If you’re going to withhold, document extensively and have counsel send the demand letter clearly explaining that withholding is based on landlord’s material breach that substantially deprives you of beneficial use of the premises, as this lays groundwork for defending the inevitable eviction action.

Can my landlord lock me out or shut off utilities to force payment instead of going through formal eviction procedures?

Absolutely not, and if your landlord does this, you have powerful legal remedies. California law strictly prohibits commercial landlord “self-help” evictions including lockouts, utility shut-offs, removing tenant property, or other actions designed to force tenant vacating without court process. California Civil Code Section 789.3 applies to commercial properties and creates statutory damages of $100 per day of violation plus actual damages, and courts have awarded attorneys’ fees against landlords who engage in illegal lockouts. Even if you’re legitimately behind on rent or in breach of other lease obligations, the landlord must use lawful eviction procedures through unlawful detainer proceedings in court. If your landlord locks you out, immediately document the lockout through photographs, witness statements, and records of attempted entry. Contact police to file a report documenting the illegal lockout. Then immediately contact an attorney to seek emergency court intervention through a temporary restraining order requiring restoration of access and possession. You can also pursue damage claims for business losses resulting from the illegal lockout. Many commercial leases contain provisions attempting to authorize landlord self-help remedies or lockouts for non-payment, but these provisions are generally unenforceable as violations of California public policy. Courts disfavor self-help even in commercial contexts where parties are presumed sophisticated, because the potential for abuse and property damage is too great when landlords are allowed to take possession by force.

How do I determine if my commercial lease dispute is worth the cost of hiring an attorney to send a demand letter?

Start with a clear-eyed cost-benefit analysis looking at both the amount in dispute and the likelihood of collection. For disputes under $5,000, demand letter costs of $1,500-$3,000 may not make economic sense unless the principle involved affects future lease interpretation or the relationship. For disputes between $5,000-$25,000, demand letters often represent cost-effective dispute resolution because litigation would cost $15,000-$50,000 in attorney fees and take 1-2 years. For disputes over $25,000, demand letters are almost always worth the investment as a required pre-litigation step. Beyond dollar amounts, consider the strategic value—if you’re a tenant and the landlord has a pattern of improper CAM charges affecting you every month for years, spending $2,500 on a demand letter that fixes the problem saves much more over the lease term than the immediate disputed amount. Similarly, if you’re a landlord and a tenant is violating use restrictions in ways that affect other tenants, the demand letter investment protects relationships with other tenants even if the immediate violation’s monetary impact is modest. Also evaluate the opposing party’s sophistication and financial position—demand letters work better against established businesses that value their reputation and have assets to protect than against fly-by-night operations or defunct entities. Run a preliminary asset search on the opposing party before investing in demand letters; if they’re judgment-proof with no collectible assets, the legal claims may be valid but practically worthless.

My landlord returned only part of my security deposit with a vague itemization—what are my options?

Commercial security deposit disputes in California are governed by Civil Code Section 1950.7, which requires landlords to return deposits within a reasonable time (generally 30-60 days, though not as strictly defined as the 21-day residential deadline) and provide an itemized statement of any deductions. The itemization requirement for commercial deposits is less stringent than for residential—general categories like “repairs to premises” or “cleaning” are typically sufficient without detailed receipts. However, the deductions must still be reasonable and actually incurred. Your demand letter should request complete documentation supporting each deduction category, challenge any deductions that seem excessive or unrelated to actual damage beyond normal wear and tear, point to any lease provisions that limit landlord’s right to deduct for certain items, and request return of the improperly withheld portion within 10-14 days. Attach any documentation you have showing the property’s condition at move-in and move-out—lease move-in inspection reports, photographs, or video walkthroughs are invaluable here. Many commercial leases require mutual move-out inspections with both parties present, and if the landlord skipped this procedure, that strengthens your position. For substantial deposit amounts (over $10,000), consider whether the landlord’s withholding was in bad faith—California courts can award additional damages and attorneys’ fees for bad faith deposit retention, though the burden of proof is higher for commercial than residential deposits. The practical leverage you have is that most landlords prefer avoiding litigation costs over fighting about deposit deductions, particularly if you can demonstrate their itemization is deficient or inflated.

Can I use a demand letter to force my commercial tenant to accept a lease modification or rent increase outside the lease terms?

Generally no—demand letters are for enforcing existing rights under the lease or law, not for forcing parties to agree to new terms they’re not legally obligated to accept. If your lease doesn’t provide for mid-term rent increases or modifications, you can’t use a demand letter to force the tenant to agree to changes. The tenant has a contract right to the terms as written through the lease expiration date. However, demand letters can be used as negotiation tools when paired with legitimate lease enforcement issues. For example, if the tenant has violated use restrictions or failed to maintain insurance as required, your demand letter can address those violations and propose resolving them through a lease modification that includes updated rent or other terms. The modification becomes the settlement of the violation dispute rather than a forced mid-term change. This approach works when both parties have something to gain—you get modified terms you want, they get resolution of violations without eviction risk or litigation costs. If you’re planning lease modifications at renewal time, a letter outlining proposed new terms and deadlines for response is appropriate, but it’s a negotiation letter rather than a demand letter. The tenant has no legal obligation to accept renewal on modified terms, though they may face increased rent or other changes as the price of renewal. True leverage for forcing lease modifications comes from holding something the tenant needs—like consent to an otherwise-prohibited assignment or sublease, consent to alterations they want to make, or waiver of defaults that could justify lease termination.

What happens if I send a demand letter and the opposing party forwards it to my other tenants or business contacts to damage my reputation?

Forwarding demand letters to uninvolved third parties can expose the person who forwards them to defamation, business disparagement, or tortious interference claims, depending on what statements they add and their intent in forwarding. Demand letters sent between parties to a dispute are generally protected by qualified privilege—they can’t form the basis for defamation claims because they’re legitimate legal communications about disputed rights. However, that privilege can be lost through excessive publication to third parties who have no legitimate need to know. If your landlord forwards your demand letter to your customers or suppliers with accompanying statements like “this tenant is dishonest” or “don’t do business with this company,” they may be liable for defamation or business interference. Similarly, if you’re a landlord and your tenant forwards your demand letter to other tenants or posts it publicly with inflammatory commentary, they may exceed the privilege. Your first response should be a cease-and-desist letter through counsel demanding that the opposing party stop disseminating your confidential legal correspondence and warning of potential liability for any damages caused by the improper disclosure. Document any business harm you suffer—lost clients, damaged relationships, quantifiable revenue losses—as these become your damages in a subsequent claim. Consider filing a motion for protective order or preliminary injunction to prevent further dissemination if the harm is ongoing. For future demand letters, mark them “CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED COMMUNICATION” and include language stating that unauthorized dissemination may result in liability. While this doesn’t absolutely prevent forwarding, it creates clear evidence that the recipient knew dissemination was improper. The more inflammatory and reputation-damaging the added commentary, the stronger your claims become. Courts recognize that parties must be free to communicate about legal disputes without fear that legitimate claims will be weaponized through improper publication.

Should my demand letter threaten to report my landlord to code enforcement or health departments for lease violations?

Be very careful with threats to report regulatory violations in demand letters, as this can cross into improper coercion or potentially extortion if not handled correctly. The general rule is that you can’t threaten to report someone to authorities solely as leverage to obtain civil payment or contractual performance—that’s using government process as a threat to gain private advantage. However, you absolutely can report legitimate code, health, or safety violations to appropriate authorities, and you can inform the landlord that you’re considering doing so as part of explaining the seriousness of the situation. The key distinction is between “I will report your illegal conduct unless you pay me” (improper) versus “your conduct appears to violate health codes, and I’m considering making a report to the health department while also pursuing my contractual remedies” (proper). If you’re including regulatory language in your demand letter, have counsel draft it carefully to avoid improper threat implications. Focus on your contractual and tort claims first, and reference regulatory violations as additional context showing the seriousness of the landlord’s breach rather than as the primary threat. In some situations, reporting to code enforcement or health departments actually helps your case by creating official documentation of violations that supports your constructive eviction or habitability claims. An inspector’s report documenting that the premises violate safety codes provides powerful evidence for your lease-based claims. Just don’t condition your willingness to refrain from reporting on the landlord meeting your payment demands, as that starts to look like extortion regardless of the validity of your underlying claims.

About the Author: I’m a California-licensed attorney (State Bar #279869) with over 13 years of experience representing both landlords and tenants in commercial lease disputes, including rent defaults, CAM charge disputes, maintenance failures, use violations, and security deposit conflicts. My practice emphasizes cost-effective dispute resolution that preserves business relationships when possible while aggressively protecting clients’ rights when litigation becomes necessary. If you’re facing a commercial lease dispute and need guidance on whether a demand letter is appropriate for your situation, schedule a consultation to discuss your specific circumstances and develop a strategic approach to resolution.