Private members-only forum

Commercial landlord refusing to renew lease and harassing my business - what are my options?

Started by BakeryOwnerLA · Sep 19, 2024 · 14 replies
For informational purposes only. Commercial lease law varies significantly from residential protections.
BO
BakeryOwnerLA OP

I've run a bakery in a strip mall in Glendale for 8 years. My lease is up in 4 months and the landlord is refusing to renew. He's also been making my life hell:

  • Shutting off my HVAC "for maintenance" during business hours
  • Parking construction equipment in front of my entrance
  • Telling other tenants I'm "going out of business soon"

I spent $85,000 on tenant improvements when I moved in - custom ovens, ventilation, walk-in cooler. My lease says these become property of the landlord. I'm devastated.

Do I have any rights here? Is there anything like rent control for commercial tenants?

RS
RetailSurvivor

Unfortunately there's no "commercial rent control" in California. Unlike residential tenants, commercial tenants have very few statutory protections. The landlord generally has no obligation to renew your lease unless your lease specifically says otherwise.

I went through something similar with my retail store in 2022. It sucks but the reality is commercial leases are "business to business" and courts assume both parties are sophisticated.

RG
RachelGarcia_Esq Attorney

Let me address a few things here:

On renewal rights: @RetailSurvivor is correct that there's no general right to renewal. However, check your lease carefully for:

  • Options to renew (did you exercise any option properly?)
  • Right of first refusal
  • Right to match any offer made to a new tenant

On the harassment: This is where you may have leverage. Even though commercial tenants have fewer protections, landlords still have duties under the lease. Shutting off HVAC and blocking your entrance likely violates the implied covenant of quiet enjoyment and possibly specific lease terms about common areas and utilities.

Document everything. Photos, videos, dates and times. If he's intentionally interfering with your business, you may have claims for breach of contract and tortious interference.

BO
BakeryOwnerLA OP

I just pulled out my lease. There's no renewal option - my lawyer at the time said it wasn't necessary since I'd been there so long and had a "good relationship" with the landlord. Huge regret.

What about the $85K in improvements? The lease says "All alterations and improvements shall become the property of Landlord upon installation." Can I at least negotiate compensation for these?

PG
PropertyGuy_Mike

That clause is pretty standard unfortunately. From the landlord's perspective, they want the improvements to stay with the property, especially kitchen buildouts that are expensive to remove and reinstall.

Some leases have "trade fixture" exceptions that let you remove specialized equipment. Does yours mention anything about trade fixtures or FF&E (furniture, fixtures, and equipment)?

CV
CovidCasualty

Are there any COVID-era protections still in effect? I remember there were some commercial eviction moratoriums.

My restaurant survived on those protections in 2020-2021. Just wondering if any of that is still relevant.

RG
RachelGarcia_Esq Attorney

The COVID commercial eviction protections have essentially expired. California's SB 91 and later extensions protected commercial tenants from eviction for unpaid rent during the pandemic, but those were temporary and have sunset.

However, @BakeryOwnerLA - this isn't an eviction situation. The landlord isn't trying to evict you for cause; they're simply not renewing. That's a different legal scenario.

Regarding the tenant improvements, I want to add something important: the personal guarantee issue. Did you personally guarantee the lease? If so, you need to make sure you're completely clean on all lease obligations before you leave, or the landlord could pursue you personally for any claims.

BO
BakeryOwnerLA OP

Yes, I personally guaranteed the lease. My LLC is the tenant but I signed a personal guarantee for the full lease term.

Is there any trade fixture language... let me check... The lease says "Tenant may remove trade fixtures at the end of the term provided Tenant repairs any damage caused by removal and is not in default." That's something at least?

PG
PropertyGuy_Mike

That trade fixture clause is actually good news. The question is what qualifies as a "trade fixture" versus a permanent improvement. Generally:

  • Trade fixtures (you can take): Equipment that can be removed without significant damage - ovens, refrigerators, display cases, POS systems
  • Permanent improvements (landlord keeps): Built-in ventilation hoods, floor drains, electrical upgrades, walls

Your commercial ovens and walk-in cooler are likely trade fixtures you can remove. The ventilation system is probably a permanent improvement you lose.

RG
RachelGarcia_Esq Attorney

Here's my practical advice for next steps:

  1. Document the harassment - Keep a detailed log with photos/videos. This gives you negotiating leverage and potential legal claims.
  2. Send a formal letter - Have an attorney send a letter demanding the landlord stop interfering with your business operations. Reference the quiet enjoyment clause.
  3. Get quotes for relocation - Start looking for new spaces now. 4 months goes fast.
  4. Inventory your trade fixtures - Make a list of everything you plan to remove with photos and documentation of what you paid.
  5. Consider negotiating - Sometimes landlords will pay tenants to leave early and cleanly. If he wants you out and you have harassment claims as leverage, there might be a deal to be made for compensation.

The harassment is actually your best leverage here. Landlords don't want lawsuits, especially documented ones with photos of blocked entrances.

BO
BakeryOwnerLA OP

Update: I hired a commercial real estate attorney and she sent a letter about the harassment. The HVAC shutoffs and parking issues stopped immediately.

We're now negotiating. Landlord wants me out by end of lease (he apparently has a chain restaurant lined up to take the space). My attorney is pushing for either a 6-month extension to find new space, or a buyout payment for the improvements I'm leaving behind.

Also started looking at new locations. Already found a spot in Burbank that might work. Lesson learned: ALWAYS negotiate renewal options into commercial leases, and document your tenant improvements carefully.

Thanks everyone for the advice.

REA
RealEstateAgent_TX Contributor

PSA: many consumer protection statutes allow recovery of attorney fees and treble (3x) damages. This means even if your actual damages are small, the statutory multiplier can make it worthwhile to pursue. Check your state's consumer protection act.

FTB
FirstTimeBuyer_CO

Just wanted to add โ€” I went through almost the exact same thing last year. What finally resolved it for me was sending a formal demand letter via certified mail. Once they realized I was serious and had documentation, they settled within 2 weeks.

CL
CommLease_Specialist

Commercial real estate broker here with 20 years specializing in restaurant and food service leases in the greater LA area. This thread hits close to home because I see this exact scenario play out regularly, and there are some negotiation strategies that can make a real difference.

First, regarding the leverage from the harassment documentation: this is your strongest card. In my experience, once a landlord receives a formal attorney letter with photographic evidence of interference with business operations, the dynamic shifts dramatically. I have been involved in negotiations where documented harassment resulted in the landlord offering a full buyout of tenant improvements just to avoid litigation risk. The key is making the landlord calculate that fighting you will cost more than compensating you.

Second, the Burbank relocation: make sure your new lease includes a comprehensive renewal clause, a right of first refusal on adjacent space, and clear language about tenant improvement ownership and removal rights. I would also strongly recommend a co-tenancy clause if you are going into a multi-tenant property, which protects you if anchor tenants leave and foot traffic drops.

Third, for anyone reading this thread for future reference: the time to negotiate lease protections is before you sign, not after. I always advise my restaurant clients to negotiate at minimum a 5-year initial term with two 5-year renewal options, a cap on annual rent increases (CPI plus 2-3 percent max), and an explicit definition of trade fixtures that covers all movable commercial kitchen equipment. These provisions cost nothing to include at signing but are worth tens of thousands of dollars when disputes arise later.