Legal Question in Business Law in California

There are two questions here - one about enforceability of a commercial lease if the premises lack occupancy permits, and the other about a tenant's ability to sue for and recover past rent when a lease is held unenforceable.

Taking the first question, I'd say that when the landlord knows the purpose for which the tenant is leasing the property (which they usually do), there is at least an implied (if not express) warranty in the lease that the zoning and permits are suitable for the intended use and that the tenant won't suffer any hardship as a result of the landlord failing to obtain and maintain the basic permits such as occupancy permits. If the landlord didn't know the intended purpose, or if the tenant were making extensive renovations that would require new occupancy permits, the situation is less clear.

Now, insofar as a successful suit to recover past rent when a lease was held unenforceable, I think some further facts are needed in order to give you a single, simple answer. First, what do you mean by unenforceable? Which party can't enforce it, the landlord or the tenant? Or, perhaps you mean the premises cannot be used at all due to the lack of an occupancy permit? Generally, if a lease is not enforceable by either party, the tenant is considered to be a month-to-month renter on an implied agreement which takes the place of the unenforceable lease. The tenant couldn't sue for and collect back rent.

However, if a commercial tenant moves in, expecting to be there for years under a lease, and shortly thereafter learns that he has no lease -- or worse yet, that his use is illegal and he has to close up -- then the tenant can probably bring a successful lawsuit against the landlord, not for "past rent" but for the unrecovered costs of moving in and setting up shop, and the costs of moving out. Such costs could include wasted advertising expense, lost business, signs, refurbishing and equipping expense, etc.

The general rule is that a lease of premises where there is no certificate of occupancy is void, as being against public policy, especially where the purpose of the certificate of occupancy is to allow inspections to insure that the building is safe for human occupation. This does not mean you can avoid an eviction, but only that the landlord cannot get an award of rent. (See Gruzen v. Henry (2nd Dist. 1978) 84 Cal.App.3d 515.)