Legal Question in Business Law in California

Commercial Property Misrepresentation

I started a lease on property/and a building 1 year ago.

The county project area is rural-commercial. The county requires a new permit to be issued, whenever there is a different change of business use on the property. Any new permit would require standard updated improvements for the property and building, as dictated by the county general plan. One month prior to my lease, a new permit was issued. However, the county approved a permit without the county guidelines being followed. Because my business requires some additional conditions beyond the standard permitting, they want me to not only meet those conditions, but make all the improvements that were not followed when the last permit was issued.

We leased the project area in good faith, knowing that a permit had just been issued and that any general updated requirements from the county, would have been followed & completed. It was only after spending $5000 to upgrade a permit, did I find out that the standard improvements were never met.

The county has acknowledged their mistake, without taking any further responsibility. I know the the owner received a copy of all requirements, at the time of application.

What recourse do I have with the owner?


Asked on 6/07/06, 1:51 pm

2 Answers from Attorneys
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Commercial Property Misrepresentation

An attorney advising you would want to read your lease to get an idea of whether there is any language therein which tends to allocate the risk of defective permits or inability to obtain this permit because of a non-complying structure or use. However, I think most commercial leases would put the risk on the landlord for matters relating to the structure, building codes, etc., and on the tenant for requirements that are specific to the tenant's proposed use.

I don't think the fact that the county made a mistake affects liability as between the landlord and the tenant. Further, I doubt that the county can be held responsible for the consequences of its mistake. You seem to appreciate this reality of life.

Finally, an attorney advising you would want to look at the disclosures made by the landlord, the extent to which the tenant fully disclosed his intended use (if this could make a difference), whether the transaction was handled by the parties without the aid of agents or brokers, and the like.

As you probably know, there is a duty to disclose in commercial lease transactions, but the duty isn't so comprehensive as to make the landlord an insurer of the tenant's ability to use the building for the tenant's intended purposes. The landlord's defense may be, "How was I to know the county made a mistake?" The answer to that question may be the key to his liability. If he "coulda, shoulda" known, but didn't, there may be an actionable failure to disclose.

It may also be relevant whether the landlord is an active manager with sophisticated knowledge of commercial real estate, or just an average guy who semi-passively rents out a building from time to time.

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Answered on 6/07/06, 3:32 pm
Terry A. Nelson Nelson & Lawless

Re: Commercial Property Misrepresentation

There is no way any attorney can advise you effectively until you have fully discussed the facts and documents. Any recourse you have is with the owner, not the county. Get an attorney to negotiate a resolution, or file suit if all else fails and you have proper grounds to do so.

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Answered on 6/07/06, 4:02 pm


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