Legal Question in Landlord & Tenant Law in California

I had a business that I sold in 2006. I assigned the lease to the new tenant who assumed full liability. However the landlord insisted that I continue to be the guarantor on the lease. Since the tenant could not pay the full rent amount about a year ago and because I was the guarantor on the lease, the landlord and I entered into a separate agreement that stated that I would pay the difference in rent until August of 2010. One clause in the agreement stipulated that "In the event that the business located in the Premises is sold or the Lease is assigned, Lessees' obligations under this Agreement, shall terminate." I got stuck in paying the difference between the original lease amount and what the tenant could pay while he was in the shop.

In March of 2010 the tenant sold the business and the landlord entered into a new lease with the new tenant. The previous tenant was not in default at the time the business was sold. The landlord , however, is still insisting that I pay the difference between the original lease and what the new tenant that bought the place in March. The questions I have are as follows:

1. Can the Landlord still hold me responsible even though he entered into a new lease with the new tenant while I was a guarantor on the original lease?

2. Can more than one lease be outstanding on the same property for the same term? isn't true that “Where the lessor with the lessee's consent enters into a new lease with another, the original lease is terminated and the original lessee is released. A surrender of the premises takes place by operation of law, without the necessity of a formal surrender”? Are there any precedent cases that address this issue that you can refer me to?

3. Since I continued to pay from March through July for the difference in rent without a notification from the landlord that the place had been leased, shouldn’t I get my money back for that period?

4. Would I be able to cover any lawyer’s fee from the Landlord for handling the issues that I’m going through?

5. Are there any other damages that I can sue the landlord for?

6. The landlord fired a letter indicating that he was on strong grounds and that he will sue me and ruin my credit. How strong of a case does he have or is he bluffing?


Asked on 7/22/10, 11:25 pm

1 Answer from Attorneys

1. Maybe. If what the landlord did was commercially reasonable in re-renting the property when the tenant after you vacated, you and the tenant after you may be jointly and severally liable for the difference through the end of the term of your lease.

2. No, but that is not relevant to your case. The landlord's case against you and your assignee is for early termination of your lease, not a continuing obligation under a lease still in effect.

3. Maybe, but only if you have a defense to his claims that you owe the rent shortfall due to the termination of the lease before its expiration.

5. Not based on anything you've told us so far.

6. You have only provided the barest facts, not nearly enough to tell how strong his case may or may not be. I can tell you that based on what you have told us there is a case the landlord can make. Without going over all the details of your original lease, the assignment, and the latest transactions with the assignee and landlord ending your lease, and with the new tenant, it is impossible to evaluate even preliminarily, the strength of either side's case.

I notice that you have a zip code close to me. If you would like to make an appointment to go over your documentation and the details of the situation, at no obligation, please feel free to contact me for an apointment.

Read more
Answered on 7/23/10, 9:52 am


Related Questions & Answers

More Landlord & Tenants questions and answers in California