Legal Question in Real Estate Law in California
Lease on Retail Store
I used to own a Dollar Store in a Shopping complex and signed 3 year lease in August 2004 with the comapny which owns the complex. The lease is effective until December 2007. In August 2005 I sold the store and transferred(assigned) the lease to the new owner of the store. Two days ago I received a certified letter from a Law firm stating that the rent on the premises was not paid for the last 3 months and $10,800 including Rent, Penalty and Attorney fee need to be paid with in three days. The letter was addressed to me and the current owner Since I sold the store 2 years ago, I have no way of knowing if the current owner was not paying the rent for the last 3 months. Is it that they should try to collect the money from the current owner who own the store and they should come after me only after they exhausted all the possibilities of collecting amount due form the current owner. I am really concerned and pls advice what sould I do in this situation.
5 Answers from Attorneys
Re: Lease on Retail Store
When you assigned the lease, it did not change the right of the landlord to collect rent from you. The new store owner became obligated TO YOU to pay the rent, but that's a separate analysis. I can advise you more specifically if you can fax me the relevant documents. We draft commerical leases and litigate commercial lease disputes frequently.
Call me to discuss.
-Ben
Re: Lease on Retail Store
I don't necessarily agree with Mr. Berger. If you truly assigned the lease, it would have been with your landlord's permission, and would have effectively become a new lease with the new owner and your former landlord.
If you did not get your landlord's permission, or it was withheld in the lease, your actions in selling the store may only be construed as subletting.
In this situation, you could also become personally liable for the rent.
Very truly yours,
Re: Lease on Retail Store
I would need to look at the assignment for an appropriate response. Is it still open and doing business? Contact me directly.
Re: Lease on Retail Store
The assignment of a lease does not relieve the original lessee (the assignor) of liability to the landlord.
If the original lessee wants to be off the hook, there must be what is called a "novation." In a novation, the landlord, the original tenant, and the new tenant are all parties to the deal and all must sign. When that happens, the existing lease is in legal effect rescinded and the new lease takes it place. See Civil Code sections 1530 to 1533.
Again, assigning a lease, or any other kind of contract, does not relieve the assignor of obligation to the other party.
So, in this case I'm agreeing with Mr. Berger and disagreeing with Mr. Roach. As to whether it would be helpful to look at the assignment or not, the assignment (unless signed by the landlord and intended as a novation) will only control whether the assignment was also a delegation of duties, such as the duty to pay the rent, which it undoubtedly was; but the fact that it is a delegation of duties as well as an assignment of rights has NO IMPACT on the landlord's right to collect the rent from the original tenant!
Re: Lease on Retail Store
Unless the assignment was approved by the landlord and the landlord released you of the obligation to pay, you are liable. In fact, if the landlord did not approve the assignment, then the current "owner" is likely only liable for the time he/she occpied the premises. You will still be responsible for the entire lease.
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