California Court Imposes Obligation On Landlord To Inspect Premises After Entry of Judgment For Possession But Prior To The Eviction!

Landlords across the State of California should be aware of a recent development in the law which imposes a duty to inspect property once landlords have obtained a judgment for possession though the tenant has yet to be evicted.

In Stone v. Center Trust Retail Properties, Inc. (2007) 146 Cal.App.4th 1435, the landlord obtained a judgment for possession against a restaurant tenant. The restaurant continued to operate after entry of the judgment. Plaintiff, hosting a party at the restaurant, was injured when she slipped on a wet dance floor. Plaintiff sued the restaurant tenant and the landlord. The jury found that the landlord was only 19% at fault but, due to rules of joint and several liability and the implied (but not stated) insolvency of the restaurant tenant, the landlord was held liable for $385,440 of the total $690,100 in damages.

On appeal, the Court of Appeal held that a landlord must conduct inspections of its property after obtaining a judgment for possession and at reasonable intervals thereafter. Generally, a landlord is not liable for conditions on property leased to a tenant when the landlord does not know of such conditions or when the landlord does not have the right to correct such conditions. However, the Stone Court determined that the landlord's "judgment for possession made it a hybrid… lying between the limited duties of a non-possessory landlord and the greater duties of an occupying landowner."

Some background is needed to fully understand the implications of this decision. An unlawful detainer lawsuit is the typical mechanism by which landlords regain possession of real property from a defaulting tenant. The purpose of the lawsuit is to obtain a judgment for possession which gives the landlord the legal right to occupy the premises. After a judgment for possession has been entered, the Court upon request issues a writ of possession. The writ of possession is delivered to the sheriff, who must then provide the tenant with five days notice before performing an eviction. The eviction restores possession of the premises to the landlord.

The Stone decision imposes a duty to inspect upon landlords during the interval which occurs after obtaining the judgment for possession but prior to the actual recovery of possession which occurs at the time of the eviction. Due to the institutional delays in obtaining a writ of possession or in scheduling an eviction date, and given the five days notice that the sheriff must provide, it's not uncommon for evictions to occur as many as two weeks or more after obtaining a judgment. This is a significant period of time during which landlords are now responsible for inspecting the property while a tenant's business may still be operating.

Despite the Stone Court's attempt to "strike the right balance between safety and disfavored self-help," the decision imposes an onerous burden on landlords and raises numerous concerns. How is a landlord to conduct inspections if the tenant is unwilling to grant access to the landlord prior to the eviction? How can landlords protect themselves or their property managers from confrontations with tenants - who may be angry at being evicted - during inspections? How often must the landlord conduct "reasonable periodic inspections"?

Prudent landlords and their counsel should implement procedures to protect the landlords' interests. First and foremost, a landlord who obtains a judgment for possession should move immediately to have an eviction scheduled. Everything that can be done should be done to shorten the interval between the entry of the judgment and the actual eviction of the tenant. This is particularly true with retail restaurant operations where high customer traffic may continue, coupled with the service of alcoholic beverages, so long as the tenant is open for business.

Although it may seem unreasonably burdensome, cautious landlords will initiate telephonic and written requests for inspections to their tenants or their counsel immediately upon obtaining a judgment for possession. Landlords and their counsel should document all efforts to inspect the property and the results of such inspections, and may wish to contract with third-parties to inspect the premises prior to the eviction. Landlords and their counsel should also discuss the particular operations of the tenant in order to determine a reasonable inspection timeline. The nature and extent of the tenant's business activities will influence when and how frequently inspections need to occur to minimize the Landlord's exposure for injury or property damage during the post-judgment/pre-eviction interval.

If you have any questions regarding any real estate legal matter, in San Diego please contact Brian Frasch (litigation) at bfrasch@gordonrees.com or Eric Young (transactions) at eyoung@gordonrees.com or call us at (619) 696-6700. In San Francisco, please contact Phil Wang at pwang@gordonrees.com or call us at (415) 986-5900. This Real Estate Update was prepared by David Chasin of the firm's San Diego Office. He can be reached at dchasin@gordonrees.com or (619) 230-7741.