Landlord Can't Collect Waste Damages While Lease Remains in Effect

What Happened: A landlord discovered that a tenant had removed landscaping, added a sidewalk, and made other major structural alterations without notifying or getting the landlord’s consent as the lease required. The failure of the unauthorized alterations to meet building code, ADA, and other regulatory standards did little to relieve the landlord’s ire. But rather than evict, the landlord sued the tenant for committing waste, claiming that the alterations reduced the value of the property and would require hundreds of thousands of dollars to repair. The jury agreed and awarded the landlord $351,000 in damages. The tenant appealed.

Decision: The California appeals court ruled that the verdict was legally invalid and set it aside.

Reasoning: The key factor was that the lease remained in effect and the landlord continued to collect rent from the tenant; and under California law, a landlord can’t recover money to repair damages caused by a tenant’s waste until the lease ends and the landlord actually retakes possession. Exception: A landlord can recover for “substantial and permanent damages” a tenant inflicts on its reversionary interests. But the witness testimony the landlord presented in this case was speculative and inadequate to prove that the tenant’s alterations resulted in substantial and permanent damage. So, the jury’s finding of waste was invalid.

• 6401 Balboa Ave. v. Cal. Food Mgmt., 2019 Cal. App. Unpub. LEXIS 8258, 2019 WL 6767800