Can Landlord Evict Tenant for Not Carrying Required Insurance?

The recipe for legally evicting a tenant contains two essential ingredients:

1. A valid substantive case—that is, proof that the tenant has violated a material duty under the lease without having a legal defense excusing the default; and
2. Proper procedures for not only eviction but also, in many cases, notification and opportunity to cure.

While the primary focus for many landlords is the first ingredient, it’s the second ingredient that determines the lion's share of cases. Consider the scenario below.

THE LEASE

A commercial lease to an auto shop tenant includes three key clauses:

1. Tenant’s duty to maintain insurance. Section 19 of the lease requires the tenant to maintain fire, business, and liability insurance on the property and name the landlord as an additional insured. It also provides that “tenant shall provide Landlord with a copy of all policies of insurance within 30 days of Landlord's request of same.”

2. Default provisions. Section 21 sets out a procedure for the landlord to follow in the event of a tenant default:

If Tenant shall default in the observance of any agreement or condition on its part to be performed or observed and if Tenant shall fail to cure said default within sixty (60) days after notice of said default from Landlord. . . Landlord lawfully may immediately, or at any time thereafter, commence legal action against Tenant for possession of the Premises.

3. Notices must be in writing. Section 24 of the lease provides that “all notices required under this Lease shall be in writing.”

WHAT HAPPENED

Assume that the following is the only correspondence between the parties:

June 11, 2021: Landlord sends tenant a letter demanding proof of insurance.

Sept. 8, 2021: Tenant sends a certificate of insurance.

Oct. 28, 2021: Landlord sues to evict tenant for not obtaining the required insurance.

Jan. 13, 2022: Tenant provides additional certificates of insurance.

Jan. 31, 2022: Tenant acknowledges that none of the certificates it’s provided prove that it’s gotten the insurance required under Section 19 and that it’s therefore in default under the lease.  

QUESTION

Does the landlord have a valid case for eviction?

A. Yes, because the tenant is in default under Section 19 of the lease

B. No, because the landlord didn’t provide the required notice and opportunity to cure

C. Yes, because the tenant knew it was in default even though it never got written notice

D. No, because failure to carry insurance isn’t a material lease violation

ANSWER

B. Even though the tenant is in default, the landlord can’t evict because it didn’t provide written notice or follow the procedures set out in Section 21.

EXPLANATION

This scenario, which comes from an actual Virginia case, illustrates that having substantively valid grounds for eviction isn’t enough. To reclaim possession, landlords must also follow the clearly described default notice and cure provisions set out in the lease. In this case, Section 21 created “a condition precedent” to eviction; “without written notice of default and the expiration of the 60-day cure period, the landlord couldn’t sue for possession for breach of the Lease,” the court concluded.

What the landlord should have done was provide a written notice of default 30 days after the tenant failed to respond to its demand for proof of insurance on June 11—that is, as early as July 11. That would have started the 60-day cure period provided by the lease. Then, if the tenant didn’t cure in 60 days, it could have “immediately, or at any time thereafter,” begun legal action against the tenant for possession [Eskandari v. Auto Imps. of Woodbridge, 2022 Va. Cir. LEXIS 37].

WHY WRONG ANSWERS ARE WRONG

A is wrong because while the tenant was in default, following the Section 21 process was the condition precedent for the landlord to assert its eviction rights in response to the default. The court acknowledged what it called “a certain degree of irony in this outcome” allowing tenants who freely admitted leaving the landlord’s property uninsured for a substantial period of time to get off scot-free on a lease technicality. “Even so, the contractual provisions of the lease are clear, and [landlord] must take the action that the lease requires before reclaiming possession of the premises.”

C is wrong because while, like most states, Virginia recognizes “constructive notice,” unwritten notice based on the actual situation, the principle doesn’t apply when the lease requires that all notices must be in writing.

D is wrong because failure to carry—and provide the landlord with verification of—insurance on leased premises is very much a material breach justifying a landlord’s eviction rights. The moral of the Eskandari case is that the landlord must exercise those rights in accordance with the clear procedures set out in the lease.