COMMERCIAL TENANT SECURITY DEPOSITS

California has very clear statutory prohibitions against commercial landlord’s wrongfully withholding security deposits

Under California Civil Code 1950.7, the commercial landlord must return the security deposit less any “lawful deductions.” Further, if the the landlord still refuses to return the security deposit, then the Landlord may be subject to damages not to exceed two hundred dollars ($200), in addition to any actual damages.

Well, $200 does not seem like much of a deterrent for an aggressive Landlord. However, most commercial leases have attorneys’ fee clauses, and the law provides for the recovery of statutory interest at 10% annually, along with costs to a prevailing party. Taking together, the financial cost to a commercial Landlord who wrongfully withholds a security deposit can quickly escalate.

For example, in one recent case, the commercial landlord wrongfully withheld our client’s security deposit for over two years. After filing suit, we recovered the ENTIRE security deposit plus interest, attorneys’ fees and costs. At the end, the Landlord ended up paying nearly TWICE the tenant’s original deposit!

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CASE STUDIES

Represented Plaintiff in litigation against Landlord.

RESULT

In the end, Landlord paid the entire security deposit, PLUS interest at 10% per year, PLUS a statutory penalty and PLUS all attorneys' fees and costs - nearly double what was owed.

TIME TO RESOLUTION

2 months after filing

HOW WAS CASE RESOLVED?

Attorney to Attorney negotiation during litigation

Represented Landlord in commercial unlawful detainer action against tenant who had vacated the Premises prior to end of lease term. Obtained a settlement backed by a confession of judgment.

RESULT

Settled mid 5 figures, back by confession of judgment

TIME TO RESOLUTION

6 months

HOW WAS CASE RESOLVED?

Settled during litigation (arbitration)

DEFENDED community real estate non-profit organization when they were sued for partition, breach of contract, and breach of fiduciary duty. Brought counter-claims. Case covered approximately 10 properties and a decades long business relationship.

RESULT

Client paid $0 of the 7-figure demand

TIME TO RESOLUTION

13 months

HOW WAS CASE RESOLVED?

Settled during litigation through mediation

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