480-634-8426

 

 

 

 

Baker Law Offices, Real Estate and Business Lawyers

Dave Baker: Nine-time Super Lawyers selectee and Certified Specialist in Real Estate Law

 

Alex Baker: Real estate transactions, litigation, tax liens and estate planning ... Super Lawyers Rising Stars honoree

 

 

Commercial Landlord/Tenant Law | April 2017

Commercial Lease Enforcement: Declaring the Default

It is in the landlord’s best interest to err on the side of over-noticing the default.

In the first two articles of this series,[1] we discussed the analysis necessary to determine whether a material breach of the lease has occurred. Once a determination has been made that such a breach has occurred, the landlord’s attention must turn to ensuring that the breach is properly declared by providing adequate notice of the default. In the commercial setting, the lease will be controlling factor on this procedure.[2]

Because Arizona statutes do not have a set procedure (or requirement) for declaring a default of a commercial lease, it is extremely common for commercial leases to contain such provisions. These provisions need to be reviewed carefully, as a failure to follow the procedural requisites may render a default improperly noticed and, thus, a breach improperly declared.[3]

There are exceptions to this rule; specifically, notice that does not follow the strict provisions of the lease will be deemed sufficient if:

  • the notice provided is superior to that required by the lease;

  • the notice is sent to a known agent of the defaulting party under the lease;[4] or

  • the course of conduct between the parties has established a different method of providing notice.

It is in the landlord’s best interest to err on the side of over-noticing the default. Thus, a landlord is well advised to provide notice of default (1) in the manner provided for in the lease, (2) to any other known address of the tenant, and (3) to any agent known by the landlord to represent the tenant.

 

[2] See Richardson v. Casey, 6 Ariz. App. 141, 430 P.2d 720 (1967) (holding that notice must be provided in accordance with the terms of the lease, if the lease requires such notice).

[3] See University Realty & Development Company v. Omid-GAF, Inc., 19 Ariz. App. 488, 508 P.2d 747 (1973).

[4] Bates v. Springer, 109 Ariz. 203, 507 P.2d 668 (1973) (notice to the agent will be imputed to the tenant).