Make Sure Lease Clearly Spells Out Your Self-Help Eviction Right
Like many owners, you probably believe that the only way to kick out a holdover tenant or a defaulting tenant is to sue to evict it, says New York City attorney Adam Leitman Bailey. However, you may have another option: taking back a tenant's space using a self-help eviction right. That is, you can terminate the tenant's lease and then lock it out of its space.
Provided your lease spells out your right to use a self-help eviction, you should not be afraid to exercise that right. Just last fall, a federal court dismissed a lawsuit claiming that an Iowa owner wrongfully evicted a subtenant. The court said that the owner's self-help eviction had been a valid, peaceable means of taking back the space.
Having a self-help eviction right can benefit you in several ways. For instance, you may not have to go through a long and costly lawsuit to evict the tenant, thereby saving you lots of time and money, says Bailey. And you will be able to re-let the tenant's space faster, he adds.
But if you resort to a self-help eviction when your lease doesn't clearly give you that right, a court could hold you liable for damages for wrongfully evicting the tenant. With Bailey's help, we will give you five points to include in a properly drafted self-help eviction clause. And we will give you a Model Lease Clause that you can put in your leases that includes those points (see box, at right). Bailey includes a self-help eviction clause in his lease forms and just negotiated that clause in a restaurant tenant's lease.
Check State Law on Self-Help Evictions
Before including a self-help eviction clause in your lease, ask your attorney to check your local law to see whether your state permits self-help evictions, advises Bailey. All states ban self-help evictions of residential tenants, but some states—such as Alabama, Alaska, Arizona, Georgia, Hawaii, Maryland, Mississippi, New Jersey, New York, Ohio, Texas, and Wisconsin—permit peaceable self-help evictions of commercial tenants, he explains.
For example, consider the case involving the Iowa owner, mentioned above. The owner terminated its tenant's lease and then notified the space's subtenant that it must remove its equipment from the space by September 1. The subtenant asked the owner not to change the locks until September 10.
The owner changed the locks on September 1, but gave the subtenant access to the space until September 10, to remove the equipment. Despite that, the subtenant sued the owner for wrongfully evicting it from the space. The subtenant claimed that the owner was not entitled to use self-help eviction methods and had to seek an eviction through a judicial proceeding.
A federal court in Iowa dismissed the subtenant's lawsuit in September 2006. The evidence indicated that the owner gave the subtenant clear notice of when it would take back the space. The court noted that the subtenant knew what the owner was going to do and that the subtenant was preparing to give back the space.
Thus, the self-help eviction was valid because “the changing of the locks was a permissible peaceful means” for the owner to take back the space, said the court [Brown v. State Central Bank].
Be aware that several other states—such as Idaho, Massachusetts, Missouri, North Dakota, Virginia, and West Virginia—let owners use self-help eviction only if the tenant has abandoned its space, Bailey adds.
Including the self-help eviction right in a lease is key in most states that permit self-help evictions, says Bailey.
Five Points to Cover in Self-Help Eviction Clause
A properly drafted self-help eviction clause, like our Model Lease Clause, should require the tenant to agree to the following five points, says Bailey:
You and your agents and servants may immediately or at any time after the tenant causes a material default (and all applicable cure periods given in the lease have run out) or after the lease ends, re-enter and take back the tenant's space;
Your self-help eviction right is given in accordance with your “common law rights” of peaceable re-entry;
You have no duty or requirement to get a court order, start an eviction proceeding, or take any other action before exercising your self-help eviction right;
You can remove any people and property remaining in the tenant's space when you exercise your self-help eviction right; and
You will not be liable to the tenant for exercising your self-help eviction right and removing the tenant's property and occupants from the space.
Will Tenants Agree to Self-Help Eviction Right?
Small tenants are likely to agree to your self-help eviction right. Bailey regularly includes the self-help eviction right in leases with smaller office, retail, and restaurant tenants.
However, expect larger tenants with more clout to resist self-help clauses, says Bailey. Those tenants will usually win the battle in any market because they don't want you taking back their spaces so easily if they default under their leases, he explains.
In any event, owners of larger spaces don't usually conduct self-help evictions, which would be costly and unduly burdensome because of the size of the space, the amount of inventory involved, and the inability to secure all of the space properly, he adds.
Nonetheless, such a clause should be included in the lease and, if contested, used as a bargaining chip for a stronger default clause involving the court system, Bailey says.
Brown v. State Central Bank: 459 F. Supp. 2d 837 (S.D. Iowa 2006).
Adam Leitman Bailey, Esq.: Shareholder, Adam Leitman Bailey, P.C., 26 Broadway, 21st Fl., New York, NY 10004; (212) 825-0365; email@example.com.
PRACTICAL POINTER: Check your local or state laws to see whether they also place any restrictions on your ability to remove or store the tenant's property after you have exercised your self-help eviction right and re-entered the tenant's space, adds Bailey.
PRACTICAL POINTER: Note that the tenant must commit a “material”—that is, major—default before you can exercise a self-help eviction right, says Bailey. Exercising your self-help eviction right for a minor default—such as the tenant's violating its lease by ignoring your building's or center's recycling rules—could get you into trouble. However, you can exercise the self-help eviction right if the tenant doesn't maintain the proper insurance coverage, he suggests.
Perceptions and Realities of Self-Help Evictions
Even though many states permit self-help evictions, it is typically a “neglected remedy,” notes New York City attorney Adam Leitman Bailey. Many attorneys don't advise their owner-clients to use self-help evictions to get back spaces when a tenant defaults. Why? Those attorneys fear that courts will be hostile to self-help evictions because the space is forfeited to the owner before the tenant can litigate its right to remain in the space, he explains. Also, many owners are not familiar with self-help eviction rights, so their attorneys are reluctant to recommend such an aggressive remedy, Bailey adds.
It is true that courts don't allow self-help eviction if the lease is ambiguous or there are outstanding questions concerning the lease's expiration, Bailey admits. And owners that wrongfully and forcibly evict tenants may be subject to lawsuits that allow tenants to collect treble damages and get back their spaces, he warns.
However, owners should not be scared to get and exercise a self-help eviction right if a tenant defaults, says Bailey. This self-help eviction right benefits owners by providing tenants with an incentive to comply with their leases. And it allows the owner to quickly re-let the tenant's space without spending time and money on a lengthy lawsuit before doing so, he explains.
Be aware that if you exercise a self-help eviction right, you will not always avoid lawsuits. The evicted tenant could sue you, and then you would have to prove that the tenant was in default at the time of your re-entry and that the self-help eviction complied with the law, says Bailey. However, if you document a tenant's default before re-entering its space and ensure that re-entry is done peaceably, you should not worry that a court will rule that your re-entry was illegal or forceful, he says.
Bailey has noticed that, even if a tenant's lease includes a self-help right, most owners exercise their self-help eviction right only when a tenant doesn't pay its rent. Also, owners are more likely to resort to self-help eviction if their tenant uses an electronic key card system to lock its doors, instead of a standard door key, because it is easy to deactivate the tenant's access code by computer without having to physically remove and change locks, he explains.