Construction & Contracts  ·  October 31, 2026

Commercial Tenant Walked Out? California Landlord Remedies

The short answer

When a commercial tenant stops paying and leaves before the lease ends, California gives the landlord two basic paths, and the lease language affects which remedies, and how much, are available:

• Terminate and sue for damages under Civil Code section 1951.2: unpaid rent already earned at termination; rent lost from termination until the award and, in some cases, rent for the rest of the term, both reduced by what the tenant proves the landlord could reasonably have avoided; and other damages caused by the breach.
• Keep the lease in effect and collect rent as it comes due under section 1951.4, but only if the lease provides for that remedy and gives the tenant a reasonable right to sublet or assign.

Before either, the landlord may need to establish that the tenant has actually abandoned. For commercial property the statute is section 1951.35, not section 1951.3, which applies only to non-commercial property. A section 1951.2 claim on a written lease must be filed within four years after the earlier of breach plus abandonment or termination of the tenant's right to possession. (Code Civ. Proc., § 337.2.)

Has the tenant legally abandoned the space?

An empty storefront is not always an abandoned lease. Tenants sometimes close temporarily, keep paying, or dispute the rent. Section 1951.35 gives a commercial landlord a statutory way to resolve the question.

When the notice may be given. Only if "the rent on the property has been due and unpaid for at least the number of days required for the lessor to declare a rent default under the terms of the lease, but in no case less than three days, and the lessor reasonably believes that the lessee has abandoned the property." (§ 1951.35, subd. (c).)

The termination date. The notice must state a termination date "not less than 15 days after the notice is served personally, sent to the lessee by an overnight courier service, or deposited in the mail." (§ 1951.35, subd. (c).) It goes to the tenant's last known address, and to any other known address if there is reason to believe the notice will not be received at the last known one. (§ 1951.35, subd. (d).) The statute supplies a form. (§ 1951.35, subd. (e).)

What it does. If the tenant does not respond in time, the property is deemed abandoned within the meaning of section 1951.2 and the lease terminates on the date in the notice. (§ 1951.35, subd. (b).)

How the tenant stops it. The property is not deemed abandoned if, among other things, the tenant gives written notice before the termination date that it does not intend to abandon, with an address for service by certified mail in an unlawful detainer action, or pays all or part of the rent due during the period. (§ 1951.35, subds. (b), (f).)

What the notice is not. It is not a three-day notice to pay rent or quit, and giving it "does not satisfy the requirements of Section 1161 or 1162 of the Code of Civil Procedure." (§ 1951.35, subd. (h).) Nor is it the only way to prove abandonment. (§ 1951.35, subd. (g).)

The residential and non-commercial version, section 1951.3, has different numbers: rent unpaid for at least 14 consecutive days and 15 days' notice if served personally or 18 if mailed. Since 2019, subdivision (a) of that section limits it to "real property other than commercial real property." Using the wrong statute's timing is a mistake to avoid.

If the tenant has not left but has stopped paying, the landlord's first step is generally a three-day notice to pay rent or quit. Our article on the one-year limit on three-day notices explains the timing rules that apply to commercial notices.

What can I recover if I terminate the lease?

The four categories in section 1951.2

When the tenant breaches and abandons, or the landlord terminates the right to possession for breach, the lease terminates, and the landlord may recover:

1. "The worth at the time of award of the unpaid rent which had been earned at the time of termination";
2. The worth at the time of award of the rent that would have been earned from termination until the award, minus "the amount of such rental loss that the lessee proves could have been reasonably avoided";
3. Subject to subdivision (c), the worth at the time of award of the rent for the balance of the term after the award, minus the rental loss "that the lessee proves could be reasonably avoided"; and
4. "Any other amount necessary to compensate the lessor for all the detriment proximately caused by the lessee's failure to perform his obligations under the lease or which in the ordinary course of things would be likely to result therefrom."

(Civ. Code, § 1951.2, subd. (a).) "Rent" includes "charges equivalent to rent." (§ 1951.)

Amounts in categories (1) and (2) carry interest at the rate in the lease, or the legal rate if the lease has none. Category (3) is discounted to present value using the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus 1 percent. (§ 1951.2, subd. (b).)

Future rent requires a lease clause or a reletting

Category (3), rent for the rest of the term after trial, is not automatic. Under subdivision (c), the landlord may recover it only if (1) the lease provides for that measure of damages, or (2) the landlord relet the property before the award and proves that it "acted reasonably and in a good-faith effort to mitigate the damages," subject to any limits in the lease. Read the lease to see whether it includes the required clause.

The tenant must prove what could have been avoided

The landlord has to try to relet, but the statute puts the burden of proving avoidable loss on the tenant. In Lu v. Grewal (2005) 130 Cal.App.4th 841, a commercial gas-station case, the Court of Appeal held that "The burden of proof rests with the lessee," and that mitigation is measured by the property's fair market rental value, not the landlord's own operating results. In Millikan v. American Spectrum Real Estate Services California, Inc. (2004) 117 Cal.App.4th 1094, where an office tenant abandoned a building that the landlord later sold, the court held that "Sale of the property, by itself, does not excuse performance of the tenant's promise." And in Sanders Construction Co. v. San Joaquin First Fed. Sav. & Loan Assn. (1982) 136 Cal.App.3d 387, the court affirmed the judgment but remanded for recomputation of damages, so the tenant would have "the opportunity to prove that some of the rental loss could have been avoided." More recently, in USPA City Center, LLC v. Law Offices of Jason W. Estavillo, P.C. (2026) ___ Cal.App.5th ___ (A174766, filed Sept. 21, 2026, certified for publication Oct. 19, 2026), the Court of Appeal affirmed a judgment, entered on a stipulation that settled an unlawful detainer case, awarding three years of future rent reduced to present value under a lease provision that tracked section 1951.2. The court held that substantial evidence supported the award, including expert testimony about the local office market and the trial court's finding that the landlord could not market the space while the tenant remained in it. The tenant had offered no counter-evidence on mitigation.

Trying to relet does not cost the landlord its claim. "Efforts by the lessor to mitigate the damages caused by the lessee's breach of the lease do not waive the lessor's right to recover damages under this section." (§ 1951.2, subd. (d).)

No eviction needed first

When the tenant has left, the landlord does not have to bring an unlawful detainer action before suing for damages. In Walt v. Superior Court (1992) 8 Cal.App.4th 1667, the court held: "All that is required is lessee's breach and a termination of the lessee's right of possession." If the landlord does file an unlawful detainer action and possession is delivered to the landlord before trial, the case becomes an ordinary civil action, but the landlord must amend the complaint to seek category (3) damages or other damages not recoverable in unlawful detainer. (§ 1952.3, subd. (a).)

Can I keep the lease alive and collect rent as it comes due?

Sometimes. Section 1951.4 lets the landlord leave the lease in effect after breach and abandonment and "recover the rent as it becomes due under the lease," but only if two conditions are met:

1. The lease provides for the remedy. The statute offers model language: "The lessor has the remedy described in California Civil Code Section 1951.4 (lessor may continue lease in effect after lessee's breach and abandonment and recover rent as it becomes due, if lessee has right to sublet or assign, subject only to reasonable limitations)." (§ 1951.4, subd. (a).)
2. The tenant has a real right to sublet or assign. The lease must permit subletting or assignment or not prohibit or restrict it; permit it subject to express standards or conditions that are reasonable; or permit it with the landlord's consent and provide, or include a standard implied by law, that consent will not be unreasonably withheld. (§ 1951.4, subd. (b).)

Some acts do not end the tenant's right to possession for this purpose, including maintenance and efforts to relet, and "The appointment of a receiver upon initiative of the lessor to protect the lessor's interest under the lease." (§ 1951.4, subd. (c).) Our article on assignment of rents and receivers covers receivers in the lender context.

The remedy ends if the landlord recovers possession through an unlawful detainer judgment, unless the tenant obtains relief from forfeiture. (§ 1952, subd. (c).) Choosing between sections 1951.2 and 1951.4 is a strategic decision best made before the landlord takes steps that could be treated as terminating the tenant's right to possession.

Security deposits, guaranties and leftover property

The security deposit

Commercial deposits are governed by Civil Code section 1950.7, not the residential section 1950.5. The landlord may claim "only those amounts as are reasonably necessary to remedy tenant defaults in the payment of rent, to repair damages to the premises caused by the tenant, or to clean the premises upon termination of the tenancy," if the deposit was made for those purposes. (§ 1950.7, subd. (c).) The remainder must be returned within 30 days after the landlord receives possession. Where the only claim is for rent and the deposit exceeds one month's rent plus a deposit clearly described as last month's rent, the portion in excess of one month's rent is due within two weeks. (§ 1950.7, subd. (c)(1)–(3).) Bad-faith retention can add up to $200 in damages beyond actual damages. (§ 1950.7, subd. (f).)

The deposit generally cannot be kept to cover future rent damages unless the lease waives section 1950.7. In 250 L.L.C. v. PhotoPoint Corp. (USA) (2005) 131 Cal.App.4th 703, the court held that "defaults in the payment of rent" means rent that has already accrued, and that parties to a commercial lease can waive section 1950.7.

Personal guaranties

If the lease is personally guaranteed, whether the guaranty survives lease amendments, extensions or a change in the landlord's remedies depends largely on its wording. In Central Building, LLC v. Cooper (2005) 127 Cal.App.4th 1053, a guaranty that extended to later modifications covered them, and the guarantors had waived the defenses Civil Code section 2819 would otherwise give a surety whose obligation is altered without consent. Civil Code section 2856 permits those waivers.

Property left behind

Commercial abandoned property has its own procedure in Civil Code sections 1993 through 1993.09. After the tenancy has ended and the tenant has vacated, the landlord must give written notice describing the property, where it may be claimed, and a deadline not less than 15 days after personal delivery or 18 days after mailing. (§ 1993.03.) Unclaimed property must be sold at public sale unless the landlord reasonably believes it is worth less than the greater of $2,500 or one month's rent. (§ 1993.07, subd. (a).) Section 1993.09 allows this notice to be combined with a notice of belief of abandonment, but as published it refers to a notice under section 1951.3, the non-commercial statute, not section 1951.35. A commercial landlord should not assume the two can be combined, and should give the property notice once the tenancy has ended and the tenant has vacated.

The deadline

"Where a lease of real property is in writing, no action shall be brought under Section 1951.2 of the Civil Code more than four years after the breach of the lease and abandonment of the property, or more than four years after the termination of the right of the lessee to possession of the property, whichever is the earlier time." (Code Civ. Proc., § 337.2.) For a lease not in writing, the period is two years. (Code Civ. Proc., § 339.5.) Count from the earliest date that could qualify. Other claims, such as a suit on a personal guaranty or for rent under section 1951.4, may be governed by different limitations periods; do not assume this one applies.

A note for tenants

A tenant facing these claims has defenses worth evaluating early: whether the landlord used the correct abandonment statute and timing, whether the lease supports future-rent damages under section 1951.2(c), whether the landlord's reletting efforts were reasonable, what the space would have rented for, and whether the deposit was handled under section 1950.7. Qualified small commercial tenants also have protections added by SB 1103 (Stats. 2024, ch. 1015), including limits on charging building operating costs (Civ. Code, § 1950.9) and longer notice for large rent increases in periodic tenancies (Civ. Code, § 827). Those rules do not change the abandonment damages statutes.

Commercial lease disputes are contract cases at their core. Our contract dispute practice handles them for landlords and tenants.

Common questions

This article is general information about California law, not legal advice, and reading it does not create an attorney-client relationship. Statutes and case law change, and how they apply depends on the specific facts. Attorney advertising. Prior results do not guarantee similar outcomes. Robert B. Mobasseri, State Bar No. 193193, ROMO Law Group, Encino, California.