March 23, 2020 Articles

Is That a Penalty? Or Is It Just Rent?

Pre-printed commercial lease holdover rent at 150 percent upheld on appeal.

By Kenneth Van Vleck

When is a commercial lease so unbalanced, so unfair, or so unreasonable that it is unenforceable? Not often. The California Court of Appeal, Second Appellate District Court, recently upheld a lease provision allowing the landlord to charge 150 percent of base rent as “holdover” rent if a commercial tenant did not timely vacate the premises in Constellation-F, LLC v. World Trading 23, Inc., 45 Cal.App.5th 22 (2020).

The provision is common in commercial leasing—so common that many preprinted commercial lease forms include it automatically. In Constellation-F, the California Court of Appeal examined the practice, finding it enforceable over a strong dissent.

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