1. The Notice.
The Notice purports to modify the residential tenancy and Lease under Civil Code Section 827. It purports to make any breach of the Lease, no matter how immaterial or trivial, a material breach of the Lease justifying (1) forfeiture of the Lease and (2) termination of the tenant’s right to possession. The provision reads something like: “3. Renter agrees that Renter’s performance of and compliance with each of the terms of the rental agreement constitute a condition on Renter’s right to occupy the premises. Any failure of compliance or performance by Renter shall allow Owner to declare a forfeiture of this agreement and terminate Renter’s right to possession. Any breach of the contract is a material breach.”
The Notice is not signed or dated by the tenant, nor does it reflect the tenant’s express written consent in any manner. The Notice is signed by the landlord only. Similarly, the Notice was not negotiated by the landlord and tenant; the Notice was prepared unilaterally by the landlord.
Can I be evicted for a slight or immaterial breach of the lease now? As discussed in more detail below, no. The Notice is invalid – and the tenant should reject it – because a landlord may not evict a residential tenant because of the tenant's breach of a lease where the terms in dispute are materially different from the original lease and unilaterally imposed by the landlord and not agreed to by the tenant in writing. Moreover, an immaterial breach of a residential lease governed by the Los Angeles Rent Stabilization Ordinance (“RSO”) may not be made ipso facto material, such that the breach warrants forfeiture and the landlord’s right to possession, simply by inserting words to that effect in the lease.
2. The Notice As a Whole Is Invalid.
The entire Notice is invalid on its face because a landlord may not unilaterally change the terms of a residential lease subject to the RSO and then attempt to evict based on a violation of those unilateral terms. The tenant must agree in writing to the additional covenant, and the tenant must knowingly consent, without threat or coercion, to each change in the terms of the tenancy.
The landlord is engaging in a tricky scheme that has been squarely and repeatedly rejected by California courts. This scheme was rejected in at least six cases before the Court of Appeal and the Los Angeles County Superior Court, Appellate Division, two of which have published opinions, and by amendment to the RSO. See L.A. Mun. Code § 151.09.A.2.(c); Boston LLC v. Juarez, 245 Cal.App.4th 75 (2016); NIVO 1 LLC v. Antunez, 217 Cal.App.4th Supp. 1 (2013); see also Y&Y Investment Group, LLC v. Lopez, Case No. BV029752; Y&Y Investment Group, LLC v. Farela, Case No. BV029713; Babay v. Cadenas, Case No. BV029139; Westhill Management v. Correa, Case No. BV028271.
The cases above were brought by a well-known Los Angeles UD mill/attorney, Allen R. King, Esq., who marketed that he had a “secret way to evict a rent control tenant.” The “secret” was to serve a unilateral Notice of Change of Terms of Tenancy containing a forfeiture clause for immaterial or trivial breaches of the lease that could later be used to evict the tenant or force the tenant to leave for a trivial breach. The landlords then served three-day notices for trivial breaches of the subject leases and later sought forfeiture of the lease and possession of the premises.
In the NIVO 1 case, the landlord served a Notice of Change of Terms of Tenancy to render all breaches material. That Notice stated: “3. Renter agrees that Renter’s performance of and compliance with each of the terms of the rental agreement constitute a condition on Renter’s right to occupy the premises. Any failure of compliance or performance by Renter shall allow Owner to declare a forfeiture of this agreement and terminate Renter’s right to possession. Any breach of the contract is a material breach.”
The NIVO and Boston decisions are the result of this “secret.” The courts in NIVO and Boston analyzed and ultimately rejected the “materiality” clause specifically and the two Notices generally, declaring them to be invalid.
“’[A] lease may be terminated only for a substantial breach thereof, and not for a mere technical or trivial violation.’ This materiality limitation even extends to leases which contain clauses purporting to dispense with the materiality limitation.” Boston LLC, supra, 245 Cal.App.4th at 81 (internal citation omitted).
Los Angeles Municipal Code sections151.00 et seq. prohibit a landlord from bringing an unlawful detainer action based on a unilateral change in terms of the tenancy. “A. A landlord may bring an action to recover possession of a rental unit only upon one of the following grounds: [¶]. . . [¶] 2. The tenant has violated a lawful obligation or covenant of the tenancy and has failed to cure the violation after having received written notice from the landlord, other than a violation based on [¶]. . . [¶] (c) A change in the terms of the tenancy that is not the result of an express written agreement signed by both of the parties. For purposes of this section, a landlord may not unilaterally change the terms of the tenancy under Civil Code Section 827and then evict the tenant for the violation of the added covenant unless the tenant has agreed in writing to the additional covenant. The tenant must knowingly consent, without threat or coercion, to each change in the terms of the tenancy.” L.A. Mun. Code § 151.09 subd. A.2.(c).
The NIVO court addressed this very provision of the RSO, writing that “LARSO, Los Angeles Municipal Code section 151.00 et seq., prohibits a landlord from bringing an unlawful detainer action based on a unilateral change in terms of the tenancy.” NIVO 1 LLC v. Antunez, 217 Cal.App.4th Supp. 1, 4 (2013).
Here, the Notice is unilateral, and the tenant has not consented in writing to the Notice. It is, therefore, invalid as a whole under NIVO and Section 151.09.
3. Section 3 of the Notice – the “Materiality” Clause – Is Invalid.
In NIVO, the property supervisor testified that she posted and mailed to defendant a notice of change of terms of tenancy. As noted above, the notice read: “‘3. Renter agrees that Renter’s performance of and compliance with each of the terms of the rental agreement constitute a condition on Renter’s right to occupy the premises. Any failure of compliance or performance by Renter shall allow Owner to declare a forfeiture of this agreement and terminate Renter’s right to possession. Any breach of the contract is a material breach.’ (Italics added.).” NIVO 1 LLC, 217 Cal.App.4th Supp. at 4.
She further testified that defendant failed to comply with the notice and did not obtain renter’s insurance, as required by Paragraph 17 of the lease. A three-day notice to perform this covenant or quit was served, and an unlawful detainer action followed. See NIVO 1 LLC, 217 Cal.App.4th Supp. at 3. “[T]he unilateral change by the plaintiff-landlord sought to alter the terms so that the failure to maintain insurance would be deemed a material breach such that it would result in a forfeiture of the lease agreement.” NIVO 1 LLC, 217 Cal.App.4th Supp. at 4 (emphasis added). The court concluded that “[s]uch a change of terms is invalid under the provisions of LARSO [the Los Angeles Rent Stabilization Ordinance].” NIVO 1 LLC, 217 Cal.App.4th Supp. at 4.
Moreover, the same “materiality” provision is invalid under black letter contract and lease law. The NIVO court stated: ““Whether a breach is so material as to constitute cause for the injured party to terminate a contract is ordinarily a question for the trier of fact.” NIVO 1 LLC, 217 Cal.App.4th Supp. at 4. “The distinction between a material and inconsequential breach is one of degree, to be answered, if there is doubt, by the triers of the facts.” NIVO 1 LLC, 217 Cal.App.4th Supp. at 5.
The court went on to conclude:
Whether a particular breach will give a plaintiff landlord the right to declare a forfeiture is based on whether the breach is material. The law sensibly recognizes that although every instance of noncompliance with a contract's terms constitutes a breach, not every breach justifies treating the contract as terminated. Following the lead of the Restatements of Contracts, California courts allow termination only if the breach can be classified as material, substantial, or total.
NIVO 1 LLC, 217 Cal.App.4th Supp. at 5 (internal quotations omitted).
The Court of Appeal in Boston LLC v. Juarez, 245 Cal.App.4th 75 (2016) addressed a very similar “materiality” provision and concluded that a tenant’s breach of a Los Angeles Rent Stabilization Ordinance, L.A. Mun. Code, § 151.00 et seq., rental contract must be material to justify the landlord forfeiting the contract and terminating the tenancy. Boston LLC, 245 Cal.App.4th at 79. According to the Boston LLC court: “[c]ase law is clear as to what kinds of ‘failure to perform’ justify forfeiture. Courts have consistently concluded that a lease may be terminated only for a substantial breach thereof, and not for a mere technical or trivial violation.” Boston LLC, 245 Cal.App.4th at 81 (internal quotations omitted). This rule holds more true for RSO leases, as “[p]ublic policy and other considerations favor a materiality requirement, especially for an LARSO lease.” Boston LLC, 245 Cal.App.4th at 84.
Here, the landlord attempted to add the same unlawful and invalid “materiality” clause rejected by the NIVO and Boston courts and prohibited by the RSO. Consequently, Section 3 of the Notice – the “Materiality” clause – is invalid, and the tenant should reject it.
