BILL ANALYSIS AB 1263 Page 1 Date of Hearing: January 12, 2010 ASSEMBLY COMMITTEE ON JUDICIARY Mike Feuer, Chair AB 1263 (Strickland) - As Amended: January 4, 2010 PROPOSED CONSENT (As Proposed To Be Amended) SUBJECT : UNLAWFUL DETAINER: SERVICE OF NOTICE KEY ISSUE : SHOULD EXISTING LAW be amended to specify that a lanDlord may serve unlawful detainer notices on a commercial tenant at the rental property, instead of requiring service at the commercial tenant's "Place of residence," as is required by existing law. FISCAL EFFECT : As currently in print this bill is keyed fiscal. SYNOPSIS Existing law specifies that, before a landlord can remove a tenant through an unlawful detainer proceeding, the landlord must serve notice upon the tenant so that the tenant can leave the property, cure whatever lease violation justifies the eviction, or file an answer with the court. As set out in existing law, the landlord must serve notice upon the tenant in one of the following ways: (a) by personally delivering notice to the tenant; or (b) if the tenant is absent from his or her place of residence or business, by leaving a copy of the notice with a person of suitable age and discretion and sending a copy through the mail to the tenant at his or her residence; or (c) if the tenant's place of residence and business cannot be determined, or if a person of suitable age and discretion cannot be found there, by affixing the notice in a conspicuous place at the subject property and mailing another copy of the notice to the tenant at the property address. These steps may be reasonable in regards to a residential tenant. But in the case of commercial tenants, if read literally, would require the landlord to attempt personal service at the tenant's "place of residence," and if the "post and mail" form of service is permitted, the copy of the notice must be mailed to the commercial tenant's "place of residence." However, as the author notes, a landlord has no reason to know the commercial tenant's "place of residence." Indeed, if the commercial tenant is a corporation, it is not clear what would constitute its AB 1263 Page 2 "place of residence." Because the bill as currently in print would have applied to either a residential or a commercial tenant, and this apparently was not the author's intent, the author will adopt amendments in this Committee that will apply only to commercial tenants. The foregoing bill summary and analysis reflects the bill as proposed to be amended. SUMMARY : Provides, as proposed to be amended, that in order to effect removal of a commercial tenant from property under the unlawful detainer statute, notice that the commercial tenant is in violation of lease terms must be served as follows: a) By delivering a copy of the notice to the tenant personally; b) If the tenant is absent from the subject property, by leaving a copy with a person of suitable age and discretion at the property and mailing a copy to the tenant at the rental property address. c) If service cannot be achieved by (a) or (b) above, then by affixing a copy in a conspicuous place at the rental property and mailing a copy addressed to the tenant at the rental property address. EXISTING LAW : 1)Provides that a tenant of real property, for a term less than life, or the executor or administrator of his or her estate is guilty of unlawful detainer under any of the following circumstances: a) When the tenant continues in possession after the lease term expires; b) When the tenant continues in possession without the landlord's permission after defaulting on rent payment; c) When the tenant continues in possession after failure to perform other lease requirements; d) When the tenant is assigning, subletting, or committing waste on the premises in violation of the lease agreement, or using the premises for an unlawful purpose; e) When the tenant agrees to surrender the property on a certain date and fails to do so. (Code of Civil Procedure section 1161.) 2)Provides that, before a landlord can seek repossession of rental property through an unlawful detainer action, based on AB 1263 Page 3 one the circumstances above, the tenant must be served notice to quit the property or cure the default of other lease violation. Specifies that the required notice must be served as follows: a) By personally delivering it to the tenant; or b) If the tenant is absent from his or her place of residence or business, by leaving a copy with a person of suitable age and discretion at either place and sending a copy through the mail to the tenant at his or her residence; or c) If the tenant's place of residence and business cannot be determined, or if a person of suitable age and discretion cannot be found, then by doing all of the following: i) Affixing the notice in a conspicuous place at the property from which the tenant is to be removed; ii) Delivering a copy to the person there residing, if such person can be found; and iii) Mailing a copy to the tenant at the property address. (Code of Civil Procedure section 1162.) COMMENTS : Under existing law, before a landlord can initiate an unlawful detainer (UD) action to regain possession of the rented property, the landlord must serve notice upon the tenant that he or she has violated a term of the lease, thereby giving the tenant an opportunity to either correct the violation or leave the premises. The procedure serving notice upon the tenant is set out in the statute in some detail. Existing law creates a strong preference for serving the tenant in person before employing alternative forms of notice. Specifically, existing law requires that personal service be attempted at the tenant's residence and the place of business, if known. If the tenant is absent from the residence and place of business, then service may be accomplished by leaving the notice with another person of suitable age and discretion at either the residence or place of business, and then mailing a copy of notice to the tenant at his or her place of residence (i.e. "substitute service"). If the place of residence and place of business cannot be ascertained, and there is no suitable person with whom to leave the notice at either place, then service may be achieved by posting a copy of the notice in a conspicuous place at the rental property and then mailing a copy of the notice addressed to the tenant at the place where the rental property is situated (i.e. "post-and-mail" service). AB 1263 Page 4 This bill, as proposed to be amended, seeks to address a problem that arises when the existing statutory scheme is applied to a commercial tenant. According to the author, in residential evictions, the existing law does not present a problem, since the landlord obviously knows the tenant's place of residence. However in the commercial context, the author contends, the landlord typically has no reason to know the personal residence of the commercial tenant - unlike the residential context, when the rental property and the place of residence are one and the same. The author seeks to correct this problem by eliminating from the existing statute all references to attempting personal service or mailing notices to "the residence" or "place of business" and instead requiring that personal service be attempted at, or any required mailings be sent to, the rented "property." Proposed Amendments Remove Opposition : As currently in print this bill would have changed existing law so that it would have applied to both residential and commercial tenants, thereby eliminating the existing requirement that landlords first attempt personal service at both the residence and place of business of a residential tenant. Not only was this apparently not the author's intended purpose, the bill in print was opposed by the Western Center on Law and Poverty and California Rural Legal Assistance on the grounds that it would weaken the law's long-standing and well-established preference for personal service, especially for residential tenants. In response to this concern, and to better reflect the author's original concern, the bill now specifies that the proposed change applies only to commercial tenants. In addition, the bill in print had two other provisions that engendered some opposition, and which will be removed. The bill in print would have provided that the mailings required under the forms of alternate notice would be sent to rental property and any alternate address that the tenant may have designated in writing for this purpose, and which was acknowledged by the landlord in writing. However, in the commercial context that this bill addresses, this simply would have created an additional and unnecessary mailing at odds with the underlying purpose of the bill. In addition, the bill in print - apparently to assuage concerns about failing to provide personal service to residential tenants - would have required process servers to attest under penalty of perjury that they had exercised "reasonable diligence" in their attempt to obtain personal service. However, it became apparent that this AB 1263 Page 5 change was at odds with existing case law, would have prompted opposition from the process servers' organization, and, again, would have created an added burden at odds with the purpose of the bill. The proposed author amendments, below, appear to remove all opposition. ARGUMENT IN SUPPORT : The author states that the bill is necessary to provide landlords with a reasonable method of serving notice on commercial tenants, whose residential addresses are often unknown to the landlord. AUTHOR'S PROPOSED AMENDMENTS : In light of the above considerations, the author will accept the following amendments in this Committee: Amendment 1 On page 2, before line 1, insert: Section 1162 of the Code of Civil Procedure is amended to read as follows: 1162. (a)Except as provided in (b), the notices required by Sections 1161 and 1161a may be served,eitherby any of the following methods : (1) By delivering a copy to the tenant personally;or, (2) If he or she is absent from his or her place of residence, and from his or her usual place of business, by leaving a copy with some person of suitable age and discretion at either place, and sending a copy through the mail addressed to the tenant at his or her place of residence;or, (3)If such place of residence and business can not be ascertained, or a person of suitable age or discretion there can not be found, then by affixing a copy in a conspicuous place on the property, and also delivering a copy to a person there residing, if such person can be found; and also sending a copy through the mail addressed to the tenant at the place where the property is situated. Service upon a subtenant may be made in the same manner. (b) The notices required by Section 1161 may be served upon a commercial tenant by any of the following methods: (1) By delivering a copy to the tenant personally. AB 1263 Page 6 (2) If he or she is absent from the commercial rental property, by leaving a copy with some person of suitable age and discretion at the property, and sending a copy through the mail addressed to the tenant at the address where the property is situated. (3) If a person of suitable age or discretion can not be found at the rental property, then by affixing a copy in a conspicuous place on the property ,and also sending a copy through the mail addressed to the tenant at the place where the property is situated. Service upon a subtenant may be made in the same manner. (c)For purposes of subdivision (b), "commercial tenant" means a person or entity that hires any real property in this state that is not a dwelling unit, as defined in subdivision (c) of Section 1940 of the Civil Code, or a mobilehome, as defined in Section 798.3 of the Civil Code. REGISTERED SUPPORT / OPPOSITION: Support California Apartment Association (for prior version only) California Association of Realtors (for prior version only) Opposition None on file (as proposed to be amended) Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334