Eviction Law for Business Owners
Most small business owners are either landlords or tenants. If so, you may have to deal with the issue of evictions, or more formally known as forcible detainer actions. The law provides very specific rules that must be followed to remove a tenant. Failure to follow these rules can subject the landlord to serious penalties.
Forcible detainer rules are different for commercial and residential properties. Residential property is governed by the Arizona Residential Landlord Tenant Act (ARLTA). However, we will discuss business tenancies for the most part, because that is the largest readership of this magazine.
The term of a tenancy is the length of time that the tenant is allowed to stay on the property. This is typically a one-year lease, but often it is a month-to-month lease. The tenancy will terminate at the end of the term and the tenant is supposed to move out. If the landlord gives written permission for the tenant to stay on the property for an additional period of time, then the tenant may stay. However, without such written permission, if the tenant with a one-year lease holds over, which means to remain in possession of the property after the end of the term, then it becomes a month-to-month tenancy.
A landlord may terminate a month-to-month business tenancy by giving the tenant a ten day written notice (30 days for residential tenants). The notice should be sent by certified mail.
If a business tenant has breached a lease by failing to pay rent or some other violation of the lease, the landlord or his agent may re-enter the property and take possession without notice. However, it may be advisable to make a written demand for payment of rent or for remedy of the breach.
The landlord may either take possession himself or may commence court action to have the tenant removed. Hearings on forcible detainers are scheduled quickly and must be heard within thirty days of filing the action. Whether a landlord should take possession himself or bring a forcible detainer action depends on the nature of the tenant and the relationship. If this is a business tenant who is simply storing supplies, for example, then it should be relatively simple to take possession and change the locks. However, if this is a restaurant and there have been heated discussions, it would advisable to file an action with the court.
After the landlord takes possession of the property he has a lien on all of the business tenants non-exempt personal property located on the premises. If the past due rent is not paid within sixty days, the landlord may sell the property to satisfy the debt.
It is important to remember that most of the above discussion involves non-residential tenancies. If you are dealing with a residential tenant, there are much greater protections for the tenant. It is recommended that you consult an attorney before any action is taken to remove a tenant. Doing so can help you avoid further headaches.