Real Estate Litigation: Specific Performance of a Lease in California?
Can a tenant seek specific performance of a lease in California? A real estate attorney in Los Angeles recently filed a lawsuit for breach of contract and specific performance against my client, the landlord, for the breach of a residential lease for a single family home. The parties had entered into a lease for the home but, due to unforeseen circumstances, my client was unable to move out of the home and lease it to the intended tenant.
Along with the legal complaint, the attorney sought a temporary restraining order and mandatory injunction which sought to have the court order the landlord to vacate immediately his own home and to award possession to plaintiff. The legal question appears relatively straightforward yet novel: Could a tenant forcibly evict a landlord from his own home and force specific performance of a breached lease?
Typically the damages for breach of a lease are established by California Civil Code section 3300. That Code section provides that breach of contract damages are an amount which will compensate the aggrieved party for all the detriment proximately caused by the breach or which in the ordinary course would be a likely result.
Plaintiff’s lawyer, however, pointed to Civil Code section 3387, which states that it is to be presumed that the breach of an agreement to transfer real property cannot be adequately relieved by pecuniary compensation (i.e., money). The Code further provides that “in the case of a single-family dwelling which the party seeking performance intends to occupy, this presumption is conclusive.” Neither side in the dispute could find a case in which the court had interpreted Civil Code section 3387 to include leases rather than the purchase and sale of property.
A lawsuit for specific performance requires that a plaintiff show (1) the inadequacy of his legal remedy; (2) an underlying contract that is both reasonable and supported by adequate consideration; (3) the existence of a mutuality of remedies; (4) contractual terms which are sufficiently definite to enable the court to know what it is to enforce; and (5) a substantial similarity of the requested performance to that promised in the contract.
Although a purchase and sale contract to buy a single-family home is subject to specific performance, a lease poses different considerations. The first element of specific performance hinges on whether the legal remedy (the payment of money) is adequate to redress the wrong. In a purchase situation each home is considered unique and there are other considerations which may make money inadequate to compensate for the loss of a family home. In a home purchase the buyer could conceivably live in the home for the rest of his or her life.
However, in the lease scenario, the tenant had an agreement to lease the house for twelve months only. After the twelve month period expired, the tenant would be moving on. Moreover, in a purchase and sale agreement, the buyer takes over the care and ownership of the property. In a lease, specific performance would force the same landlord and tenant who are engaged in litigation against each other to now enter into a landlord/tenant relationship for the next year. While they had originally planned on such a relationship, the subsequent litigation would have surely soured the relationship and doomed any chance of a functional relationship over the ensuing twelve months.
Another element of specific performance is the mutuality of remedy. It is unclear whether this element is still a viable element in a specific performance action. However, it makes a certain amount of sense in a purchase and sale agreement—either the buyer or the seller can seek to specifically enforce the contract. However, in a lease, a court may not order a tenant to move into an apartment and enter into a year-long relationship with the landlord. From this perspective it is easy to conclude that a lease is not capable of specific performance by a landlord against a tenant. The remedy is money damages. Could a tenant therefore compel a landlord to enter into such a relationship via specific performance? The answer is almost certainly no if a court were to require a mutuality of remedy.
Another sticking point in this analysis is the process by which a court awards possession of real property. Typically the restoration of possession of real property is addressed in the Unlawful Detainer Act of California’s Code of Civil Procedure. Unlawful detainer is another word for eviction. Notably, the Unlawful Detainer Act only allows the eviction of a “tenant”, who is described as “any person who hires real property”. It would turn the Act up on its head if a tenant were allowed to evict his landlord.
If this case involved a commercial lease in a shopping center or industrial building, the analysis is not as compelling for refusing to order specific performance of the commercial lease. However, in the case of a residential lease, it seems that the proper remedy is still monetary damages.