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Time for the Thanksgiving Clause-Ready?

Several years ago, one of our clients received a surprise from their landlord. Apparently, a notice was delivered to their office which required a response in five days. That in and of itself should not have been an issue except for one thing: The notice was delivered the Wednesday before Thanksgiving.

Besides the unusual timing of the notice, it was addressed to the Managing Partner who had already left for an extended holiday weekend and wouldn't return until the following Tuesday.

Monday morning the property manager called with an angry tone that they had not received the response to the notice in the time frame normally permitted under the lease

and furthermore, she threatened the client with default if a response was not forthcoming by end of business day. The firm administrator, knowing this was obviously critical but that the reading of the notice and the potential response was solely the responsibility of the managing partner, immediately called IN/House for help.

There was no cause to panic.

As a standard policy for any size client, but particularly for closely held or small firms, we always request that anytime there is a notice which must be replied to in ten days or less, we request a modification in the lease that “days” refer to “business days” rather than the typical “calendar days”. Very few landlords have ever turned down that modification.

A quick call from our office to the property manager resolved the matter. When the managing partner returned, he reviewed the notice with me and a response was drafted. That scenario has since fondly been referred to as “The Thanksgiving Clause”.

Recently, Governor Brown signed into law AB2343. It deals with Unlawful Detainers, or more commonly referred to as “Three- Day Notice to Pay to Quit”, which are typically sent to a tenant who is in default of a lease for failure to pay rent or other charges due. Under the new law, if delivered to the Tenant on a Friday, a weekend day or a judicial holiday, the clock does not begin to count on those days. Rather, it begins to count on the next business day.

Until this new law goes into effect, a landlord can deliver a Three-Day Notice on a Friday. This would not only put the tenant in default by Monday but would also not afford the tenant the opportunity to seek proper legal representation.

In reading the law, as a layman, it does not differentiate between residential and commercial leases. The assumption is that it is applicable to both. There is no stipulation that other time sensitive notices have to rely on the same framework noting that all “days” would refer to “business” days. This might be an interesting first impression case down the road for the courts.

In the meantime, IN/House’s “Thanksgiving Clause” becomes a California law on September 1, 2019.

What does your lease say?

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