Arizona law authorizes commercial property landlords to take possession of leased premises under certain conditions. According to A.R.S. § 33-361(A), the landlord may enter and seize the leased property if the tenant fails to pay rent for five days after it has become due or violates another provision of the lease. Alternatively, the landlord may file an action to reclaim possession of the premises. Unlike residential leases, which prohibit a landlord from engaging in self-help or retaliatory measures such as locking out a tenant or shutting off utilities, commercial landlords have several options in handling tenants who have defaulted.
Lien on personal property. In addition to repossessing the premises, the landlord is permitted to seize the personal property of the tenant on the premises as security for the rent owed to the landlord. If the tenant does not satisfy his rent obligation within 60 days of the landlord’s seizure, then the landlord is permitted to sell the property so long as he or she adheres to the time and notice requirements specified in A.R.S. § 33-1023. The personal property on the premises must be owned by the tenant in order for the landlord to sell it. The landlord has similar rights with respect to the confiscation and sale of property if a sublessee or assignee is in control of the premises and fails to pay rent.
Action for recovery. If the landlord opts to pursue an action for forcible entry to recover the premises, such action should be brought before a court between five and thirty days after commencement. During such action, the court determines who is in possession of the premises, and can grant damages and fees related to the action.
When evaluating the best course of action when a default occurs, the landlord should consider several factors pertaining to the tenant. For example, the landlord should ensure that the lease does not forbid repossession by the landlord through a lock out. If the lease does not expressly prohibit a lockout, it is important to determine whether there are criteria that must be satisfied to proceed with a lockout, such as proper notice. Finally, if the lockout will result in a breach of the peace, it is not a lawful remedy for the violation of a lease. The landlord could even incur civil liability if unnecessary force is used to repossess the premises.
Chernoff Law handles business and real estate litigation matters throughout Arizona. Contact us by calling 480-719-7307 to discuss your legal matter.