Dr. Leevil, LLC v. Westlake Health Care Center
Facts: A landlord defaults on the mortgage encumbering their commercial property. The property is occupied by a tenant under a lease containing an automatic subordination clause. The property is later sold to a buyer at a trustee’s sale. The buyer serves the tenant with a three-day notice to quit prior to recording the transfer with the county and perfecting title. The tenant holds over and is evicted in an unlawful detainer (UD) action.
Claim: The tenant seeks to regain possession of the property, claiming the notice to quit and subsequent UD action are invalid since the notice was served prior to the buyer perfecting title.
Counter claim: The buyer claims the tenant’s lease is wiped out by the trustee’s sale since the lease is automatically subordinate to the buyer’s trust deed, and the buyer only needs to have possession of the property before serving a notice to quit.
Holding: The California Supreme Court holds the notice to quit, and thus the UD action, is invalid since it was served prior to the buyer perfecting title. [Dr. Leevil, LLC v. Westlake Health Care Center (December 17, 2018) _C6th_]
Editor’s Note — This is a reversal of a previous appeals court ruling, which held that the tenant could not regain possession since the tenant’s lease was subordinate to the buyer’s trust deed, and thus the buyer did not need to perfect title prior to serving a notice to quit.