Boston LLC v. Juarez

Facts: A landlord rents a residential apartment unit to a tenant. The rental agreement calls for the tenant to obtain renter’s insurance. A forfeiture clause in the rental agreement states the tenant’s right to possession may be terminated due to any failure to perform. The tenant fails to obtain renter’s insurance for more than fifteen years and the landlord issues a three-day notice to perform or quit. After the three-day notice expires, the tenant obtains renter’s insurance. The landlord sues for unlawful detainer (UD).

Claim: The tenant seeks to maintain their tenancy, claiming the breach of the insurance clause in the rental agreement is not a sufficient reason to evict since failure to purchase renter’s insurance is immaterial to the landlord as it does not cause them any direct harm.

Counterclaim: The landlord claims the tenant is unable to challenge the validity of the UD action since the rental agreement contains a forfeiture clause allowing the landlord to terminate the tenancy for any failure to perform.

Holding: A California court of appeals holds the landlord may not evict the tenant in spite of the forfeiture clause since the tenant’s breach of the rental agreement’s insurance clause is immaterial to the landlord as the obligation to obtain renter’s insurance protects only the tenant and has no effect on the landlord. [Boston LLC v. Juarez (February 25, 2016) __CA4th__]

Read the case text.