The recent case of Bank of New York Mellon v. Preciado (2014 S.O.S. JAD14-06) serves as a good reminder to commercial landlords to pay close attention to details when dealing with residential evictions. When commercial lenders take properties back by way of foreclosure, they often must deal with the unfortunate remaining task of doing an unlawful detainer on the property. Many such lenders and their property managers are not accustomed to the rigorous detail required by the statutes in such situations. The case by New York Mellon against Preciado is a good example of such a “trap for the unwary.”
California’s legislative branch has taken extensive measures to protect tenants from wrongful and improper evictions. The rules for residential landlords are rigorous. While this blog is generally dedicated to commercial lease issues, the following lessons serve as important reminders to commercial lenders and owners when dealing with residential tenants.
Lesson number one for landlord counsel in this case appears to be: never underestimate the resolve of your adversary. This case, while apparently a quick post-foreclosure eviction, turned out to be a matter that proceeded all the way through trial and up to the Court of Appeal. The trial court ruled in favor of the landlord, but the tenant did not stop upon the issuance of that ruling. The tenant’s appeal was unusual and was in fact a far more extensive step than most tenants take in residential cases. But therein lies the lesson. The fact that a tenant may be destitute should never be mistaken for a lack of resolve. Landlord counsel should always expect a tenant to seize upon legal opportunities.
Lesson number two for landlord counsel arising out of the New York Mellon case: hire competent process servers. Here, the Court ruled that service of process was ineffective where the process server posted notice and made no mention in his declaration that he at least ATTEMPTED personal service. Where service is carried out by a registered process server, Evidence Code section 647 applies to eliminate the necessity of calling the process server as a witness at trial. Landlord attorneys usually do not call their process servers as witnesses, and why should they? If the presumption protects them, why open up Pandora’s Box and put the case in a position of unnecessary risk? Well, the rule may be generally helpful to the landlord in presenting the case, but it is most certainly another trap for the unwary.
Counsel must make absolutely sure that the Process Server’s proof of service (affidavit attesting to the service) complies with legal requirements. The proof of service must demonstrate that, even if substitute service is ultimately the basis for the service, the process server at least TRIED to serve the termination notice personally. No such statement was provided in the proof of service here, so once again, the landlord lost.
Lesson number three for landlord counsel from the New York Mellon case: Be prepared to thoroughly prove up transfer of title. Post-foreclosure evictions require, as one essential element of proof, that the owner prove he/she/it owns the property. This really is not a complicated fact. But the problem arises when there has been, for example, a sale conducted other than by the trustee identified in the deed of trust, and no evidence is put forth showing authority to conduct the sale. Again, these details are often overlooked, as they were here, and careful attention must be paid on the landlord side to the issue of title, as well as all other issues discussed above.
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