Court Holds That a Lease May Not be Forfeited Unless There is a Material Breach

In Boston LLC v. Juarez, a California Appellate Court held that a lease may not be terminated unless the tenant materially breaches it.  In Boston, defendant entered into a rental agreement with the plaintiff.  That agreement required the tenant to obtain and pay for renters’ insurance.  He failed to do so.  The agreement provided that “Any failure of compliance or performance by Renter shall all Owner to forfeit this Agreement and terminate Renter’s right to possession.”  Relying on that provision, plaintiff filed an unlawful detainer action.  Defendant opposed that lawsuit on the basis that the failure to purchase insurance was not a material term.  The trial court found in favor of plaintiff finding that the forfeiture clause rendered all breaches of the Agreement material.  The appellate division of the Los Angeles’ Superior Court affirmed holding that the forfeiture clause compelled judgment in favor of the plaintiff.  The court held that under the lease, evidence concerning the materiality of the breach was irrelevant.

The tenant appealed the decision to the California appellate court.  The appellate court reversed the trial court’s decision and held that in order to terminate a lease, the breach must be material.

Shannon B. Jones, Partner, sbj@sbj-law.com