If suit is brought to collect rents owed by a tenant, there is a court procedure in California that can secure the tenant obligation before the landlord obtains judgment. It is called a Pre-Judgment Writ of Attachment. The term "Pre-Judgment," is merely descriptive.
A Writ of Attachment is a court order, obtained upon application by the plaintiff, (landlord), at any time after the filing of the complaint and before judgment or dismissal, which will allow the landlord to take possession of the tenants assets in order insure payment on the judgment once the landlord goes through the litigation process and obtains judgment. The Writ can be used to obtain funds in a tenants bank accounts or to take possession of cars, boats or any other asset that might secure the judgment.
Obtaining a Writ of Attachment can be a very effective tool in persuading a tenant to settle the lawsuit or of course, will significantly increase the landlord's chances of actually collecting rents rather than just obtaining a worthless judgment.
Actually getting the order, is not a mere matter of right in favor of the landlord, but can be obtained only in situations in which the landlord can convince the court that the landlord will probably prevail in the suit in the amounts that the landlord seeks in the Writ application. This is a significant burden of proof at such an early stage of the litigation and courts are leary of allowing the landlord to take the tenant's assets before judgment unless the court is pretty certain that the landlord will prevail at the time of judgment.
Cost of pursuing a Writ of Attachment is also a significant consideration and is not likely a recommended procedure unless significant tenant assets have been identified that can be subject to a Writ of Attachment. In addition to having substantial facts in favor of the landlord, significant attention to detail and argument, including persuasive declarations need to be prepared and submitted to the court. The landlord also needs to be credit worthy in order to obtain a bond that is required by statute. The total cost of obtaining and enforcing an effective Writ of Attachment could range from as low as $2,000.00 to as high as $10,000 or more.
Finally, it should be noted that a Writ of Attachment is not enforceable and will have no legal effect in the event that the tenant files for bankruptcy protection.
Very good comment Mike. I think that the increase in suits against brokers is a natural consequence of the worsening economy and the need of many people to blame others for their own failures. However, it is likely that many brokers do share some culpability.
I recently received a new case where the tenant received 12 months free rent in lieu of tenant improvement costs and when they were required to start paying rent, they didn't. They are now 4 months in arrears and one of the first things I thought of was the potential liability of the brokers. The default was so blatant, you have to wonder what the brokers knew or didn't know at the time of the lease. The broker is not necessarily a target, but it would be fair to say that the broker is on my radar screen. I am not about to file suit against the broker on mere suspicion, however, if, in my research and discovery I find that the broker(s) were aware or should have been aware that fraudulent information was given to the landlord or information should have been disclosed, I wouldn't hesitate to file suit against the broker.
Posted by: Howard F. Kline | January 21, 2009 at 07:53 AM
Our Firm is a Professional Liability (E&O) Broker specializing in commercial real estate. One further note to your article worth considering is that we are seeing an uptick in claims against our brokers when tenants fail to pay rents. This is based on the assumption that the broker should qualify tenants. Although, the concept doesnt seem fair, we are seeing such suits and a lot a legal expenses paid in such matters even if the landlord is not successful. Please feel free to contact me if you have any questions please feel free to call me
Mike Smith
Axis Insurance Services LLC
[email protected]
www.axisins.com
Posted by: Mike Smith | January 21, 2009 at 05:09 AM