With so many businesses affected by COVID-19 emergency orders, an increasing number of commercial properties will be vacated by tenants who leave without taking all their equipment, furniture, supplies, or other personal property. At the same time, the courts’ efforts to combat the coronavirus has created unavoidable delays in obtaining a judicial order. These circumstances can tempt a commercial landlord to use “self-help” to clean out the property and clear out the items that a tenant has left behind.
The term self-help commonly refers to acting without a court order to evict a tenant or in removing, discarding, destroying or interfering with a tenant’s access to their belongings. Self-help remedies are risky and potentially expensive. If abandoned personal property is not handled properly, the landlord could be sued and found liable for triple the amount of a tenant’s actual damages, including the value of the discarded items and lost profits, plus the tenant’s attorney fees. A commercial landlord may also be exposed to the claims of other parties, such as secured creditors who have a legal interest in the abandoned items. Before proceeding with self-help, a landlord should make sure that their actions will comply with the terms of the lease and the laws of the state.
Unlike many other states, Indiana law does not prohibit a commercial landlord from using self-help to deal with personal property that a tenant has abandoned. Nevertheless, if a lawsuit is filed by the former tenant, the court will still take a very dim view of any self-help methods the landlord used. From a different perspective, the judge or jury may not see the actions taken as reasonably as the landlord did. Commercial self-help in some circumstances can be defended, such as when proper notice is given under the lease and no damages results or when it prevents other damage to the personal property or the premises. More often, the cost and time spent in securing a court order is a better choice than taking the risk of paying a judgment in favor of the tenant.
Commercial landlords in Michigan are effectively prohibited from using any self-help. Under the anti-lockout statute, a landlord may lawfully interfere with a tenant’s right to possession of the premises only when the landlord:
(1) believes in good faith that the tenant abandoned the property; and
(2) after diligent inquiry, had reason to believe that
- (a) the tenant does not intend to return, and
- (b) current rent is not paid.
Michigan’s anti-lockout statute does not offer a bright-line test, but the courts review the question of abandonment with a very fact-specific approach. To support a landlord’s good faith belief that a former tenant has abandoned personal property, there must be evidence of the tenant’s intention to relinquish the property and evidence of external acts that put that intention into effect. Courts will look to indicators such as whether the premises were empty on multiple occasions, whether utility services had been disconnected by the tenant or for non-payment, whether the grass had gone uncut, whether the trash had been piling up, and how much of the tenant’s business equipment and furniture was already missing.
In determining whether a commercial tenant has abandoned property, a landlord cannot rely exclusively on non-use of the premises, sporadic use, reduced hours, or even the end of normal business operations. The court will also tend to find no intent to abandon if the amount of personal property left behind is substantial or the items are particularly valuable. For these reasons, it may be very difficult to prove abandonment for any period of time spent under COVID-19 stay-at home-orders.
When dealing with a tenant’s abandoned personal property in either Michigan or Indiana, a commercial landlord should completely and meticulously document any steps taken to satisfy the law and any provisions in the lease.
This article is for information purposes only and is not intended to constitute legal advice.
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