Page 6
— Property Management Quarterly — February 2015
O
nce upon a time, a tenant
failed to pay rent, and so the
story goes. Unfortunately,
commercial property own-
ers and managers are all too
familiar with this tale, and rarely,
if ever, does it end happily. Instead,
in most instances, landlords are
left holding the proverbial bag after
spending significant sums on attor-
ney fees and writs of restitution in
order to retake possession of their
leased property, monies that they will
unlikely recoup from their defaulting
tenants. Moreover, landlords are then
left to mitigate their own damages
by finding a new tenant, ultimately
resulting in additional commission
and tenant improvement costs, which
also are unlikely to be recovered.
Property managers with any level of
experience know that once a deter-
mination is made to proceed with
an eviction action, the first step in
the process is to serve the default-
ing tenant with a statutory notice
and demand for compliance or pos-
session, or what is more commonly
known as a “three-day demand.”The
three-day demand is a condition
precedent to an eviction action, which
often is considered trivial and given
little thought. The Colorado Forcible
Entry and Detainer Statutes, which
dictate the permitted bases and pro-
cess for evicting a tenant, include spe-
cific requirements and time frames.
In order to prevail on a claim for pos-
session of leased property, one must
strictly comply with each require-
ment.
Furthermore, and particularly in the
context of a commercial lease, a lease
may include added requirements that
must be satisfied in addition to the
statutory require-
ments in order to
prevail on a claim
for possession. A
three-day demand,
which strictly com-
plies with both
the statutory and
lease requirements,
is essential to the
eviction process,
and a misstep could
result in additional
costs and signifi-
cant delays.
By way of exam-
ple, in a contested-
eviction action, the failure of a land-
lord to deliver a copy of the three-day
demand in compliance with the
notice provisions of the subject lease,
which could, for example, require a
certified mailing, and in compliance
with the applicable statute, which
generally requires posting or hand
delivery to the leased property, could
result in the court’s ruling in favor of
a defaulting tenant at a possession
hearing.
For reference purposes, an uncon-
tested-eviction action usually takes
three to four weeks, beginning from
service of a three-day demand and
concluding upon restoration of pos-
session of leased property to a land-
lord by the sheriff. If a landlord is
forced to restart the process by serv-
ing a new three-day demand after
losing at a possession hearing for
failure to give proper notice, the extra
step could add three weeks to the
eviction process, increasing the time
frame for obtaining possession of the
leased property from three to four
weeks to six to seven weeks.
Perhaps even more disturbing is
the possibility that a defaulting, non-
paying tenant who is successful at a
possession hearing on the basis of a
notice technicality could be entitled
to an award of its attorney’s fees and
costs on the basis of a “prevailing
party” contract clause contained with-
in the lease, which is not an uncom-
mon provision. Needless to say, this
would be a less than desired result.
Avoiding the Pitfalls
The pitfalls of a noncompliant
three-day demand can, in most
instances, be avoided by following
these simple steps:
1. Review the default section of
the lease to confirm whether a ten-
ant must be given a demand letter
before being served with a three-day
demand. Remember that a three-day
demand is served after a default has
occurred. In a well-negotiated lease,
a tenant may be entitled to written
notice that rents have not been paid
and given an opportunity to cure
before the tenant is considered to be
in default.
2. Review the notice section of the
lease to determine whether the three-
day demand must be served on the
tenant by mail or any other method
in addition to the statutory require-
ments. Generally, posting or hand-
delivery to the leased property is the
common method.
3. Review the lease to determine
whether the statutory three-day peri-
od was extended by the agreement
of the parties. The three-day statu-
tory period may never be waived or
reduced by the agreement of the par-
ties, but it may be extended. Although
this type of language is rare, it’s some-
thing that should be considered.
4. Review any personal guarantees
to confirm whether the guarantors
are entitled to receive a copy of the
three-day demand, and, if so, how
notice is to be given.
5. Be sure that the three-day
demand complies with C.R.S. § 13-40-
106, which requires, among other
things, that the demand be in writing;
describe the grounds of the landlord’s
right to possession, identify the leased
property, specify the time when the
property must be surrendered; and be
signed by the party claiming posses-
sion or his agent or attorney.
6. Perhaps more obvious, but
must be stated for the purpose of
being comprehensive, the three-day
demand should identify the tenant
and all persons entitled to possession
of the leased property.
7. Finally, and perhaps most impor-
tantly, if a landlord intends to pursue
a tenant for rents accruing for the
balance of the lease term, the three-
day demand should make it clear
that although the tenant’s right to
possession will terminate if the ten-
ant fails to cure within the three-day
period, the tenant’s obligations for
rents accruing for the balance of the
lease term will remain in full force
and effect.
At the end of the day, an eviction
cannot be filed until after a three-
day demand, which complies with
the lease and the statute, is properly
served. Preparing a three-day demand
does not require a magic wand or
a fairy godmother, but an oversight
could cost time and money, both of
which become precious commodities
when a tenant defaults.
s
Legal
Amanda H.
Halstead, Esq.
Member, Mills,
Schmitz, Halstead,
Zaloudek LLC,
Denver
