California real estate law, and often commercial rental agreements, provide the tenant with a right of quiet enjoyment. This means that the landlord promises that during the term of the tenancy no one will disturb the tenant in the tenant's use and enjoyment of the premises.
If the covenant of quiet enjoyment is breached, the tenant has a choice- he can stand on his lease and sue for damages, or vacate the premises and claim constructive eviction. A 1994 Third District decision found that the a Lease provision prohibited the lessee's claim for constructive eviction, restricting his rights to a claim for damages or injunctive relief. While this is bad for tenants, the law is clear, and Commercial landlords and tenants entering leases should consult with an experienced Sacramento real estate and leasing attorney to be fully advised as to the terms of their contracts.
In Lee v. Placer Title Company Placer was the tenant in a shopping center. Their premises were next door to a dry cleaners. Placer claimed that cleaning fumes made the office unusable, stopped paying rent, and vacated the premises. Lee sued for the balance of the rent owed on the lease as damages. Placer raised, as a defense, constructive eviction.
The lease provision which covered landlord defaults stated:
"In no event shall Tenant have a right to terminate this Lease as a result of Landlord's default and Tenant's remedies shall be limited to damages and/or an injunction."
The court first noted that the covenant of quiet enjoyment is codified in California at Civil Code section 1927. But this covenant may be waived by the parties; another code section (3268) provides that some statutes are subordinate to the intention of the parties. Here, the parties modified the covenant by limiting the tenant's remedies to damages or an injunction only- they cannot terminate the lease. Thus, the tenant could not vacate the premises and assert a constructive eviction defense.
This language is a boon for landlords, and a bust for tenants. If a tenant could prove interference with their use of the premises, the likely result would be reduction of rent for the duration of the interference. Meanwhile, the tenant is stuck with the premises though it may be difficult to do business. They may have to set up shop temporarily elsewhere, a digester for a retail location, and an additional expense (though the expense could be included in damages.)