Small-format industrial and flex space has run below the broader industrial vacancy rate since 2017 — CBRE pegged the gap at roughly 2.5 percentage points as of early 2024 — and asking rents in that segment are up more than 50 percent since 2010.[1] A landlord sitting on a long tenancy signed at 2014 rates, in a market like that, has every reason to end it and re-lease at what the space is actually worth now. A Fremont, California landlord did exactly that — twice — and the second time, the way she tried to collect the last month’s rent cost her the eviction entirely.
A written notice to terminate a commercial tenancy is not the end of the story if the landlord then deposits the tenant’s next rent check. Under California law, that deposit renews the tenancy by itself, on a month-to-month basis, no matter what the landlord privately intended or what the lease says about waiver.
The landlord had already used a termination notice to push the rent up once, and tried again nine months later. Kuang signed a one-year commercial lease for premises in Fremont in January 2014 at $1,805 a month. The parties amended the lease repeatedly over the following years, converting it to month-to-month in January 2019. In March 2022, landlord Laura Read Baca issued a 30-day notice to terminate. Kuang asked to stay, and the two sides struck an amendment that June raising his rent from $2,775 to $3,850, plus $150 in common-area charges — $4,000 a month total.[2] Six months later, on December 28, 2022, Baca issued a second 30-day notice, terminating the tenancy as of January 31, 2023. Kuang owed no back rent and had breached nothing.
She deposited the next rent check, sued the day after, and then kept depositing. On February 6, 2023, Kuang tendered his rent and CAM charges for February. Baca deposited the check the same day. The next day, she filed an unlawful detainer action alleging he was unlawfully holding over. That did not stop her property manager from continuing to invoice him for March, April, and May — and it did not stop Baca from depositing each of those checks, too. She never returned a payment, never sent a reservation-of-rights letter, and never told Kuang the money was being held as damages rather than accepted as rent.[2]
The trial court accepted her claim that intent controlled; the Court of Appeal did not. Baca testified she believed she could keep accepting rent after the notice expired and still evict Kuang — “her understanding of the law,” in her own words. The trial court agreed, holding that she had “never consented” to a renewal and awarding her possession plus $79,135.23, including $51,560 in attorney fees and $24,000 in holdover damages.[2] The Court of Appeal reversed on de novo review. California Civil Code section 1945 provides that when a tenant remains in possession after a lease expires and “the lessor accepts rent from him, the parties are presumed to have renewed the hiring” on a month-to-month basis. The question under the statute is whether the landlord accepted the payment as rent — not what she subjectively meant by accepting it. As the court put it, Baca’s intent “has no bearing on our interpretation of section 1945,” and a prior decision from the same district had already held that a landlord’s mere 30-day notice, without more, “could not have rendered [a tenant’s] continued possession ‘unlawful’” once the landlord went on taking rent.[3]
The lease’s own waiver language didn’t rescue her, because there was nothing to waive. Baca argued that a no-waiver clause in the lease preserved her right to evict despite accepting rent. That clause only waived breaches that preceded the accepted payment — and Kuang hadn’t breached anything. He owed no back rent, and the lease gave him ten days to surrender possession before failure to vacate itself became a breach; that window hadn’t closed when Baca deposited the first post-termination check. She also argued the payments were a “setoff” against holdover damages under a survival-of-obligations clause, but her own complaint had already sought holdover damages for that same period on a different theory, so the payments couldn’t be both. That left only one lease provision her acceptance could relate to: the holdover clause itself — the one that converts continued possession into a month-to-month tenancy. The court distinguished two cases Baca leaned on: one where the landlord had accepted rent before the lease expired (not after, so no renewal issue arose), and one where the landlord returned every check except a single one deposited by mistake and immediately refunded. Baca deposited four checks and refunded none.[3]
Filing suit the day after the first deposit didn’t undo it, and every check after that made it worse. The unlawful detainer action came too late to matter, since Baca had already accepted rent before she filed it. Worse, each rent payment she kept accepting while the suit was pending created its own fresh renewal presumption — meaning she would have needed a new 30-day notice to have any shot at eviction, which she never issued. The Court of Appeal reversed the unlawful detainer judgment and the $51,560 fee award outright, leaving her to start the eviction over from a fresh notice.[3]
Why this is the moment landlords are most likely to make this mistake. A landlord’s incentive to end a tenancy and reset the rent is strongest exactly where the market is tightest, and small-footprint commercial space — shallow-bay industrial, flex, small-format retail — is one of the tighter corners of commercial real estate right now, per CBRE’s data on the vacancy gap and rent growth.[1] That is the same incentive that led Baca to use a termination notice to push Kuang’s rent up once already, in 2022, before trying to end the tenancy outright in 2023. The more valuable it becomes to swap out a below-market tenant, the more often a landlord ends up managing a termination and a rent roll at the same time — and depositing a check reflexively is a mechanical mistake, not a legal judgment call.
A rent-acceptance renewal like this one sits differently than a negotiated termination buyout clause, which at least gives both sides a price for ending the deal on purpose. It’s closer in spirit to how a Florida court unwound a lease the landlord never delivered: a doctrine outside the four corners of the lease overriding what the parties thought they’d agreed to, triggered by conduct rather than by anything either side signed.
Knowing which notice is still live before the next check gets deposited#
A termination notice, a no-waiver clause, and a holdover provision can all sit in the same lease and still lose to a statute the moment someone in accounting deposits the wrong check. Acrebase extracts notice deadlines, holdover terms, and no-waiver language from every lease in a portfolio and flags when a termination notice is outstanding, so a rent payment that arrives after that date gets routed for a decision — refuse it, or send a reservation-of-rights letter — before anyone in the finance team deposits it on autopilot.
It also applies a firm’s approved clause library automatically, so the reservation-of-rights language a landlord’s counsel has actually approved gets proposed the same way on every deal, rather than depending on whether the property manager who handles a given asset has run into this problem before.
If you are a landlord, a termination notice is not self-enforcing once you take the tenant’s money: refuse any payment tendered after the notice date, or put in writing, before you deposit it, that you’re accepting it as holdover damages rather than rent. If you are a tenant, a landlord who keeps invoicing and cashing your checks after serving notice may have renewed your tenancy without meaning to — and that renewal is worth raising well before anyone files anything in court.
Footnotes
[1] CBRE, “Shallow-Bay Industrial Availability Remains Tight Amid Strong Demand” (Mar. 24, 2026) — shallow-bay vacancy has trailed the overall industrial vacancy rate since 2017, a gap CBRE measured at roughly 2.5 percentage points as of early 2024; asking rents in the segment are up more than 50 percent from 2010 to 2025, with the tightest conditions in supply-constrained markets like Orange County, CA and Charlotte. https://www.cbre.com/insights/briefs/shallow-bay-industrial-availability-remains-tight-amid-strong-demand
[2] Baca v. Kuang, 108 Cal. App. 5th 666 (Cal. Ct. App., 1st Dist., Div. 5, filed Jan. 13, 2025, certified for partial publication Feb. 10, 2025), No. A171071 — background facts on the 2014 lease, the June 2022 rent increase, the December 28, 2022 termination notice, and the four rent and CAM payments Baca deposited and never refunded between February and May 2023, plus the trial court’s $79,135.23 judgment including $51,560 in attorney fees. https://www.courts.ca.gov/opinions/archive/A171071.PDF
[3] Baca v. Kuang, 108 Cal. App. 5th 666 (Cal. Ct. App., 1st Dist., Div. 5, Jan. 13, 2025) — applying the renewal presumption in Civil Code section 1945, rejecting Baca’s no-waiver and holdover-damages-setoff arguments and her reliance on The City v. Hart (1985) 175 Cal.App.3d 92 and Kaufman v. Goldman (2011) 195 Cal.App.4th 734, and reversing the unlawful detainer judgment and the $51,560 attorney fee award. https://www.courts.ca.gov/opinions/archive/A171071.PDF
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