Lockout by Landlord for Breach of Commercial Lease

Question: We own a small industrial building in Gilbert with one tenant. Under our lease there is a clause that prohibits the storage of poisonous and noxious chemicals in the building. We became aware that our tenant was storing large containers of sulfuric acid in the building. We then gave our tenant the 10-day written notice to correct the problem as required by the lease. On the 10th day the tenant said that the large containers of sulfuric acid had been removed. However, I inspected the premises last night and the large containers were still there.

Can we lock out the tenant now? This tenant has been a big problem for us, and I would like to find another tenant anyhow.

Answer: If there is a breach in a commercial lease that is not timely cured after notice from the landlord, the landlord generally has two options. One, lock out the tenant or, two, file a lawsuit to get a judge to order an eviction of the tenant. Most lawyers rarely recommend to landlords that the tenant be locked out. The main reason is that the benefits of quickly recovering possession of the leased property, and being able to hold the tenant’s assets until the deficient rent is paid, are generally outweighed by the potential liability of the landlord if the lockout is wrongful.

For example, in your situation you said that the large containers were still there; but could the large containers be empty of any sulfuric acid? If so, any lockout of the tenant would probably be wrongful. In that event you could be liable to the tenant for the destruction of his business, damage to any personal possessions of the tenant and his employees, damage to any third parties’ property that is leased to the tenant, e.g., copying machines, and attorneys’ fees and court costs.