§ 1263.615.One-Year Leaseback Agreement Offered to Owner

This section gives a condemned owner a chance to stay put, at least for a while. When a public entity acquires property by eminent domain -- whether through a completed taking, after a resolution of necessity, or even before one, once the entity has given written notice it may condemn -- it has to offer the owner a one-year leaseback for the owner's continued use of the property. The owner pays fair market rent and has to meet the conditions subdivision (c) sets out. The entity can skip the offer only by stating in writing that development, redevelopment, or the planned public use will begin within two years of acquisition, or that the leaseback would create or continue a public nuisance affecting the surrounding community.

The conditions protect the entity as landlord: the owner-turned-lessee answers for any added waste or nuisance and for liability arising from continued use, the entity can demand a reasonable security deposit, the entity is indemnified against lawsuits arising from the lessee's business or use of the property, and the entity can require the lessee to carry insurance naming it as an additional insured. No further goodwill accrues during the lease, and an owner who overstays is subject to unlawful detainer like any other tenant.

The leaseback is not a one-shot deal. The entity has to offer renewal in one-year increments, adjusted for inflation, unless it again states in writing that development is coming within two years of the lease's end. It has to give that renewal offer or termination notice at least 60 days before the lease ends; the lessee then has 30 days to accept or reject, and silence counts as rejection. If the entity misses its own deadline, the lease keeps extending in 60-day increments until the entity finally makes an offer or gives notice, and a late termination notice still gives the lessee at least 60 days to leave. A holdover tenant faces both unlawful detainer and holdover damages.

Subdivision (f) keeps the leaseback from becoming a bargaining chip in the compensation fight itself: entering into it does not change the amount of compensation owed for the property being acquired.