January 27, 2023

Volume XIII, Number 27

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If A Lease Is Not "Valid", Is It Void or Voidable?

Justice Ignazio ("Nace") John Ruvolo once observed that the "Illegality of contracts constitutes a vast, confusing and rather mysterious area of the law."  McIntosh v. Mills, 121 Cal. App. 4th 333, 344 (2004).  One confusing or mysterious question is when a a statute declares an agreement not "valid", is that agreement void or voidable?

"For Ninety Nine Years Is Almost For Life"

Tufeld Corp. v. Beverly Hills Gateway, L.P., 2022 WL 17482205, involved a dispute over a long-term lease.  The term of the lease was in fact so long that it violated Civil Code Section 718 which provides in relevant part: "No lease or grant of any town or city lot, which reserves any rent or service of any kind, and which provides for a leasing or granting period in excess of 99 years, shall be valid."  The question before the Court of Appeal was whether the lease was void or voidable.   A void contract has no legal effect whereas a voidable contract, in contrast, is one in which one or more parties have the power, by a manifestation of election to do so, to avoid the legal relations created by the contract, or by ratification of the contract to extinguish the power of avoidance.  

In Tufeld, the Court of Appeal did not find the entire lease to be either void or voidable pursuant to Section 718.  Rather, the Court of Appeal agreed with the trial court that only the period of the lease longer than 99 years is void.  To arrive at this conclusion, the Court of Appeal engaged in an extensive analysis of legislative history, tracing Section 718 back to California's adoption of English common law.  See Ahistorical Bedfellows: The California Corporations Code And The Common Law

© 2010-2023 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XII, Number 342
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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
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Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

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