Cal. Civ. Code § 1954.05
California Civil Code
Operative Text
In any general assignment for the benefit of creditors, as defined in Section 493.010 of the Code of Civil Procedure, the assignee shall have the right to occupy, for a period of up to 90 days after the date of the assignment, any business premises held under a lease by the assignor upon payment when due of the monthly rental reserved in the lease for the period of such occupancy, notwithstanding any provision in the lease, whether heretofore or hereafter entered into, for the termination thereof upon the making of the assignment or the insolvency of the lessee or other condition relating to the financial condition of the lessee. This section shall be construed as establishing the reasonable rental value of the premises recoverable by a landlord upon a holding-over by the tenant upon the termination of a lease under the circumstances specified herein.
California Civil Code § 1954.05 addresses what happens to a business lease when a tenant-business undergoes a general assignment for the benefit of creditors—a formal insolvency process in which assets are transferred to an assignee for distribution to creditors. Under this rule, the assignee steps into the leased business premises for up to 90 days, so long as regular monthly rent is paid, even if the lease contains a clause that would otherwise terminate it upon insolvency or assignment. The provision also establishes that the monthly rent paid during this period counts as the legally recognized reasonable rental value for any holdover situation arising under these circumstances.
Plain English — not legal advice.
Landlords and property managers dealing with a commercial tenant that has entered a general assignment for the benefit of creditors under Cal. Civ. Code § 1954.05 should be aware that lease clauses terminating tenancy upon insolvency or assignment are overridden by this statute for up to 90 days. Compliant operators generally continue to accept the monthly rent reserved in the lease during this window and treat that amount as the established reasonable rental value for the occupancy period. Keeping clear records of rent payments received from the assignee and the date of the assignment helps document the timeline of the 90-day occupancy period.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
For tenants—or their assignees—navigating a general assignment for the benefit of creditors, Cal. Civ. Code § 1954.05 provides a statutory right to remain in the business premises for up to 90 days by paying the monthly rent specified in the lease, regardless of lease language purporting to end the tenancy upon insolvency. This means an assignee managing the wind-down of a business has a protected window to occupy the space without the landlord invoking an insolvency-based termination clause. Those involved in such proceedings may benefit from consulting a tenant-rights organization or an attorney familiar with commercial lease and insolvency law to understand how this provision interacts with the broader assignment process.
General guidance for tenants — not legal advice for your specific situation. Consult a tenant-rights organization or attorney for advice on your case.
Generated September 3, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
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