Twitter sued by landlord for allegedly not paying rent | CNN Business

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A business owner is suing Twitter for breach of contract after the company allegedly failed to pay rent for one of its offices in San Francisco.

The lawsuit concerns Twitter’s office space at 650 California Street, not its main headquarters on Market Street. But it comes after media reports last month said new Twitter owner Elon Musk had stopped paying rent for Twitter’s global office space, including its headquarters, and had told employees not to pay the company’s vendors, in an apparent effort to cut costs. Musk acquired Twitter for $44 billion, including a substantial amount of debt financing.

According to a copy of the complaint filed last week in California Superior Court in San Francisco, Twitter failed to pay $136,260 in rent for its office at 650 California Street. That prompted a notice from the owner on December 16, giving Twitter five more business days to make the payment or risk default.

Columbia REIT – 650 California, LLC’s complaint asks the court to order Twitter to pay unpaid rent plus interest, as well as the landlord’s attorneys’ fees. A spokesman for Columbia REIT, also known as Columbia Property Trust, declined to comment. Twitter, whose communications staff was cut by Musk after he took over the company, did not immediately respond to a request for comment.

Columbia oversees more than a dozen offices in Boston, New York, San Francisco and Washington, DC, according to its website.

Daniel Bornstein, a San Francisco real estate attorney who represents property owners in landlord-tenant disputes, said the complaint could be the first of many to drop if Musk waives some of the obligations. Twitter financials.

But because of Musk’s status as one of the world’s richest people, he said, office space owners won’t be averse to pushing him too hard. Musk’s deep pockets make Twitter a lucrative tenant, at least when he pays or is forced to pay. But landlords who overplay their hands risk having Musk walk away from the leased spaces altogether, leading to a costly extended vacancy of the properties, an even worse outcome for the landlords than having to chase payments in court.

In last week’s complaint, Columbia could have asked the court to evict Twitter, Bornstein said, but chose not to, suggesting the landlord still values ​​Twitter as a tenant.

“What Elon may be doing by not paying the rent is signaling that he’s really interested in renegotiating the terms of the lease,” Bornstein said. (The New York Times reported last month that Musk hopes to renegotiate or opt out of some of his office leases.)

Carl Tobias, a law professor at the University of Richmond, said the lawsuit is a natural consequence of Musk’s refusal to pay.

“Litigation is a normal and expected action that occurs when a tenant has a lease and fails to pay the rent required by a valid contract with the landlord,” Tobias said. “These types of disputes are often settled without litigation, to avoid litigation costs and bad publicity.”

It was expected, he added, that a landlord would seek attorney’s fees in addition to unpaid rent when the landlord had exhausted other efforts to seek payment.