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  • Writer's pictureDavis Yu

California Eviction Moratoriums: Guidelines for Commercial Tenants

September 16, 2020



AB 3088, or the COVID-19 Tenant Relief Act of 2020 (Tenant Relief Act), recently passed on September 1, 2020, which provided residential tenants financially impacted by COVID-19 with extended relief from rental payments and evictions. Refer to our recent blog post for more information about the Tenant Relief Act. This legislation, however, only applies to residential tenants. But what guidelines can commercial landlords and tenants refer to?


With the expiration of the statewide moratorium that applied to both residential and commercial properties, cities and counties that passed their own local eviction moratoriums prior to September 1, 2020 may afford commercial tenants additional protections. The Tenant Relief Act will continue to uphold existing local moratoriums until they expire, but any extensions or new local ordinances must align with the current regulations provided in the Act.


As such, landlords may initiate unlawful detainer (i.e. eviction proceedings) actions unless they are subject to a local moratorium that protects commercial tenants from evictions.


The following list of counties and cities have existing eviction moratoriums that apply to commercial properties and have yet to expire:


Los Angeles County


The LA county temporary moratorium prohibits a countywide ban on evictions of commercial tenants until September 30, 2020. County moratoriums will apply unless a city has passed its own moratorium. Commercial tenants may not be evicted for nonpayment of rent due to a COVID-19 related reason.


The county moratorium does not apply to commercial renters that are multi-national, publicly-traded, or contain more than 100 employees. Commercial tenants with 9 or fewer employees will have up to 12 months after the end of the moratorium to repay rent. Commercial tenants with 10 or more employees but less than 100 have up to 6 months following the end of the moratorium to make past due rental payments in equal payments.


City of Los Angeles


The city of Los Angeles enacted an ordinance that prohibits landlords from evicting commercial tenants if they are able to demonstrate financial hardship related to COVID-19. Such hardships include loss of income due to workplace closures, child care expenses, or health care expenses related to COVID-19 or caring for a family member ill from the virus. During the emergency period, no interest or late payments may be incurred.


For commercial tenants, the local ordinance expires 3 months after Mayor Garcetti’s emergency declaration expires and missed rental payments must be paid.


Costa Mesa


Costa Mesa enacted a temporary eviction moratorium that prohibited commercial landlords from initiating eviction proceedings or taking other steps to evict a tenant for nonpayment of rent if the tenant has been financially affected by COVID-19. The moratorium will remain in effect until the State-declared emergency has been lifted.


The tenant must provide written notice and documentation that he or she has experienced a substantial loss of income specifically due to COVID-19 within 30 days after the rent is due. Any missed rental payments must be fully paid within 120 days after the State-declared emergency order has been lifted.


Fullerton


Under Fullerton’s eviction moratorium, commercial tenants who are unable to pay rent must demonstrate substantially decreased income as a result of COVID-19. Such documentation may include letters from clients or customers citing COVID-19 as a reason for reducing or cancelling purchase orders, requests for services-for-hire, or other profit-generating contract. Although non-profit tenants are not expressly considered in the ordinance, they are considered business tenants. The city’s moratorium is set to end on September 30.


San Diego City


The San Diego City Council passed a city wide ban on evictions through September 30. For any rent due on or after March 12, 2020, a landlord cannot evict a tenant if he or she is financially affected by COVID-19. Any and all unpaid rent must be paid up to 6 months from the date the ordinance is effective or the date Governor Newsom’s executive order has expired, whichever event occurs sooner.


City and County of San Francisco


Mayor Breed enacted a temporary moratorium for the city and county that sought to protect small to medium-sized businesses from evictions due to the economic impacts of COVID-19. The temporary moratorium is set to expire on September 30. The moratorium applies to commercial tenants, subtenants, and month-to-month or holdover tenants. In order to be protected under the county’s moratorium, the commercial tenant must be registered to do business in San Francisco and has $25 million or less in combined worldwide gross receipts for tax year 2019.


After meeting the two requirements, a landlord cannot evict and must provide written notice of nonpayment to a tenant who has missed rental payments between March 17 and September 30, 2020. Additionally, the landlord must provide the tenant with an opportunity to cure the violation of at least 30 days from the time the tenant receives notice. Should a tenant be unable to cure the violation within the specified time frame, he or she will be required to provide documentation of financial impact due to COVID-19, which will likely result in potential extensions of the cure period by at least one month.



Conclusion


With the recent issuance of the Tenant Relief Act and the Centers for Disease Control and Prevention’s (CDC) nationwide moratorium on evictions, commercial tenants are not covered. Consequently, commercial tenants may turn to their respective local ordinance to seek additional protections from evictions.


Most counties and cities commonly encourage open communication between landlords and tenants to disclose financial hardships, provide necessary documentation and written notice if necessary, and discuss potential plans for repayment. Federal, state, and even local regulations regarding evictions not only contain specific requirements for both landlords and tenants, but also have the potential for revisions and extensions. Be sure to stay up to date with your applicable county or city ordinance.


At DY LAW, APC, we are prepared to review any existing lease agreements, draft amendments to take into consideration accommodations including repayment plans, and answer any other questions regarding your legal rights and obligations.




This article is specific to the laws of the State of California and is intended for informational purposes only. The article should not be construed as legal advice or a legal opinion based on any specific facts or circumstances. For specific questions related to this article, please contact an attorney.



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