California Commercial Renters Find Relief During COVID-19
Published At: Tue, 08/04/2020 - 18:27
Relief for Renting California Office Space During COVID-19
With the continued spread of the coronavirus, many rental housing landlords and tenants have been trying to navigate through the ever-changing policies that are being put in place. The statewide stay-at-home order and critical social distancing measures necessary to prevent the spread of COVID-19 have resulted in many tenants being out of work or in jeopardy of losing their homes. Since the pandemic has taken root in California, Governor Gavin Newsom has issued two executive orders related to evictions of residents who have been affected by the COVID-19 pandemic. While these are proactive measures to assist residential tenants, the continued spread of the coronavirus and state-of-emergency guidelines continue to affect commercial renters. So what does this mean for tenants who occupy office space for rent Los Angeles and other cities?
Many commercial tenants and their businesses are at the mercy of local city or county guidelines. Perhaps they are some of the most vulnerable tenancies in the state. While each phase in the “reopening” initiative is a promise towards getting back to normalcy and allowing certain commercial properties to open based on their essential nature, of course, not all commercial businesses are seen as equal. This means that certain commercial tenants will need to prolong opening their doors, thus prolonging their income and having to figure out the new parameters of their commercial leases. So, what are California Senators doing to alleviate and protect commercial tenants and their businesses?
Relief for Commercial Real Estate Tenants
Introduced by Senators Scott Weiner and Lena Gonzalez on February 6, 2020, California Senate Bill 939 (SB 939) will provide a crucial basis for commercial tenants to seek relief and protection for their commercial leases. This bill passed the Senate Judiciary Committee by a 5:1 vote on May 29, 2020, with additional hearings scheduled for early June 2020. This bill is significant in that it states the measures that are offered to California commercial tenants and states who is eligible for this relief.
At its core, SB 939 seeks to protect commercial tenants by prohibiting eligible tenants impacted by COVID-19 to be evicted from their places of business. It also allows them additional time to pay unpaid rent accrued as a result of the state-of-emergency. In addition, as a final attempt to provide assistance to eligible commercial tenants who have absorbed the negative implications of having to abide by state-of-emergency guidelines, this bill provides them with the opportunity to modify rental agreements or terminate their leases if no agreement is made between commercial tenant and landlord within an allotted amount of time.
Eligibility for commercial tenants is outlined in a few different ways. It’s important to note that SB 939 defines commercial tenants as an eating or drinking establishment, a place of entertainment, or a performance venue that is a small business. First, a California operation that has experienced a decline of 40% or more of average monthly revenue over the two most recent calendar months when compared to before the state-of-emergency or shelter-in-place orders took effect may be eligible. Commercial tenants who are prevented or must delay from opening due to guidelines also qualify. Finally, commercial tenants whose businesses have suffered a decline of 25% or more in capacity due to compliance with an official order or guideline for preventing the spread of COVID-19 are also eligible.
Additional forms of assistance offered are retroactive voidance of any eviction notices served during a time in which a commercial tenant would have been eligible. It also prohibits landlords from willingly harassing, intimidating, threatening or retaliating against a commercial tenant with the intent to terminate the occupancy.
SB 939 is definitely a step in the right direction by California Senators to provide relief to commercial tenants. While the bill will surely go through a fine-tuning process, it will provide significant assistance to California’s businesses.