Client Alert

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Daniel M. Engler
415.262.5134

Photo of Alicia N. Vaz

Alicia N. Vaz
310.284.2273

Real Estate

SF Bay Area Shelter in Place Order

Effective as of 12:01 a.m. on March 17, 2020, six Bay Area counties, including San Francisco, Alameda, Contra Costa, Marin, San Mateo and Santa Clara, as well as the neighboring county of Santa Cruz, began to enforce “shelter in place” orders in an effort to slow the transmission of the COVID-19 virus (the “Orders”) and “flatten the curve.” The Orders require individuals to remain in their residences as much as possible unless they are performing certain defined Essential Activities or Essential Governmental Functions, or operating Essential Businesses. The Orders are substantially the same for each of the counties and will continue through April 7, 2020, unless rescinded, extended, or amended.

All “non-essential” businesses are required to take steps for their employees to comply with the shelter-in-place mandate and to facilitate their employees to work from home remotely to the extent possible. All other operations of these non-essential businesses are required to cease, except for certain “Minimum Basic Operations” specified in the Orders. These Minimum Basic Operations include, for example, activities to maintain the value of inventory, ensure security, process payroll and other employee benefits and facilitate remote work by employees.

All services needed to ensure the continued operation of government agencies and to provide for the health, safety and welfare of the public, including the services provided by first responders, law enforcement and court personnel, are exempted from these restrictions.

The Orders also permit what is described as “Essential Businesses” to continue to operate, provided that they comply with certain social-distancing measures to the greatest extent feasible, such as maintaining a six foot distance form others, cleaning frequently touched surfaces often, washing hands with soap and water for at least twenty seconds and not shaking hands. Some of the enumerated Essential Businesses set forth in the Orders include:

  • Healthcare providers and suppliers;
  • Essential infrastructure, including public construction, construction of housing (in particular affordable housing or housing for individuals experiencing homelessness), public transportation, utilities, communication systems, and waste removal;
  • Grocery stores, including stores that sell both groceries and non-grocery products;
  • Newspapers, television, radio, and other media services;
  • Banks and related financial institutions;
  • Businesses providing mailing and shipping services;
  • Educational institutions, for purposes of facilitating distance learning or performing essential functions;
  • Restaurants and other facilities that prepare and serve food, but only for delivery or carry out;
  • Businesses that supply products needed for people to work from home;
  • Businesses that supply other essential businesses with the support or supplies necessary to operate;
  • Businesses that ship or deliver groceries, food, goods or services directly to residences;
  • Airlines, taxis, and other private transportation providers providing transportation services necessary for essential activities;
  • Home-based care for seniors, adults, or children;
  • Residential facilities and shelters for seniors, adults, and children; and
  • Professional services, such as legal or accounting services, when necessary to assist in compliance with legally mandated activities.

Although the Orders provide a lot of guidance, they also raise a number of important questions for real estate businesses operating in any of these counties.

For all non-essential businesses, employers are left wondering what they can and cannot do with respect to the wages and benefits of employees who cannot work remotely particularly as those employers may suffer adverse economic consequences as a result of the restrictions on their operations.

Landlords and tenants are grappling with how to address rent payment obligations of tenants operating non-essential businesses where remote working is not feasible or results in a substantial decrease in productivity and rent cannot be met. The Orders also raise questions as to continued contractual or payment obligations to property managers, contractors and vendors who perform building services and maintenance that are not essential or which may not be needed while businesses operate remotely.

For construction projects, the Orders appear to exempt all housing projects, but do create some ambiguity by calling out affordable housing and housing to combat homelessness. And, what about projects that are part residential and part commercial? Are they also exempt? These Orders also raise questions about what rights and obligations owners, contractors and subcontractors may have for projects that must cease in order to comply with the Orders or where certain of those parties determine that they will not provide construction services during this pandemic out of concern for their own employees even if not prohibited by the Orders.

Another important issue to be considered in addressing the issues raised by the Orders, is the repercussions and risks associated with the failure to comply with the restrictions. 

Cox Castle has created a Task Force to analyze these difficult issues and other questions that arise as a result of the COVID-19 pandemic.  If you have any questions about these Orders or responding to the COVID-19 pandemic more generally, please let us know.

ORANGE COUNTY
3121 Michelson Drive, Suite 200
Irvine, CA 92612

949.260.4600    949.260.4699

SAN FRANCISCO
50 California Street, Suite 3200
San Francisco, CA 94111

415.262.5100    415.262.5199