Client Alert

Cities of Los Angeles and San Francisco Announce Moratoriums on Commercial Tenant Evictions

In the continuing efforts to slow the spread of the COVID-19 coronavirus (“COVID-19”) in California and beyond, the cities of Los Angeles and San Francisco announced yesterday (March 17, 2020) moratoriums on certain evictions of commercial tenants.

Los Angeles Mayor Eric Garcetti announced a moratorium on commercial evictions that applies to all businesses in the City of Los Angeles.  The Los Angeles moratorium is expected to remain in effect until March 31, 2020, unless otherwise extended.  Mayor Garcetti’s statement further provides that eligible tenants shall have up to 3 months following the expiration of the local emergency period to repay any back due rent.  The statement did not describe who “eligible tenants” are.

San Francisco Mayor London N. Breed announced a moratorium on commercial evictions that applies to businesses with a license to operate in San Francisco that have less than $25 million in annual gross receipts.  The San Francisco moratorium is expected to remain in effect until April 17, 2020 and can be extended for another 30 days through Executive Order.  Mayor Breed’s statement did not address tenant back rent.

It is important to note that these moratoriums on commercial evictions follow Governor Gavin Newsom’s Executive Order signed March 16, 2020, which lifted state law restrictions on local government’s ability to impose limitations on commercial evictions when the basis for eviction is non-payment of rent arising from a documented substantial decrease in household or business income or substantial out-of-pocket medical expenses caused by the COVID-19 pandemic or local, state, or federal government responses to the pandemic.  Governor Newsom’s Order also expressly provides that nothing in the Order relieves tenants of the obligation to pay rent, or restricts a landlord’s ability to recover rent due.

These statements from Mayors Breed and Garcetti raise a number of important questions.  For instance, how will it be interpreted that decreases in income or medical expenses have been “caused” by the pandemic?  In his statement, Mayor Garcetti says, “No landlord shall evict a commercial tenant in the City of Los Angeles during this local emergency period if the tenant is able to show an inability to pay rent due to circumstances related to the COVID-19 pandemic. These circumstances include loss of business income due to a COVID-19 related workplace closure, child care expenditures due to school closures, health care expenses related to being ill with COVID-19 or caring for a member of the tenant’s household who is ill with COVID-19, or reasonable expenditures that stem from government-ordered emergency measures.”  This initial statement seems to indicate a relatively broad interpretation of the causation requirement.

Other questions: Is there any relief to landlords who may not receive rent payments during the moratorium?  Also, what options are available to landlords to receive at least partial rental payments during this period so that they too can continue to operate?

Some questions and uncertainty also may be addressed when Los Angeles and San Francisco issue effective orders implementing the announced moratoriums.  Clarity on other answers may come with time as government authorities take additional actions. [1] As can be said about most things today, the situation regarding commercial tenant evictions remains fluid.  Our firm will continue to monitor California jurisdictions for these eviction issues and issues related to rent repayment rights, and will provide timely updates.

Please stay healthy and safe.

[1] At the time of writing this article, the County of Los Angeles, City of San Diego, and City of San Jose have announced they will take action regarding commercial evictions, but have yet to issue guidelines.

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