In the midst of the COVID-19 epidemic, one particular issue has emerged between landlords and tenants: without income for tenant to pay landlord, how is the lease to proceed?  While Governor Gavin Newsom had issued Executive Order N-28-20, this has resulted in a patchwork infrastructure between various cities to address rental issues, with some focusing on residential properties, and some focusing on commercial.  To simplify this, members of the California Legislature, Scott Wiener and Phil Ting, have introduced S.B. 939 and A.B. 828 respectively to address this outstanding issue immediately.

S.B. 939.

S.B. 939 attempts to resolve the issue by making an eviction regarding commercial real property, including a business or non-profit for the duration of the State of Emergency proclaimed by Governor Newsom on March 4, 2020 regarding COVID-19.  Those landlords seeking to evict a commercial tenant face a potential fine of up to $10,000, and a year in a county jail.  Furthermore, it creates additional civil liability as an act of unfair competition under the Business and Professions Code, exposing a landlord to civil liabilities up to $2,500 per infringement.  However, these actions would be brought by Government officials, such as the Attorney General or a City's Attorney.  Importantly, as of March 25, 2020, the bill currently has a lookback provision that would include any eviction started prior to the bill's passing, but after March 4, 2020.  The bill also does not specify whether the eviction is limited to one arising out of a failure to pay rent or if there was some other broken covenant.  Notwithstanding this, any evictions occurring prior to the March 4, 2020 declaration would be permitted to proceed.

A.B. 828

A.B. 828, which has been announced through press release, but is not yet available for review, purports to similarly attempt to address the eviction issue in housing, by imposing a moratorium on evictions and foreclosures.  The bill purports to provide for no evictions or foreclosures for the duration of the State of Emergency, plus 15 days afterwards.  Furthermore, repayment plans may be set forward by the courts, with recovery periods being extended through March of 2021 if there is a provable economic hardship.

What Should Landlords Do?

Ultimately, the solution will likely be different for each landlord and tenant.  Some landlords and tenants may agree to amending a lease with deferred rent or an extension, while some tenants may be invoking force majeure in order to avoid performance.  Others will simply rely on city orders, like those in San Francisco.

For further inquiries or questions, you can consult with a Task Force attorney by emailing NDCovid19Response@ndlf.com or contact our office directly at 949-854-7000.