A California Legislature bill (SB 939) which would have extended California’s eviction moratorium and possibly allowed tenants to trigger lease negotiations and/or break their lease with little or no penalty was defeated in committee on June 18th. The California Senate Appropriations Committee did not pass SB 939 regardless of last second attempts to limit the current eviction moratorium’s length and eliminating a tenant’s right to break a lease in 30 days if a new one was not agreed to.
If enacted, SB 939 would have enacted a moratorium on commercial evictions for businesses and nonprofits with 500 or fewer employees during the coronavirus state of emergency. SB 939 would have also allowed tenants in the hospitality sector to trigger renegotiations with landlords to modify existing leases if they lost more than 40 percent of their revenue or if they will operate at 25-percent reduced capacity due to extended social distancing requirements and shelter-in-place orders. Though this possible lifeline to small businesses collapsed, it is currently unknown whether new attempts will be made to assist small business tenants.
Additionally, we are closely watching developments in other jurisdictions as last week, the United States Bankruptcy Court in Illinois sided with a commercial tenant in determining that the Governor’s Covid-19 related executive order triggered a force majeure clause and partially excused the tenant’s obligation to pay rent.
For now, California landlords can breathe a little easier. However, they are still unable to evict tenants per State of California Executive Order (N-28-20). If possible, landlords should try and resolve any disputes with tenants via negotiation.
