A Summary of Los Angeles Eviction Moratoria: Commercial Tenants

Almost a year and a half after issuing their first eviction protections, both the city and county of Los Angeles continue to maintain rules prohibiting landlords from evicting commercial tenants financially impacted by COVID-19, along with offering qualifying business grace periods for repaying past-due rent.

I. Los Angeles County

A. Moratorium Period and Qualifying Tenants

On June 22, 2021, the Los Angeles County Board of Supervisors voted to extend the county’s eviction moratorium (the “Moratorium”) through September 30, 2021. The Moratorium applies to the unincorporated areas of the county and, as of September 30, 2020, all incorporated cities located within the county.  ¶ 5.2.” Under the Revised Eviction Moratorium Guidelines of July 1, 2021, commercial tenants (the “Tenants”) with no more than 100 employees are “protected from eviction if they are unable to pay rent during the moratorium period “so long as the reason for nonpayment is financial impacts related to COVID-19.” ¶ 5.3(A); ¶ 6.1(A). “Any notice of termination served to a Tenant subject to the Moratorium on or after March 4, 2020, and during the Moratorium is rendered null and void.” ¶ 5.4(C) However, the Moratorium does not protect Tenants with more than 100 employees, Multinational companies, and publicly traded companies. ¶ 5.3(A); ¶ 5.3(B). A Tenant’s number of employees is calculated based on the total number of employees, as of March 4, 2020, at any business location, including the employees of any subsidiary, parent, or affiliated entities (unless the Tenant is a sole proprietorship or franchisee). ¶ 7.

B. Tenant Requirements

A Tenant must establish a financial impact related to COVID-19 to justify the nonpayment of rent and avoid eviction within seven (7) days of the rent becoming due. ¶ 6.1(A). The Guidelines define a financial impact as “loss of revenue or business…due to business closure, increased costs, reduced revenues, or other similar reasons impacting a Tenant’s ability to pay rent due.” ¶ 4.12. The Tenant must provide timely notice absent extenuating circumstances such as illness. ¶ 6.1(A). A Tenant that successfully establishes a financial impact related to COVID-19 must still eventually repay any unpaid rent. The specific requirements for establishing a financial impact and for determining when a Tenant must repay all unpaid rent vary depending on the Tenant’s number of employees.

1. Qualifying Tenants with Nine (9) or Fewer Employees

A Tenant with nine (9) or fewer employees establishes a financial impact due to COVID-19 through a “written, signed self-certification.” ¶ 6.7(C)(1).  However, “failure to provide a written, signed self-certification does not preclude…establishing financial impact related to COVID-19, including but not limited to verbal notice to the Landlord.” ¶ 6.7(C)(1). Upon providing this notice, the Tenant “shall have twelve (12) months following the end of the Moratorium to repay their Landlords for rent and related charges which came due but were unpaid during the Moratorium.” ¶ 8.3(A). The Landlord and Tenant do not need to agree upon a payment plan or schedule. ¶ 8.3(A).

2. Qualifying Tenants with Ten (10) or More Employees

Qualifying Tenants with ten (10) or more employees face more stringent requirements. The Tenant must provide sufficient documentation to demonstrate a financial impact related to COVID-19. ¶ 6.7(C)(2). The Guidelines cite bank statements, gross sales receipts, and expenses before and after the pandemic as well as applicable government orders demonstrating restrictions on business activity as examples of helpful documentation. ¶ 6.7(C)(2). Upon establishing a financial impact related to COVID-19, the Tenant “shall have six (6) months following the expiration of the Moratorium to pay rent and related charges which came due but were unpaid during the Moratorium. Tenants shall make such payments in six equal monthly installments, unless the Tenant and Landlord agree to an alternate payment schedule.” ¶ 8.3(B).

​​​​​​​C. Limitations on Landlords

A Landlord may not charge any late fees, interest, penalties, or other related fees on timely late payments covered under the Moratorium. ¶ 8.4. Furthermore, “[a]ny notice of termination served to a Tenant subject to the Moratorium on or after March 4, 2020, and during the Moratorium is rendered null and void.” ¶ 5.4(C). Finally, if a Tenant fails to give timely notice under the Moratorium explaining that the non-payment of rent was due to COVID-19 and the Landlord starts eviction proceedings, but the Tenant subsequently notifies the landlord that the failure to provide timely notice was due to extenuating circumstances, the landlord “must immediately cease all efforts to evict the Tenant.” ¶ 6.8(B).

II. Los Angeles City

​​​​​​​A. Moratorium Period and Qualifying Tenants

Ordinance 186606, effective on May 12, 2020, prohibits commercial evictions “during the Local Emergency Period and for three months thereafter...if the tenant is unable to pay rent due to circumstances related to the COVID-19 pandemic.” Sec. 49.99.3. However, the Ordinance does not apply to Multinational companies, publicly traded companies, and companies that employ more than 500 employees. Sec. 49.99.1(A). The Local Emergency Period is defined as “the period of time from March 4, 2020, to the end of the local emergency as declared by the Mayor.” Sec. 49.99.1(A). Although Tenants must eventually pay unpaid rent, the Ordinance defers this obligation.

​​​​​​​B. Tenant Requirements

If a Tenant establishes that it was unable to pay rent due to circumstances related to COVID-19, the Tenant “shall have three months following the expiration of the Local Emergency Period to repay any rent deferred during the Local Emergency Period.” Sec. 49.99.3. The Ordinance does not contain an express notice requirement nor examples of sufficient proof that a Tenant’s inability to pay rent was due to circumstances related to COVID-19. However, the Ordinance does cite the following as examples of circumstances related to COVID-19: (1) Loss of business income due to COVID-19 related workplace closures; (2) child care expenditures due to school closures; (3) COVID-19 related health care expenses; (4) expenses due to COVID-19 related government emergency orders. Sec. 49.99.3.

​​​​​​​C. Limitations on Landlords

A landlord may not charge interests or late fees on rent that went unpaid due to circumstances related to COVID-19 by a Tenant nor deliver a three-day notice to pay or quit. Sec. 49.99.3.

The rules affecting landlord-tenant relations in the context of commercial leases are subject to further updates and vary by jurisdiction in most instances. As such, please reach out to the attorneys at Greenberg Glusker if you have any questions or require assistance with respect to the various moratoria that may affect your property.

Benjamin Ruskin is a legal clerk at Greenberg Glusker and is currently attending UCLA School of Law.