Commercial Eviction Moratoriums in California in Response to COVID-19

March 30, 2020Client Alert

Updated as of March 30, 2020 at 10:00 a.m.

On Friday, March 27th, after an all-day videoconference-meeting, the Los Angeles City Council passed an ordinance further detailing the moratoriums on residential and commercial evictions in the City – a copy of the draft is here.  With respect to the moratorium on commercial evictions, various items were clarified:

(1) a tenant of a commercial property, with the exception of tenants that are multi-national companies, publicly traded companies, or companies that employ more than 500 employees, cannot be evicted during the Local Emergency Period if the tenant is unable to pay rent due to COVID-19.  This includes (a) loss of business due to COVID-19 workplace closures, (b) child care expenditures due to school closures, (c) health care expenses as a result of a COVID-19 sickness or the tenant caring for a family member that is sick with COVID-19, or (d) other reasonable expenditures that are a result of the government-ordered emergency measures.

(2) Tenants will still have only 3 months after the expiration of the Local Emergency Period to pay back rent, and are still obligated to pay rent during Local Emergency Period.

(3) Landlords cannot charge interest or late fees on unpaid rent during the Local Emergency Period.

The Local Emergency Period is retroactive starting March 4, 2020 and goes through the date when the Mayor deems the local emergency over.

Other Moratorium News Around California:

  • California: In an attempt to establish uniformity throughout the state, California’s Governor Newsom has issued an executive order banning the enforcement of eviction orders for residential renters affected by COVID-19 through May 31, 2020.  Residential tenants are required to provide notice to their landlord of their inability to pay.
  • Costa Mesa: At a special meeting on Tuesday, March 24, the Costa Mesa City Council approved an urgency ordinance enacting an eviction moratorium benefiting residential and commercial tenants who are unable to pay rent, allowing tenants up to 120 days from the expiration of the ordinance to repay deferred rent.
  • Coachella: On March 27th, the City of Coachella enacted its own moratorium that would protect both residential and commercial tenants who are unable to pay rent due to COVID-19 impacts.

Updated as of March 27, 2020 at 10:00 a.m.

Los Angeles Mayor Eric Garcetti has ordered that all prior emergency orders, which included protections for both residential and commercial tenants, are extended through April 19th. As for residential tenants, the Mayor further clarified that no residential tenant may be evicted for nonpayment, no-fault and unlawful detainer actions, or if any member of the household is ill, in isolation or under quarantine, until 60 days after the order expires. As before, the Mayor’s recent order does not excuse a tenant’s obligation to pay rent.

Updated as of March 24, 2020 at 8:00 p.m.

The emergency order in effect in the County of Los Angeles prohibits evictions of commercial tenants in unincorporated areas of the county. To determine whether the order applies to your property, please reference the full list of unincorporated areas here.

The County of Santa Cruz has also implemented its own moratorium.

Santa Ana is one of the first Orange County municipalities to implement an eviction moratorium, which provides protection for commercial and residential tenants and suspends foreclosures on both types of properties.

Updated as of March 20, 2020 at 8:00 p.m. 

Although changing rapidly, most California jurisdictions have begun implementing moratoriums on the eviction of commercial tenants. Protections are generally tied to a tenant’s inability to pay rent as a result of the effects of COVID-19. While these tenant safeguards do not excuse the payment of rent entirely, they instead allow for some period of deferment.

As of March 20, 2020, the following jurisdictions are among those in California that have implemented moratoriums (which may be extended) on the eviction of commercial tenants:

Although most municipalities in Orange County haven’t enacted moratoriums yet, news reports indicate discussions are in process. Sacramento and San Jose are also considering offering protections to commercial tenants after doing so for residential renters.

Other Noteworthy Moratoriums:

  • Federal Government has suspended foreclosures on any mortgages backed by Freddie Mac, Fannie Mae, or the Federal Housing Administration (“FHA”) for 60 days (through at least April).
  • New York has announced a 90-day moratorium (through at least June 20) on evictions for residential and commercial tenants.
  • Various cities across the country have enacted moratoriums on residential and/or commercial evictions. In some cases, courts have halted eviction proceedings (i.e., Massachusetts).

As a general note, local governments have been swift in enacting protections for residential renters, with safeguards for commercial tenants following soon thereafter.

Given that the above list is not exhaustive, please reach out to the attorneys at Greenberg Glusker if you have any questions or require assistance with respect to either residential or commercial moratoriums that may affect your property.