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My Commercial Tenant Defaulted On The Rent During COVID-19—What Are My Options?

My Commercial Tenant Defaulted on the Rent During COVID-19—What are My Options?

On behalf of , P.C. posted in Commercial Real Estate, workplace discrimination on Friday, October 30, 2020.

The California Department of Public Health (CDPH) has confirmed more than 840,000 cases of COVID-19 virus in the state as of October 11th. As the virus continues to spread in California, state and local officials have extended emergency economic regulations, including certain restrictions on residential evictions and commercial evictions.

If you are a commercial landlord and your tenant is behind on the rent, you may have questions about your rights or options under the law. There is some confusion about state rules. In this article, our Northern California real estate attorneys explain the most important things commercial landlords need to know about evictions during COVID-19 as of October of 2020.

Commercial Eviction Moratorium Extended Until March of 2021

On September 24th, 2020, California Governor Gavin Newsom signed an executive order extending the state’s moratorium on commercial evictions through the end of March 2021. To be clear, this order is not technically a statewide ban on commercial evictions for overdue rent. Instead, the governor’s executive action allows local jurisdictions to enforce their own bans on commercial evictions. The action from the governor is important because California state law (California Civil Code § 1954.2) largely prevents cities and counties from enacting commercial rent control regulations.

Local Jurisdictions Empowered to Prevent (or Allow) Commercial Evictions

In effect, California currently allows different jurisdictions to operate under different rules. As an example, San Francisco Mayor London Breed quickly followed up the latest executive action by announcing that the City of San Francisco will be extending its commercial eviction moratorium through March of 2021.

However, other local jurisdictions may opt not to extend the moratorium. Alternatively, they may choose to extend the moratorium for a shorter period of time. As a commercial landlord, you need to check the rules in your city or county. Local rules are what matters for commercial eviction in California.

Three Steps to Protect Your Rights as a Commercial Landlord During COVID-19

The COVID-19 pandemic, government shutdowns, and eviction moratoriums have all put financial strain on landlords. At this time, it is imperative that you know how to protect your rights and interests. Here are three steps to take if your commercial tenant has fallen behind on rental payments and eviction is not currently an option (or advisable) in your jurisdiction:

  1. Document Everything: Commercial rent moratoriums do not free tenants of their obligation to pay rent. Instead, they simply allow a delay of rent payments. Commercial tenants will eventually be required to catch up on their obligations. Make sure you clearly document what has (and has not) been paid.
  2. Consider Options for Negotiation: If you have a good relationship with your commercial tenant, there may be options for negotiation. You may be able to renegotiate the terms of your lease—either helping them to get back on track with rent payments more quickly or accepting partial payments.
  3. Strictly Comply With the Law: Commercial landlords are not permitted to engage in self-help evictions or you charge late fees on rent subject to a local moratorium. Make sure you strictly comply with state and local law. Failure to do so will cause serious problems.

Call Our California Real Estate Lawyers for Immediate Help

At the Law Office of David C. Winton, our California real estate attorneys provide practical, results-oriented legal representation. If your commercial tenant defaulted on the rental and you have questions about your options, we are here to help. To set up a completely confidential initial consultation, please do not hesitate to contact us today. From our legal offices in Novato, Auburn, and Nevada City, we serve clients throughout Northern California.

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