As of the beginning of April, more than one million Californians have applied for unemployment assistance. While state and local officials are seeking to address this aspect of the economic fallout of the COVID-19 pandemic in a number of ways, renter protections are among the most visible measures to emerge. In San Francisco, Mayor London Breed issued a series of Declarations temporarily banning commercial and residential evictions if the tenant cannot pay rent due to COVID-19 impacts. Here are important takeaways from the Declarations.
On March 13th, Mayor Breed announced a moratorium on residential evictions applying to any tenant experiencing a loss of income related to business closure, loss of hours or wages, layoffs, or out-of-pocket costs as a result of the pandemic. Under the ordinance, a financial impact is “related to COVID-19” if it was caused by the COVID-19 pandemic, the Mayor’s Proclamation, the Health Officer’s Declaration of Local Health Emergency or public health orders related to COVID-19 from local, state, or federal authorities.
Here are key takeaways from the Mayoral Declaration:
- If a residential tenant has not timely made a rent payment that was due on or after March 13, 2020, a landlord may not recover possession of the unit if the tenant has provided notice to the landlord within 30 days after the rent due date that the tenant is unable to pay rent due to financial impacts related to COVID-19.
- Within one week of providing notice, the tenant must provide the landlord documentation or other objectively verifiable information that, due to financial impacts related to COVID-19, the tenant is unable to pay rent. If the tenant does not provide evidence of financial impacts related to COVID-19, the landlord may proceed with an eviction. If the tenant does provide the documentation, the tenant automatically receives an additional month (calculated starting on the date the tenant provided the documentation) to pay the rent.
- If, at the end of that month-long extension, the tenant does not pay rent, the landlord must: (i) inform the tenant of the breach in writing; and (ii) attempt in good faith to develop a payment plan with the tenant.
- The eviction moratorium also applies to housing providers which are exempt from the City’s Rent Ordinance by virtue of their rent being controlled or regulated by the City.
The residential moratorium expires 30 days after its most recent amendment—currently April 22, 2020—but is subject to extension by the Mayor.
On March 17th, Mayor Breed announced a moratorium on commercial evictions applying to businesses with licenses to operate in San Francisco and which have less than $25 million in annual gross receipts.
Here are key takeaways from the Mayoral Declaration:
- Order applies only to commercial tenants registered to do business in San Francisco under Article 12 of the Business and Tax Regulations Code (“Code”) with combined worldwide gross receipts for tax year 2019 for purposes of Article 12-A-1 of the Code equal to or below $25 million. This figure is prorated in the case of businesses that were not operating for the entire 2019 tax year.
- If a covered commercial tenant fails to make a rent payment due on or after March 17, 2020, the landlord may not recover possession of the unit without first providing the tenant written notice of the violation and an opportunity to cure.
- The written notice from the landlord required under subsection must specify a cure period of at least one month from the date the tenant receives the notice, but landlords are encouraged to offer a longer period. Upon receipt of the notice, the tenant shall have the full cure period to either: (i) pay the rent; or (ii) provide documentation to the landlord showing that the tenant is unable to pay the rent due to a financial impact related to COVID-19.
- If the tenant provides the landlord documentation of the tenant’s inability to pay rent due to a financial impact related to COVID-19, then the cure period is extended by one month to provide the landlord and tenant the opportunity to discuss the matter in good faith and attempt to develop a payment plan for the tenant. If the landlord and tenant cannot agree to a payment plan, the tenant must, on or before the cure period will expire, either: (i) pay the rent; or (ii) provide additional documentation of its continuing inability to pay due to a financial impact related to COVID-19. In the event of the latter, the cure period shall extend by one more month.
- The tenant may obtain additional monthly extensions of the cure period by providing updated documentation each month, but the landlord may evict a tenant for non-payment after six months of nonpayment.
The commercial moratorium expires after 30 days—on April 17, 2020—but is also subject to extension by the Mayor.
As you are aware, things are changing quickly and there is no clear-cut authority or bright line rules. This is not an unequivocal statement of the law; instead, it represents our best interpretation of where things currently stand. This article does not address the potential impacts of the numerous other local, state, and federal orders that have been issued in response to the COVID-19 pandemic.
*This alert is provided for information purposes only and does not constitute legal advice and is not intended to form an attorney client relationship. Please contact your Sheppard Mullin attorney contact for additional information.*