20-0428_COVID-19_32

This video is brought to you by the California Lawyers Association, a non-profit organization of lawyers throughout the state of California. This video is geared for small business and tenants who have questions about how COVID-19 impacts their commercial lease. Please note this video is intended to provide general information, and does not constitute as legal advice. The information in this video is based on the rules in place as of April 28, 2020. My name is Mathieu Putterman and I'm a lawyer with Klinedinst PC practicing in the areas of real property law and general litigation. Two orders came down from the governers office on March 27th, that I think are relevant to these issues that are facing commercial tenants at this time. But first exacutive order N-37-20 afforded protections to residential tenants who met certain requirements, and this rule is enacted through the end of May of 2020. I point this out because, speaking with folks, it seems like there was some confusion with respect to who this order pertain too. The answer is, it pertains to the residential context, to residential tenants. It does not pertain to commercial tenants. So it is important to keep that in mind. The second order that came down in the state is executive order N-38-20. This order suspended limitations on the powers of the Judicial Branch to adopt any rules concerning civil or criminal practice or procedure it may deem necessary to respond to the COVID-19 pandemic. So in essence this order gave the court system and the judicial branch broad authority to do whatever they deem necessary to respond to the issues presented by the pandemic. Once such order, or rather, a series of rules, came into effect on April 6, 2020 and on this date the state of California Judicial Council enacted a series of court rules that impact the judicial system. Among these rules, the judicial council enacted an emergency rule placing a hold on nearly all evications throughout the state of California. This rule did this by suspending the ability of all California courts to issue a summons on the complaint for unlawful detainer. Without a summons, you cannot serve a complaint in California. So in essence, filing a complaint would not do you any good. The second way that this will place a hold on all evictions was by suspending the ability of all California courts to enter a default or a default judgment for restitution or return of the property, in an unlawful detainer action. Third, the rule states that trial may not be set less than 60 days after a request for trial is made, and continues all previously scheduled trials at least 60 days from the initial date set for the trial. There is a caveat here, and that is, unless necessary to protect public health and safety. This is a very narrow exception to the broad rule here, and the rule is to remain in effect until 90 days after the governer lifts the state of emergency related to the COVID-19 pandemic, or until amended or otherwise repeled by the Judicial Council. Additionally, local governments throughout California were given the authority to take action to the extent they feel it necessary to protect both residential and commercial tenants. Now there have been several cities, counties that have enacted ordinances of their own. And these ordinances tend to vary considerably from city-to-city; and county-to-county. Irvine, where I live in particular, is pretty laissez-faire, relative to some other local authorities, kind of in essence they're leaving it to the discretion of the higher levels of governments and the courts. Some other examples, where they're more hands-on, is the city of Los Angeles for one. On March 27th city of Los Angeles enacted an order prohibiting landlords from evicting many residential and commercial tenants for non-payment of rent during the city's declared COVID-19 local emergency period, which is defined in the ordinance as extending from March 4th, 2020 to the end of the local emergency as identified by Mayor Eric Garcetti which is presently set for May 15th, 2020. Next, in order to qualify for this eviction protection, a tenant must be unable to pay rent as a result of circumstances related to the COVID-19 pandemic. These include losses of business income due to COVID-19 related workplace closures, child care expenditures due to school closures, health care expenses related to being ill with COVID-19 or having to care for a member of the tenant's household or family who might be ill with COVID-19 or fourth, reasonable expenditures that stem from government order emergency measures. Order that property owners, landlords, may not charge interest or late fees on unpaid rent during this period. Also, commercial tenants are provided three months from the, following the expiration of the local emergency period to pay all back rent. These protections apply to small businesses with generally less than 500 employees. Also as another example, in Orange County, Costa Mesa on April 1st enacted ordinances including commercial evictions if non-payment of rent was due to a substantial decrease in business income as a result of COVID-19. Now to take advantage of this protection, a commercial tenant must notify the landlord within 30 days after the rent is due in writing, and by providing documentation establishing such loss of business income. Also in Costa Mesa, back rent would be due no later then 120 days from the expiration of the statewide emergency. There are also no late fees or interest during the statewide emergency period. So for commercial tenants, it's important, I think, for you to check your local ordinances, by simpling jumping on Google and typing in the name of the city in which your property is situated, and followed by the words "eviction ordinances". That should direct you to some good substantive information there. Some tips for commerical tenants. First and foremost, I think you know there's a common theme running throughout the state, which is encouraging parties to work together in creative and collaborative ways to find a solutions. So you know along those lines I think its important for commercial tenants who are experiencing hardships during this time, with respect to the ability to pay rent, to contact your landlord in writing, and request some options for working it out. Such options that I have seen include: deferment of rent for a period of 2-3 months, and then amortizing the deferred rent over another 3-6 months or so. Another method or option that might be available to commercial tenants to explore with their landlord is again, deferment of rent and tacking on the back rent to the end of the lease with a lease extension. Now some landlords may not be very interested in this option, especially those with tenants with longer lease term, but nonetheless it would be worth making the request. Lastly, you could see about, check with your landlord to see if they'd be interested in allowing you, or the landlord rather, to deduct the missed rent or reduced rent from the security deposit and applying it towards rent during this time. It's important to remember that there under no authority... are any tennents in the state of Califronia where the residental or commercial are relieved of their obligations to pay rent during this time. That's something that, you know, if the hardship warrants it, certainly adresss it with your landlord, but not many landlords I think are going to be very respetive to such a request, but nonetheless, it wouldn't hurt asking if those other options just don't work for you. Also, it's worth considering applying to federal loan assistance program that have been made available, such as the Paycheck Protection Program or the Economic Injury Disaster Loan. The PPP loan recently ran out of funding, but I think that funding is getting jumpstarted here soon pursuant to some recent regulations that were passed, and another option to perhaps look into is insurance. Particularly business interuptions, policies and reviewing those policies perhaps with your broker, and possibly tendering a claim to your insurance carrier. Lastly, I think it's important for all of us to understand that this is a moment in time and it's hard to believe that just a couple of months ago we were freely going about our lives, going to restaurants with friends. It's hard to escape the moment that you're living in currently, but you know I think, and what I advise my clients, is to try put your best foot forward during this time period, knowing that we'll all come out of this together at some point in time not too far down the road, I don't think. In conclusion, please remember that the information presented here today, is not legal advice and it is based on the rules in effect as of April 28th, 2020. Thank you for watching this video, and for doing your part to navigate through the COVID-19 pandemic.