SB 939 was recently amended to provide additional eviction protections for Covid-impacted tenants in all industries. To be clear, this provision is not limited to restaurants, bars, places of entertainment, etc. This updated section of SB 939 provides, in part:
- 12-Month Repayment Period: “Covid-impacted” tenants have 12 months after the state of emergency ends to repay rent that became due during the state of emergency period.
- No Eviction For Unpaid Rent Accrued During State of Emergency: “Covid-impacted” tenants cannot be evicted for unpaid rent that accrued during the state of emergency period. Note: It appears that this unpaid rent could be pursued by landlords in a rent collection action after the 12-month repayment period expires, but it could not be grounds for eviction.
- Attorneys’ Fees And Statutory Fines: A landlord which willfully harasses, intimidates, threatens, or retaliates against a commercial tenant with the intent to terminate the occupancy is liable for (1) actual damages of the tenant, (2) fines up to $2,000 for each incident, and (3) the tenant’s reasonable attorney’s fees. This applies to all commercial tenants (not just “Covid-impacted” tenants).
- Landlord Notice To Tenants: Landlords are required to provide notice to tenants of these provisions within 30 days. This applies to all commercial tenants (not just “Covid-impacted” tenants).
Qualifying “Covid-Impacted” Tenants: The rent deferral and eviction protections (described in the first two bullet points above) apply only to “Covid-impacted” commercial tenants operating primarily in California. A tenant qualifies as “Covid-impacted” if it satisfies the revenue decline test or the capacity decline test.
Revenue Decline Test: First, a tenant qualifies as “COVID-19 impacted” if it experienced a decline of 20% or more in average monthly revenue over the two most recent calendar months compared to the average monthly revenue for: (1) the same calendar months in 2019; or (2) the two calendar months before a state or local government shelter-in-place order took effect. Note: If the business never opened or was delayed in opening because of the state of emergency, the requirement is satisfied.
Capacity Decline Test: Alternatively, a tenant qualifies as “COVID-19 impacted” if it experienced a decline of 15% or more in capacity due to compliance with an official public health order or occupational health and safety guideline for preventing the spread of Covid-19.
In subsequent articles, I will provide additional detail regarding this updated Section of SB 939.
Note re SB 939 Lease Termination Right: SB 939 also includes a lease termination right for certain Covid-impacted tenants, which now applies to only eating or drinking establishments, places of entertainment, and entertainment venues: SB 939 Termination Right Narrowed To Restaurants/Bars and Places of Entertainment.
Thanks Usman.
SB939 is the gift which keeps on giving
Mr. Mohammed,
Thank you for publishing about revisions to SB 939.
According to the Bureau of Economic Analysis, Retail, Education/Healthcare, and Professional/Business services each comprise a larger percentage of the State of California’s GDP than Entertainment, Recreation, Hospitality and Food service combined. Yet SB 939 has excluded them, narrowing its scope so the:
“lease termination right would apply only to:
Eating or drinking establishments
Places of entertainment
Performance venues”
This leaves a large portion of California business tenants (and GDP and tax payers) which are COVID-19 impacted, with zero support in the face of landlords still demanding full rent for spaces where part or none of them can actually be used.
To whom do we direct our strong request that the rest of us are included in an amendment to this bill?
Thank you for your message. It is a very difficult time in our country in so many ways. The primary author of the bill is California State Senator Wiener. He is receiving a lot of input about this bill. Frequently, people call the state senator and their representative in the state assembly to express their views. My best wishes to you during this challenging period.
Usman,
Thank you for all you hard work on these items.
Question – I didn’t realize there was a new noticing provision/law – is there a form for that and within 30 days from when?
There is no form yet. The bill may continue to change. It is has a ways to go before it becomes law (and if it becomes law).
Hi Usman,
Why is there not a bill to protect owners from their lenders? Why isn’t the state providing relief from property taxes? I understand the need to work with our impacted tenants. But it is not all about the tenants. The owners are being impacted as well. And many owners are retired and relying on this income.
Hi Glen – Thank you for your message. This is a really good point. SB 939 would be more balanced if it also addressed owners’ financial obligations: mortgage payments, property taxes, operating expenses, etc.