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.