On March 19, 2020, the City of Los Angeles issued a public safety order to “shelter in place.” This order was placed due to the COVID-19 pandemic, for public safety as well as reducing the chances of the virus spreading. Due to the Shelter in Place order, 20.5 million jobs have been lost in the U.S. economy, the highest unemployment since the Great Depression. Since the inception of the COVID-19 Shelter in place order, the unemployment rate has soared from 4.4% in March to 14.7% in May. As a result of the Stay in Place order and thereafter unemployment soaring, the head of California Courts, the Judicial Council, issued an eviction moratorium for commercial and residential tenants who cannot pay their rent due to the pandemic.
Commercial tenants have up to three months following the expiration of the local state of emergency to repay any owed rent. Additionally, landlords cannot charge interest or late fees on this owed rent. The moratorium buys the tenant’s time. However, tenants are still required to eventually pay the landlord for any rent past due. Currently, a new bill is being proposed in the California legislature, entitled Senate Bill 939. If this bill is passed, it would allow commercial tenants to terminate their lease with a landlord, if under good faith, they are not able to negotiate a resolution due to the coronavirus and the city’s shelter in place order. At that time, “the commercial tenant may terminate the lease without any liability for future rent, fees, or costs that otherwise may have been due under the lease by providing written notification to the landlord.” Although tenants would have to pay past due rent, they would not have to pay more than three months’ worth, and they would have 12 months to repay it. If this bill passes, it would allow tenants not to pay their rent for more than a year. It would remove any existing legal remedies for the landlord and gives the tenant the right to walk away from a valid lease. If the landlord serves a notice for the tenant to terminate the premises, they would be charged a $2,000 penalty. Also, with the courts backlogged, it is uncertain when they would be able to adjudicate these cases. This bill has the potential of creating more confusion as to the rights of the parties and does not reasonably address their respective needs. This bill also has the potential of creating criminal and civil liability to landlords, making it more complicated and frustrating for the landlords to evict tenants. It would also prolong the economic instability that the Country is currently facing. This bill is in the State Senate Judiciary Committee and will be discussed and thereafter voted on later this week.
Forouzan Khalili is an Attorney at Law, and a Real Estate Broker. She obtained her B.S. in Business Management from Cal State University Northridge. Mrs. Khalili’s publication at the Whittier Law Review, “Television Violence: Legislation to Combat the National Epidemic”. was well received. Forouzan is a board member of the Persian American Women’s Conference. Forouzan Khalili lives with her husband Emil of 24 years, and their three children Josh 22, Emily 20, and Ethan 15 years old in Beverly Hills.