The Scope of this Article
The laws discussed in this are limited to the moratoriums on commercial evictions in: (1) the City of Los Angeles; (2) the unincorporated areas of Los Angeles County; and (3) incorporated cities in Los Angeles County that have not adopted their own eviction moratoriums (and are therefore governed by the Los Angeles County commercial eviction moratorium). While this article deals with commercial tenancies, some of the rules applicable to residential tenancies are mentioned as well.
As discussed below, the key to understanding the different eviction moratoriums in Southern California is the effect of Governor Gavin Newsome’s first Covid-19 Executive Order (Order N-28-20) issued on March 4, 2020. Many people believe it created statewide eviction control. It did not. What it did do was to suspend the supremacy of state laws over local laws, and specifically authorized cities and counties to enact their own eviction moratoriums and related landlord-tenant laws. Instead of one uniform statewide set of landlord-tenant laws governing the critical rules pertaining to the obligation to pay rent and the right of a landlord to evict a tenant, we are in a situation where each incorporated city in Los Angeles County can have its own laws—and many do.
The Geographic Scope of the County’s Eviction Moratorium
The County’s moratorium states that it applies to all unincorporated areas of the County of Los Angeles, and to all incorporated cities in Los Angeles County that do not have their own moratoriums in effect at any time the County’s moratorium remains in effect. While Mayor Garcetti and the City Council of Los Angeles have demonstrated that they intend to keep the City’s moratorium in effect, this article addresses both the County and City moratoriums in the event that the City’s moratorium expires at any time while the County’s moratorium remains in effect.
The County and City moratoriums on commercial evictions have exceptions. Specifically, a commercial landlord can still serve an Eviction Notice and file an Unlawful Detainer lawsuit against a commercial tenant who has failed to pay rent if the tenant is multinational company, a publicly traded company, or had more than 100 employees as of March 4, 2020 who worked at any location within or outside the City and County of Los Angeles. For franchisee tenants, the number of employees at a tenant’s franchisee location do not include employees who work at separately owned franchise locations.
Synopsis of the County and City Eviction Moratoriums
Under both the County and City eviction moratoriums, a landlord is prohibited from serving a tenant with a Notice to Pay Rent or Quit and from filing an Unlawful Detainer lawsuit seeking a judgment of possession of the rental premises or unpaid rent. The County’s moratorium is scheduled to expire on September 30, 2020. The City’s moratorium does not, as of today, have an expiration date. Instead, it provides that evictions cannot resume until three months after Mayor Garcetti declares that the “Local Emergency Period” is over. (The definition of “Local Emergency Period” is discussed in more detail below.)
Commercial Tenants Have a New Affirmative Defense to Unlawful Detainer Actions
The most recent legislation adopted by both the City and County of Los Angeles provide that commercial (and residential) tenants may assert any violation of any provisions in the eviction moratoriums as an affirmative defense to any unlawful detainer action that a landlord files.
Commercial Tenants Can Sue a Landlord for Violating the Eviction Moratoriums
1. The County’s New “Private Right of Action” Law Applicable to Commercial Tenancies.
In addition to defending any unlawful detainer action by alleging the landlord violated the County’s eviction moratorium, the Los Angeles County Board of Supervisors has legislatively granted commercial (and residential) tenants a new “private right of action” to sue landlords who violate the County’s moratorium. (See, Sec. 11 of the July 21, 2020 “Revised Guidelines to Aid in the Implementation of the Los Angeles County Eviction Moratorium During the Covid-19 Pandemic” which moratorium was implemented by Executive Order of the Chair of the Los Angeles County Board of Supervisors on March 19, 2020, and amended by Resolutions of the Board of Supervisors on March 31, April 14, June 3, June 23, and July 21, 2020; called the County Guidelines Amended July 21, 2020” below in this article.)
The new “private right of action” enacted by the County means that commercial (and residential) tenants now have the right to sue their landlords for violating the County’s moratorium. Other than creating this new private right of action for tenants to sue landlords, the County Guidelines Amended July 21, 2020 do not specify the damages or injunctive remedies a tenant is entitled to seek from a landlord. They merely state that the Court may determine the “appropriate remedies.”
2. Harassing or Intimidating Tenants to Pay Rent is a Crime Under the County Moratorium.
Under the County moratorium, all landlords—commercial and residential—are prohibited from “harassing or intimidating” a tenant to pay rent. Harassment and acts of intimidation are defined as “including, but not limited to,” threatening lease termination or eviction, threatening to serve, or serving, a Notice to Pay Rent or Quit that demands rent not payable under the moratorium, shutting off utilities, locking a tenant out, or “verbally or physically threatening a tenant.”
Landlords who violate this prohibition shall be guilty of a criminal misdemeanor. Further, landlords who violate the prohibition on harassment or intimidation—or any other provision in the County’s moratorium—shall be subject to being sued by the tenant in civil court under the new right of private action where the court may “determine the appropriate remedies.” (See, ¶¶ 11-12, County Guidelines Amended July 21, 2020.)
3. The City’s New Private Right of Action Law.
The City has also given residential (but not commercial) tenants a new private right of action to sue landlords who try to evict them during the moratorium. Unlike the County’s moratorium, which does not specify the remedies a tenant can seek, the City’s private right of action against residential landlords lists the remedies in detail. It gives a residential tenant the right to sue a landlord for injunctive relief enjoining the landlord from evicting, or “endeavoring to evict,” the tenant (which is defined to include the service of a Notice to Pay Rent or Quit), plus monetary damages, a $10,000 fine “per violation,” and the right to recover attorneys’ fees and court costs from the landlord. (See, new Section 49.99.7 of the Los Angeles Municipal Code created by City of Los Angeles Ordinance 186606, amending Article 14.6 of Chapter IV of the Los Angeles Municipal Code, approved by City Attorney Michael N. Feuer as to Legality on May 6, 2020 and passed by the City Council on that same date, and signed by Mayor Garcetti on May 7, 2020, called the “City Ordinance Amended May 7, 2020” below in this article.)
Even though the City’s private right of action rules do not (as of now) give commercial tenants a private right of action against landlords, the County and City have tended to act in tandem when amending their respective laws during the coronavirus pandemic. It would not, therefore, be surprising if the City amends the Municipal Code to match the County’s ordinance that grants commercial tenants a right of private action to sue landlords in civil court—in which case the City may impose the same list of remedies (injunctive relief, monetary damages, civil penalty, and right to recover attorneys’ fees) that it has already given to residential tenants.
4. The Administrative Penalty for Landlords Who Violate the City’s Moratorium.
While the City has not given commercial tenants a private right of action to sue landlords for violating the City’s moratorium, the moratorium does provide for actions the City can take against non-compliant commercial landlords. Any commercial landlord who violates the ban on serving Notices to Pay Rent or Quit, filing an Unlawful Detainer Action, or any other provision of the of the City’s eviction moratorium, shall be subject to an “administrative citation,” but such citation shall not be a waiver of any other enforcement remedies the City may have against the landlord. (See, new Municipal Code Section 49.99.8 enacted by the City Ordinance Amended May 7, 2020.)
When Do the Eviction Moratoriums Expire?
The key question is, of course, when do the County and City moratoriums on commercial evictions expire? The different expiration provisions of the County and City moratoriums are as follows:
Expiration of the County’s Moratorium. The most recent extension of the County moratorium was voted into effect by the County Board of Supervisors on July 21, 2020; it states the County’s eviction moratorium ends on September 30, 2020. (See, ¶ 5.1 of the County Guidelines Amended July 21, 2020.) However, if commercial rental property is located in the City of Los Angeles, the right to commence eviction proceedings by serving a Notice to Pay Rent or Quit is governed by the City’s separate moratorium, and not the expiration of the County’ moratorium on September 30, 2020.
Expiration of the City’s Moratorium.
The City’s moratorium does not (as of now) have an expiration date. Instead, the latest amendment to the City of Angeles moratorium unanimously approved by the City Council on May 6, 2020, and signed by Mayor Garcetti on May 7, 2020, states the City’s eviction moratorium shall continue to exist “during the ‘Local Emergency Period’ and for three months thereafter.” (See, new Section 49.99.1(C) of the Los Angeles Municipal Code created by the City Ordinance Amended May 7, 2020.) The term “Local Emergency Period” is defined as “the period of time from March 4, 2020 to the end of the local emergency period as declared by the Mayor.”
Mayor Garcetti has not given a date when the “Local Emergency Period” will be over. Other Executive Orders issued by Mayor Garcetti indicate he is linking the expiration of the Local Emergency Period to his various “Safer at Home” Orders. As of today, the City of Los Angeles remains subject to Mayor Garcetti’s initial March 19, 2020 “Safer at Home” Order, which was amended and superseded by the Mayor’s subsequent “Safer at Home” Order issued on June 1, 2020, which the Mayor revised on July 16, 2020. All of those “Safer at Home” Orders recite that the City of Los Angeles is still in a state of emergency due to the coronavirus and is in the process of a “phased re-opening.”
Until Mayor Garcetti issues an Executive Order that declares the state of emergency is over, or which states the future termination date of the “Local Emergency Period,” commercial landlords in the City of Los Angeles cannot serve a Notice to Pay Rent or Quit, or commence an Unlawful Detainer Action, until three months after the termination date of the Local Emergency Period.
Why Are Counties and Cities Creating Their Own Landlord-Tenant Laws?
One may ask why are local County and City laws governing a commercial landlord’s right to evict a tenant when state statutes have governed all evictions in California for over a century? It is because Governor Newsome’s initial Executive Order N-28-20 issued on March 4, 2020 suspended the supremacy of state laws over local laws, and specifically authorized cities and counties to enact their own eviction moratoriums and related landlord-tenant laws. The Governor’s initial Executive Order issued on March 4, 2020 stated it expired on May 31, 2020, but in subsequent amendments Governor Newsome extended his initial Executive Order to remain in effect until September 30, 2020. (See, latest Executive Order of Governor Newsome issued on July 1, 2020.)
The result is that instead of the uniform statewide body of eviction and landlord-tenant laws that existed before the coronavirus pandemic, we now have a patchwork quilt of different laws in Southern California. Which law applies now depends on what city a property is in and if that city has adopted its own ordinance (e.g., Santa Monica, West Hollywood, Beverly Hills, Burbank, Glendale, Pasadena and other local cities each have each adopted their own ordinances). Landlords and tenants need to be careful and should seek the advice of counsel. More than once, we have heard landlords and tenants describe their understanding of the current Covid-19 rental laws based on what they heard or read in the news, only to advise them those are not the rules govern their rental property.
Repayment of Rent and Related Charges Not Paid During the Eviction Moratoriums
In addition to the eviction moratoriums, the County and City have enacted different ordinances concerning a tenant’s duty to repay any rent or related charges (such as CAM and triple net charges) that a tenant has not paid since the moratoriums went into effect on March 4, 2020.
1. The County Rent Repayment Rules.
Under the County Guidelines Amended July 21, 2020, upon the expiration of the County’s moratorium on September 30, 2020, commercial tenants must pay their landlord any unpaid rent and related charges that did not pay during the moratorium. The time period in which a commercial tenant must repay its landlord depends on the number of employees the commercial tenant had on March 4, 2020 as follows.
- Commercial tenants with nine or fewer employees, have twelve months after the expiration of the moratorium to repay unpaid rent and related charges. Commercial tenants with nine or fewer employees are not required to pay in full immediately upon the expiration of the County moratorium on September 30, 2020, nor are they obligated to enter into any repayment plan with the landlord, or to make their repayments “according to any schedule mandated or requested by a Landlord.” (See, ¶ 8.2 County Guidelines Amended July 21, 2020.)
- Commercial tenants with ten or more employees, but fewer than 100 employees, have six months after the expiration of the County Moratorium to repay rent and related charges, and they must do so in six equal monthly installments, unless the tenant and landlord agree, or have already agreed, to an alternate repayment schedule. (See, ¶ 8.3 County Guidelines Amended July 21, 2020.)
- Commercial tenants with 100 or more employees were required to repay all unpaid rent and related charges on or before June 1, 2020 (the same rule applied to commercial tenants who are multinational companies or publicly traded). (See, ¶ 8.4 County Guidelines Amended July 21, 2020.)
Repayment Does Not Include Late Charges.
Under the County moratorium, a commercial landlord is prohibited from charging a tenant any late fees, interest, penalties, or other related fees or costs that came due but which the tenant did not pay during the moratorium. (See, ¶ 8.5 County Guidelines Amended July 21, 2020.)
2.The City Rent Repayment Rules.
Under the City Ordinance Amended May 7, 2020, commercial tenants must repay the landlord all unpaid rent within three months after the expiration date of the Local Emergency Period (when Mayor Garcetti declares it). Landlords cannot charge late fees or interest. (See, new Municipal Code Section 49.99.3 enacted by the City Ordinance Amended May 7, 2020.)
Conclusion
Despite the current ban on serving a Notice to Pay Rent or Quit, and the severe consequences a landlord can suffer for violating the ban, commercial landlords in the City of Los Angeles can still send tenants a letter that refers the tenant to the provisions in the City Ordinance Amended May 7, 2020 that require the tenant to repay all unpaid rent and other charges three months after the eventual expiration of the Local Emergency Period. A similar letter can be sent to tenants whose rental premises are subject to the County’s moratorium (or to the local ordinances adopted by other smaller cities in the County). The letter, however, should be drafted with care to not give the tenant grounds to claim the landlord is engaging in prohibited harassment or intimidation.
While commercial landlords will eventually have the right to commence eviction proceedings if the tenant does not timely repay the rent that was not paid during the moratorium, we would be remiss in not mentioning the current situation in the Los Angeles County Superior Court. In general, the vast majority of all civil trials, including unlawful detainer trials, that were pending during the months of the Covid-19 Court closure were continued. The result is that there is now a massive backlog of old cases awaiting trial. On top of the backlog of old cases, it is expected that an enormous number of eviction lawsuits will be filed in the Los Angeles County Superior Court as the different moratoriums enacted by the County, the City of Los Angeles, and various smaller cities in Southern California begin to expire.
Even if a commercial landlord immediately commences eviction proceedings when the applicable moratorium expires, any unlawful detainer action may take many months to get to trial. Accordingly, we are advising commercial landlords and tenants it may be beneficial to discuss and agree upon a rent repayment plan. Such plans can contain terms different from the provisions of the moratoriums. One useful plan for tenants who can afford to pay some rent is to provide for making partial payments as rent comes due and a schedule for paying the unpaid portion. We are also advising landlords to check with their mortgage lenders; many lenders are offering property owners programs. Neither the County nor the City moratoriums prohibit landlords and tenants from entering into plans, and the respective moratoriums make clear that the parties are free to enter them.
We monitor the Executive Orders and State, County, and City emergency legislation concerning landlord tenant laws. If you are a commercial landlord or tenant and wish to know more, or to discuss your specific situation, please feel free to contact us.
This article does not constitute our firm providing you with legal advice applicable to your situation, it is written for general informational purposes only.