SB 939 Proposes Moratorium On Unlawful Detainer Actions For Commercial Tenants And Allows Tenants Who Can't Renegotiate Their Lease In Good Faith To Terminate Their Lease Without Liability
June 01, 2020 —
Rhonda Kreger – Newmeyer DillionSB 939 is currently working its way through the Senate Judiciary Committee. The legislation would impose new obligations on landlords, and provide protections for commercial tenants who meet specified criteria. SB 939 would impose a moratorium on eviction of those qualified commercial tenants while emergency COVID-19 orders are in effect. Any eviction actions commenced after the date of the emergency COVID-19 order, but before the adoption of SB 939, would be void and unenforceable. The Senate Judiciary Committee has scheduled a hearing for SB 939 on May 22, 2020, at 9:00 a.m.
Who qualifies as a commercial tenant under SB 939?
To qualify under this legislation, a commercial tenant must be a business that operates primarily in California. The commercial tenant must be a small business, nonprofit, an eating or drinking establishment, place of entertainment, or performance venue. Publicly traded companies or any company owned by, or affiliated with a publicly traded company, do not qualify. The commercial tenant must have experienced a decline of at least 40 percent monthly revenue, either as compared to two months before the emergency COVID-19 order, or other local government shelter-in-place orders took effect, or as compared to the same month in 2019. If the commercial tenant is an eating or drinking establishment, place of entertainment, or performance venue, the commercial tenant must also show a decline of 25 percent or more in capacity due to social or physical distancing orders or safety concerns, and show that it is subject to regulations to prevent the spread of COVID-19 that will financially impair the business when compared to the period before the emergency COVID-19 order or other local shelter-in-place orders took effect.
What eviction actions are prohibited while emergency COVID-19 orders are in effect?
If adopted, SB 939 would add Section 1951.9 to the Civil Code. This section would make it unlawful to terminate a tenancy, serve notice to terminate a tenancy, use lockout or utility shutoff actions to terminate a tenancy or otherwise evict a tenant of commercial real property, including a business or nonprofit, during the pendency of the COVID-19 emergency order proclaimed by Governor Newsome on March 4, 2020. Exceptions apply if a tenant poses a threat to the property, other tenants or a person, business or other entity. Any violations of this eviction prohibition would be against public policy and unenforceable.
Any eviction started after proclamation of the state of emergency but before the effective date is deemed void, against public policy and is unenforceable.
Does SB 939 impose new penalties or remedies?
Any landlord who harasses, mistreats or retaliates against a commercial tenant to force the tenant to abrogate the lease would be subject to a fine of $2,000 for each violation. Further, any such violation would be an unlawful business practice and an act of unfair competition under Section 17200 of the Business and Professions Code and would be subject to all available remedies or penalties for those actions under state law.
When is a commercial tenant required to pay unpaid rent due to COVID-19?
If a commercial tenant fails to pay rent during the emergency COVID-19 order, the sum total of the past due rent must be paid within 12 months following the date of the end of the emergency proclamation, unless the commercial tenant has successfully negotiated an agreement with its landlord to pay the outstanding rent at a later date. Nonpayment of rent during the state of emergency cannot be used as grounds for eviction. Notwithstanding lease terms to the contrary, landlords may not impose late charges for rent that became due during the state of emergency.
Are landlords required to provide notice of protections adopted under SB 939?
Landlords would be required to provide notice to commercial tenants of the protections offered under SB 939 within 30 days of the effective date. SB 939 does not preempt local legislation or ordinances restricting the same or similar conduct which impose a more severe penalty for the same conduct. Local legislation or ordinances may impose additional notice requirements.
Does SB 939 impose new protections for commercial tenants when negotiating lease modifications?
If enacted, SB 939 would permit commercial tenants to open negotiations for new lease terms, and provide commercial tenants the ability to terminate the lease if those negotiations fail. A commercial tenant who wishes to modify its commercial lease, may engage in good faith negotiations with its landlord to modify any rent or economic requirement regardless of the term remaining on the lease. The commercial tenant must serve a notice on the landlord certifying that it meets the required criteria, along with the desired modifications.
If the commercial tenant and landlord do not reach a mutually satisfactory agreement within 30 days, then within 10 days, 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 a written termination notice to the landlord. The commercial tenant would be required to pay previously due rent, in an amount no greater than the sum of the following: (1) the actual rent due during the emergency COVID-19 order, or a maximum of three months of the past due rent during that period, and (2) all rent incurred and unpaid during a time unrelated to the emergency COVID-19 order through the date of the termination notice. The payment is due within 12 months from date of the termination notice. The commercial tenant would be required to vacate the premises within 14 days of the landlord's receipt of the termination notice. Upon service of the notice, any lease, and any third party guaranties of the lease would terminate. If the landlord and commercial tenant reach an agreement to modify the lease, the commercial tenant would not have the option to later terminate the lease under this provision.
When is the next Senate Judiciary Committee Meeting for SB 939?
The Senate Judiciary Committee set a hearing for SB 939 on May 22, 2020 at 9:00 a.m. The Senate will livestream the hearing on its website at www.sen.ca.gov. Public comments or testimony may be submitted in writing to the Judiciary Committee by emailing Erica.porter@sen.ca.gov. Alternatively, the public may participate via telephone during the public comment period. Any changes to the Judicial Committee schedule may be found at: https://www.senate.ca.gov/calendar.
Newmeyer Dillion continues to follow COVID-19 and its impact on your business and our communities. Feel free to reach out to us at NDcovid19response@ndlf.com or visit us at www.newmeyerdillion.com/covid-19-multidisciplinary-task-force/.
Rhonda Kreger is Senior Counsel on Newmeyer Dillion's transactional team at our Newport Beach office. Her practice focuses on all aspects of commercial real estate law, with a particular emphasis on the representation of residential developers, merchant builders and institutional investors. You can reach Rhonda at rhonda.kreger@ndlf.com.
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White and Williams Defeats Policyholder’s Attempt to Invalidate Asbestos Exclusions
January 28, 2014 —
White and Williams LLPWhite and Williams attorneys scored a significant victory for the insurance industry on January 15, 2014, when a federal jury of four men and four women rejected a policyholder’s novel efforts to invalidate asbestos exclusions contained in insurance policies issued between February 1, 1979 and August 1, 1985.
In General Refractories Co. v. First State Ins. Co., Civil Action No. 04-CV-3509 (E.D. Pa.), General Refractories Company contended that asbestos exclusions in insurance policies issued by various insurance companies in the late 1970s and 1980s had not been submitted to the Pennsylvania Department of Insurance for approval prior to use and, therefore, were unenforceable. Holding a failure to obtain approval, by itself, would not be sufficient to render the exclusions unenforceable, the Honorable Edmund Ludwig sent the matter to trial to determine whether the Pennsylvania Insurance Commissioner implemented a policy that was uniformly executed by the Insurance Department to disapprove all asbestos exclusions between February 1, 1979 and August 1, 1985, such that the exclusions violated a “dominant public policy.”
Reprinted courtesy of Gregory LoCasale, White and Williams LLP
and
Patricia Santelle , White and Williams LLP
Ms. Santelle may be contacted at santellep@whiteandwilliams.com and Mr. LoCasale may be contacted at locasaleg@whiteandwilliams.com.
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Yes, Indeedy. Competitive Bidding Not Required for School District Lease-Leasebacks
October 01, 2014 —
Garret Murai – California Construction Law BlogRemember when you discovered that the tooth fairy wasn’t real?
It was kind of a bummer on one hand learning that it wasn’t a fairy that magically appeared to swap your tooth for cold hard cash, but rather your mom or, visual horrors, dad.
At the same time, it was, to your nearly-halfway-to-a-decade-on-this-planet-wizened-six-year-old mind, confirmation of what you had a sneaking suspicion was the case in any event.
And, so it is with the next case.
Lease-Leasebacks
In California, most public school construction projects are built using the traditional design-bid-build project delivery method in which a design professional designs the project, the project is put out for competitive bid and the selected contractor builds the project.
But not all school construction projects are built this way.
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Garret Murai, Kronick Moskovitz Tiedemann & GirardMr. Murai may be contacted at
gmurai@kmtg.com
#3 CDJ Topic: Underwriters of Interest Subscribing to Policy No. A15274001 v. ProBuilders Specialty Ins. Co., Case No. D066615
December 30, 2015 —
Beverley BevenFlorez-CDJ STAFFMichael R. Vellado and
Nicole R. Kardassakis of
Lewis Brisbois Bisgaard & Smith LLP analyzed the appeals case that “reversed the trial court’s entry of summary judgment in favor of ProBuilders Specialty Insurance Company (“ProBuilders”) and held that the ‘other insurance’ clause in the ProBuilders policy did not relieve it of its duty to participate in the defense of its insured, Pacific Trades Construction & Development, Inc. ('Pacific Trades')."
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Another discussion of the ProBuilders appeal ruling occurred on the
California Construction Law Blog, written by
Yas Omidi of
Wendel Rosen Black & Dean LLP. Omidi explained the appeal’s court decision: “In reversing the trial court’s decision, the appellate court characterized ProBuilder’s ‘other insurance’ clause as an ‘escape clause’—i.e., a clause that attempts to have coverage, paid for with the insured’s premiums, evaporate in the presence of other insurance.” Furthermore, she noted that “California public policy disfavors such clauses.”
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U.S., Canada, Mexico Set New Joint Clean-Energy Goal
June 30, 2016 —
Tom Ichniowski – Engineering News-RecordThe U.S., Canada and Mexico have agreed to boost their combined clean-energy generation to 50% of electricity production by 2025, from 37% last year.
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Tom Ichniowski, Engineering News-RecordMr. Ichniowski may be contacted at
ichniowskit@enr.com
Recent Bad Faith Decisions in Florida Raise Concerns
November 06, 2018 —
Michael Kiernan, Lauren Curtis & Ashley Kellgren - TLSS Insurance Law BlogThe State of Florida has long been known as one of the most challenging jurisdictions for insurance carriers in the context of bad faith – to say the least. Two recent appellate decisions have taken an already difficult environment and seemingly “upped the ante” in what constitutes good faith claims handling in the context of third-party liability claims. Set forth below is an analysis of the Bannon v. Geico Gen. Ins. Co. and Harvey v. Geico Gen. Ins. Co. decisions.
Reprinted courtesy of Traub Lieberman Straus & Shrewsberry LLP attorneys
Michael Kiernan,
Lauren Curtis and
Ashley Kellgren
Mr. Kiernan may be contacted at mkiernan@tlsslaw.com
Ms. Curtis may be contacted at lcurtis@tlsslaw.com
Ms. Kellgren may be contacted at akellgren@tlsslaw.com
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Investing in Metaverse Real Estate: Mind the Gap Between Recognized and Realized Potential
May 10, 2022 —
Robert G. Howard, David W. Wright & Craig A. de Ridder - Gravel2Gavel Construction & Real Estate Law BlogThe Metaverse is an immersive world combining virtual reality and augmented reality, where users are represented by avatars and roam virtual spaces. It comprises a variety of platforms and environments that can be explored, experienced, and developed. Online social games like Second Life, Fortnite and Minecraft are among the first wave of successful Metaverse games. Now, Meta and Microsoft see the Metaverse as a place to play, live, and work. A JP Morgan white paper stated that opportunities in the Metaverse seem “limitless.” The bank predicted that virtual worlds will “infiltrate every sector in some ways in the coming years.” A March 31 report by Citi concluded that the Metaverse has the potential to become a $13 trillion opportunity by 2030, with total global users of between one and five billion. According to Citi, the Metaverse will become a significant part of the next iteration of the internet (referred to as Web3) enabled by a variety of existing and emerging technologies, including 5G connectivity, secure blockchain and payment platforms, crypto assets, cloud computing, artificial intelligence, 3D modeling tools and headset devices.
A Land Rush, Virtually Speaking
Not surprisingly, investors are speculating regarding the value and potential of “virtual land” within the Metaverse, where land sales in 2021 exceeded $500 million and attracted a lot of attention and hype. The Sandbox, Decentraland, Somnium Space and CryptoVoxels are the most active platforms and owners can build almost anything on their virtual parcels. The open-source Ethereum blockchain, with self-executing smart contract functionality, operates as the foundational layer for most platforms. Parcels of land in The Sandbox and Decentraland are purchased with cryptocurrencies (called SAND and MANA, respectively) on their platforms and can also be sold and purchased on secondary marketplaces like OpenSea.
Reprinted courtesy of
Robert G. Howard, Pillsbury,
David W. Wright, Pillsbury and
Craig A. de Ridder, Pillsbury
Mr. Howard may be contacted at robert.howard@pillsburylaw.com
Mr. Wright may be contacted at david.w.wright@pillsburylaw.com
Mr. Deridder may be contacted at craig.deridder@pillsburylaw.com
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BLOK, a Wired UK Hottest 100 Housing Market Startup, Gets Funding from a Renowned Group of Investors
October 11, 2017 —
Aarni Heiskanen - AEC BusinessBlok, listed as one of the Hottest 100 European Startups by Wired UK, has secured several renowned investors to promote the company’s product development and marketing in its second round of financing.
The Helsinki-based startup company aims to revolutionize the housing market through automation and artificial intelligence. Blok believes that the future of the housing market will be on the Internet, where intelligent technology is opening up new opportunities for disrupting traditional business models.
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Aarni Heiskanen, AEC BusinessMr. Heiskanen may be contacted at
aarni@aepartners.fi
