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.
Read the court decisionRead the full story...Reprinted courtesy of
Mitsubishi Estate to Rebuild Apartments After Defects Found
March 19, 2014 —
Kathleen Chu and Takahiko Hyuga – BloombergMitsubishi Estate Co. (8802), Japan’s biggest developer by market value, will rebuild a Tokyo residential complex where it stopped selling apartments that went for as much as 350 million yen ($3.4 million) after finding defects.
The reconstruction will take about three to four years to complete, and builder Kajima Corp. will be in charge of the project and cover the cost, said Masayuki Watanabe, a spokesman at Tokyo-based Mitsubishi Estate. The building was constructed by Kajima along with Kandenko (1942) Co., according to the developer.
Mitsubishi Estate stopped selling apartments in the building in central Tokyo’s upscale Aoyama neighborhood after finding it needed repairs, including to some of the pipes, the developer said in an e-mail on Feb. 3. Eighty-three out of 86 units were under contract and were expected to be handed over to the owners on March 20, the company said last month.
Ms. Chu may be contacted at kchu2@bloomberg.net; Mr. Hyuga may be contacted at thyuga@bloomberg.net
Read the court decisionRead the full story...Reprinted courtesy of
Kathleen Chu and Takahiko Hyuga, Bloomberg
What is an Alternative Dispute Resolution?
August 26, 2019 —
Bremer Whyte Brown & O'Meara LLPAlternative Dispute Resolution (“ADR”) is a term that refers to a number of processes that can be used to resolve a conflict, dispute, or claim. ADR processes are alternatives to having a court decide the dispute in trial.
ADR processes can be used to resolve any type of dispute including but not limited those related to families, neighborhoods, employment, businesses, housing, personal injury, consumers, and the environment. ADR is usually less formal, less expensive, and less time-consuming than a trial.
Most Common Types of Alternative Dispute Resolutions
Mediation
In mediation, an impartial person called a “mediator” helps the parties try to reach a mutually acceptable resolution of the dispute. The mediator does not decide the dispute but helps the parties communicate so they can try to settle the dispute themselves. Mediation leaves control of the outcome with the parties.
Read the court decisionRead the full story...Reprinted courtesy of
Bremer Whyte Brown & O'Meara LLP
Home Prices in 20 U.S. Cities Increase at Slower Pace
February 25, 2014 —
Victoria Stilwell – BloombergHome prices in the U.S. climbed at a slower pace in the year through December, pointing to a moderation in the market that will help keep more properties within reach for prospective buyers.
The S&P/Case-Shiller index of property values in 20 cities rose 13.4 percent from December 2012 after increasing 13.7 percent in the year ended in November, the group said today in New York. It was the first deceleration since June. The gain matched the median estimate of 33 economists surveyed by Bloomberg.
Price appreciation is slowing as rising mortgage rates combined with harsh winter weather to cool home purchases over the past few months. Smaller increases mean more homes will remain affordable as the labor market improves, helping maintain the rebound in residential real estate that has boosted growth.
Read the court decisionRead the full story...Reprinted courtesy of
Victoria Stilwell, BloombergMs. Stilwell may be contacted at
vstilwell1@bloomberg.net
Wendel Rosen’s Construction Practice Group Welcomes Quinlan Tom
January 06, 2016 —
Garret Murai – California Construction Law BlogThere’s been more cheer than usual at Wendel Rosen’s Construction Practice Group this holiday season.
Earlier this month, Quinlan Tom, a construction and business attorney, joined us from McInerney & Dillon, a venerable and well-respected construction boutique firm (we know a lot of folks there) with local roots like us in Oakland, California. We’ve all known Quinlan for a while, so when he decided to join our band of merry legal practitioners, we were quite thrilled.
Being lawyers though, and better at asking than answering questions, we decided to pose a few questions to Quinlan:
Q. So, you’ve just been sworn to tell the truth, the whole truth, and nothing but the truth, under penalty of perjury. So, tell us about your practice.
A. Let me just start with it’s quite an honor to appear in your blog; I’ve been a reader for a while (in secret of course before I got to Wendel Rosen). I’m also excited to join you and the other members of Wendel Rosen’s Construction Practice Group; as you mention, I’ve known each of you professionally for quite some time and respect each of you tremendously.
I started as a construction litigator right out of law school. I completed three years of mechanical engineering at UC Davis and put that on my resume when I was looking for a job after law school. (In addition, my dad retired after 40 years in the trenches as a union electrician). McInerney & Dillon (“M&D”) and a couple of other firms found that interesting and I ended up starting with M&D. I did find that my engineering studies helped with my acclimation to construction disputes. While I never pretend to be an engineer, it has provided me with a foundation of how the construction process works and how the projects are designed. 26 years later, I continue to enjoy counseling my clients in their construction disputes/issues and still find each construction project I am involved with fascinating.
I have tried, arbitrated and litigated cases for 26 years, from the United States District Court to the California Superior Court and the California Office of Administrative Hearings. I have argued cases before the Ninth Circuit Court of Appeals and the California Court of Appeal. I counsel my clients into hopefully making the best business decisions available melding the knowledge I have gleaned from my litigation experience with their financial and personal goals.
Read the court decisionRead the full story...Reprinted courtesy of
Garret Murai, Wendel Rosen Black & Dean LLPMr. Murai may be contacted at
gmurai@wendel.com
The Hidden Dangers of Construction Defect Litigation: A Redux
January 17, 2013 —
David McLain, Higgings, Hopkins, McLain & Roswell, LLCI previously wrote an article entitled “The Hidden Dangers of Construction Defect Litigation” for the Common Interests magazine, the monthly periodical of the Rocky Mountain Chapter of the Community Associations Institute. In that article, I discussed the potential negative effects of homeowners associations bringing construction defect suits as anything other than a last resort. The purpose of this post is to bring to light, by way of a real life example, the problems discussed in my previous article.
I have recently seen a lawsuit filed by an individual homeowner within a common interest community against the homeowners association, its management company, and the attorneys retained by the association to represent it in a construction defect lawsuit against the original developer, general contractor, and one of the design professionals. In his suit, the homeowner complains that the association’s construction defect attorneys “neglected to amend [their] complaint to include only and specifically the claims for damages for those properties, those buildings or condominium units, either by owner or specific locations, which had sustained damages or had faulty construction for which damages were being sought.” As a result of claiming damages throughout the entire community, the homeowner alleged that the entire community was tarred “with the black brush of litigation.”
As the homeowner explained in his complaint, he purchased a condominium for his daughter-in-law when she moved to Colorado to care for him after the death of his wife.
Read the court decisionRead the full story...Reprinted courtesy of
David McLainMr. McLain can be contacted at
mclain@hhmrlaw.com
Real Estate & Construction News Roundup (9/4/24) – DOJ Sues RealPage, Housing Sales Increase and U.S. Can’t Build Homes Fast Enough
October 07, 2024 —
Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law BlogIn our latest roundup, environmental regulations tighten for commercial properties, Wells Fargo sells most of its commercial mortgage services business, first-time home buyers struggle with housing affordability, and more!
- The U.S. Department of Justice announced that it is suing the real estate company RealPage, saying it engaged in a price-fixing scheme to drive up rents. (Jennifer Ludden, NPR)
- As environmental regulations for commercial buildings and properties tighten across the U.S., green leases and technologies offer owners and operators opportunities to reduce their portfolios’ carbon footprints, generate cost savings and further align with ESG goals. (Nish Amarnath, Construction Dive)
- Wells Fargo & Co. agreed to sell most of its commercial mortgage servicing business to Trimont LLC, ceding the title of biggest US commercial and multifamily mortgage servicer to the Atlanta-based firm. (Hannah Levitt and Scott Carpenter, Yahoo)
Read the court decisionRead the full story...Reprinted courtesy of
Pillsbury's Construction & Real Estate Law Team
Loss Ensuing from Alleged Faulty Workmanship is Covered
July 19, 2017 —
Tred R. Eyerly - Insurance Law HawaiiThe federal district court found that under Montana law, water damage resulting from alleged faulty workmanship in repairing the insured's roof was covered. Leep v. Trinity Universal Ins Co., 2017 U.S. Dist. LEXIS 86759 (D. Mont. June 6, 2017).
The insured's property was damaged in a hail storm. The insured contracted with Sprauge to repair the hail damage. Sprauge tore off and replaced roof lining and shingles. Sprague replaced a vent cap and tubes, but did not replace any vent piping or vents. The contract between the insured and Sprauge provided it was the owners' responsibility to check the exhaust vents for all furnaces and water heaters after the roofing project was completed.
Subsequent to the repairs, water was found dripping from a bathroom fan. Moisture was also found on the second story emanating from the ceiling. Finally, in the attic, the furnace vent piping was disconnected and the furnace exhaust was venting into the attic.
Read the court decisionRead the full story...Reprinted courtesy of
Tred R. Eyerly - Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
