Calif. Cities Can Still Impose Commercial Eviction Moratoriums

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Executive Order Extends Authorization

Many local governments took a collective sigh of relief when California Gov. Gavin Newsom signed Executive Order N-03-21, extending local authorization to impose commercial eviction moratoriums through June 30. Like its predecessors, the Executive Order, signed March 4, allows local governments to limit commercial evictions based on nonpayment of rent due to COVID-19-related impacts without concern for state law preemption. Before this extension, local governments with commercial eviction moratoriums were about to lose their express immunity from claims of state law preemption on March 31.

For residential tenancies, the state has adopted statewide eviction protection legislation (Assembly Bill 3088, Senate Bill 91 and AB 81), protecting residential renters that are financially impacted by COVID-19 from being evicted. The state Legislature has not adopted equivalent statewide protections for commercial tenants that are also struggling to stay afloat financially due to restricted business operations under applicable health orders. This means that it is up to local governments to decide whether to adopt a commercial eviction moratorium for businesses financially impacted by COVID-19. The Executive Order provides local governments a powerful tool to adopt local protections, or extend their local protections that are already in place, to help the brick-and-mortar businesses in their jurisdictions keep operating. Cities should consult with their legal counsel prior to enacting or continuing any moratoriums.

As economic sectors gradually reopen in California and the nature of the pandemic continues to evolve, commercial eviction moratoriums are also evolving. For example, as restrictions on businesses are slowly easing and allowing for expanded operations, business revenue should be increasing and allowing for partial payment of rent. Some cities require partial rental payments that are proportionate to the income received as compared to prior non-pandemic years. Some local ordinances have evolved to require a fixed percentage of rent be paid each month for those businesses that are open and not subject to government operational restrictions. This mirrors the State’s approach to residential eviction protection. Cities are continuing to address the effects of the pandemic in ways that account for their local conditions and balance the needs of various stakeholders.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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