Client Alert
January 24, 2023
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Repayment Period Expiration
The Repayment Period for
Commercial Tenants Expires January 31, 2023
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As most of you know, the Resolution passed by the County of Los Angeles in January of 2022 terminated the eviction moratorium as it pertained to commercial property tenants. ( Eviction Resolution - County of Los Angeles) See Page 10, Section VI.A.1. The Resolution did, however, provide a number of protections for tenants including detailed repayment terms as follows.
A. Commercial tenants with 1-9 employees were given a full year, through January 31, 2023, to repay all rent deferred during the period from March 4, 2020 through January 31, 2022 (the "Protected Time Period".) See Page 8, Section IV.J.2.a and Page 16, Section VI.C.2.a.
B. Commercial tenants with 10-99 employees were given 6 months, through August 31, 2022, to repay all rent deferred during the Protected Time Period. See Page 8, Section IV.J.2.b and Page 16, Section VI.C.2.b.
Reminder: Our comments pertain to commercial property only that falls under the jurisdiction of the moratoriums enacted by the County of Los Angeles. The information provided does NOT apply to commercial property that falls under the moratorium enacted by the City of Los Angeles.
WHAT CAN YOU DO AS OF FEBRUARY 1, 2023?
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Sue for all Deferred but Unpaid Amounts: You may sue a tenant of commercial property for all monies that became due during the Protected Time Period (March 4, 2020 through January 31, 2022) but remain unpaid. You may sue those tenants in a non-priority action for breach of lease. If there is a lease guarantor, the guarantor may also be sued for breach of guaranty in the same action.
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You may NOT Evict Tenants for Failure to Pay Back Deferred Rent: A commercial tenant's failure to pay back unpaid rent that was incurred during the Protected Time Period March 4, 2020 through January 31, 2022) shall NOT be cause for eviction. See Page 17, Section VI.C.4.
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Late fees, Interest and Other Penalties: Make sure that no late fees, interest or other penalties were assessed during the Protected Time Period (March 4, 2020 through January 31, 2022). Do not pass through legal fees and costs. See Pages 17 & 18, Section VIII.
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Application of Security Deposits: We've been asked if you can apply security deposit towards the old delinquency that accrued during the Protected Time Period (March 4, 2020 through January 31, 2022). This is a gray area and will need to be dealt with on a case by case basis as it will depend on your lease language and whether your lease requires you to serve a notice before a tenant is considered in default and whether the security deposit section of the lease allows application.
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Putting a Tenant in Default to Nullify Certain Options: Many leases grant certain privileges to tenants such as an exclusive use, an option to renew, etc., and predicates those privileges on the tenant "not" being "in default". Again, what you can or cannot do will be determined by the default language in your lease and in particular, the language contained in the specific paragraph providing the privilege. What we do know is that the County is very, very protective of tenants so, as with application of security deposits, lease language is key.
We hope you find this information to be helpful. Please let us know if you have any questions.
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Any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek competent counsel for advice on any legal matter.
RICHARD L. SEIDE, APC
901 Dove Street, Suite 120, Newport Beach, CA 92660- 3018
Tele: (949) 474-8000; FAX: (949) 474-8030
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