(Courtesy of the Senate Judiciary Committee)

Proposed Bill to Halt Commercial Evictions, Allow Tenants to Break Leases, Moves Forward in State Senate

May 27, 2020

A bill in California's state legislature would freeze commercial evictions for non-publicly traded companies and allow some businesses impacted by government mandated stay-at-home orders (such as cafes, restaurants and bars) to renegotiate rent or even terminate leases.

On Friday, the state Senate Judiciary committee advanced the bill, which means it is one step closer to being voted on by members of the State Assembly and State Senate.

Senate Bill 939,?presented by Senators Scott Wiener and Lena Gonzalez, would not only prohibit a person, business, or other entity from evicting tenants of commercial real property, but it would make it an unfair business practice if they do.

As written, the bill would consider an eviction harassment, and the landlord could be fined up to $2,000. Also, the evictions would be unenforceable, meaning the tenant would not have to leave.

While proponents of the bill argue it is necessary to protect some businesses, there is some opposition.The California Chamber of Commerce opposed the bill, telling the Senate Judiciary committee that the bill would have substantial unintended consequences on commercial space lessors and will ultimately hurt the very businesses it aims to protect. The Chamber added that it could lead to foreclosures and further hurt the economy.

Complicating matters further, [a]bout half of the 43 million rental units in the country are owned by small businesses, according to Bloomberg.

Wiener and Gonzalez will further amend the bill to explain what would happen if tenants broke the agreed upon leases, and will present it again to the Senate Judiciary Committee. If passed with a two-thirds vote by the legislature and signed by Governor Gavin Newsom, the measures would take effect immediately.

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