On Friday, March 27, 2020, the Los Angeles City Council adopted an emergency ordinance (Ordinance No. 186585) (“Ordinance”) with sweeping protections for commercial and residential tenants. Yesterday afternoon, March 31, 2020, Mayor Eric Garcetti of Los Angeles signed the Ordinance, which became effective immediately.
Pertinent sections of the Ordinance are summarized below.
- Owners of commercial or residential properties may not evict a tenant for nonpayment of rent due to the COVID-19 emergency during the Local Emergency Period. The “Local Emergency Period” is defined in the Ordinance as March 4, 2020 until the end of the local emergency as identified by the Mayor. Note that the end date of this prohibition is open-ended.
- In order to qualify for this eviction protection, the tenant must be unable to pay rent due to circumstances related to the COVID-19 pandemic, including loss of income due to school closures, health care expenses related to being ill or reasonable expenditures that stem from government-emergency measures. Note that landlords may request proof that the inability to pay rent arises out of these circumstances. Although not defined, the term “loss of income” for residential tenants is, in theory, broad enough to extend to work furloughs and termination of employment.
- Landlords must deliver written notice of the protections provided by the Ordinance to residential tenants no later than April 30, 2020.
- The restrictions do not apply to commercial property leased by a tenant that is a “multi-national company, a publicly traded company, or a company that employs more than 500 employees.” Note that the Ordinance does not address whether commercial property leased to subsidiaries of such large tenants would also be excluded.
- Owners may not charge interest or late fees on unpaid rent during the Local Emergency Period.
- Nothing in the Ordinance eliminates any obligation to pay lawfully charged rent. The Ordinance provides residential tenants with up to 12 months following the expiration of the Local Emergency Period to repay past due rent. Commercial tenants are provided 3 months following the expiration of the Local Emergency Period to repay past due rent.
- Owners may not remove occupied residential units from the rental market under the Ellis Act during the Local Emergency Period.
- For residential properties, prior to the expiration of the Local Emergency Period or within 90 days of the first missed rent payment (whichever comes first), the parties may mutually agree to a repayment plan of unpaid rent in accordance with the options from the City’s Housing Department.
- The restrictions are retroactive as of March 4, 2020 and apply to nonpayment eviction notices, no-fault eviction notices and unlawful detainer actions issued or filed on or after the commencement of Local Emergency Period.
Please see our webpage for legal insights regarding the COVID-19 Pandemic: https://www.sheppardmullin.com/coronavirus-insights. To sign-up for Real Estate-related alerts, subscribe to the Real Estate, Land Use & Environmental Law Blog. For more information on the Ordinance please reach us for more information.
*This alert is provided for information purposes only and does not constitute legal advice and is not intended to form an attorney client relationship. Please contact your Sheppard Mullin attorney contact for additional information.*