As previously reported on the Unfamiliar Terrain blog, San Francisco Mayor London Breed declared a moratorium on evictions of small and medium-sized businesses (those having worldwide receipts of $25 million or less) impacted by COVID-19 for non-payment of rent. By supplemental declaration on April 1, Mayor Breed ordered that the moratorium also applies to non-replenishment of security deposits. The April 1 supplemental declaration is the eighth of ten supplemental declarations (as of April 21, 2020) to the Mayor’s Proclamation of Local Emergency.
Although this supplement to the Mayor’s Proclamation discourages landlords from deducting delinquent rent from existing security deposits during the moratorium, landlords are not prohibited from doing so. Landlords may not, however, require small and medium-sized business tenants to increase their security deposits during the moratorium or evict such tenants based on failure to replenish security deposits, if such failure is caused by the financial impacts of COVID-19. Instead, landlords and tenants must follow the same notice and cure process for replenishment of security deposits as required for non-payment of rent pursuant to the original order for a commercial eviction moratorium. Landlords are barred from evicting such tenants due to failure to replenish security deposits until 6 months after the moratorium expires (currently scheduled to expire on May 17).
The Coblentz Real Estate team and authors of our real estate and land use blog, Unfamiliar Terrain, will continue to monitor these developments. Visit our COVID-19 Business Resource Center for additional information, or contact Real Estate attorneys Barbara Milanovich at bmilanovich@coblentzlaw.com or Caitlin Connell at cconnell@coblentzlaw.com.