ACTION NEEDED TODAY: SB 939 CRE Rent Moratorium Eviction Bill

An important message to our NAIOP SoCal Members …

We don’t ask you very often to write letters to legislators opposing BAD legislation.  Unfortunately, this legislative session may be unusual in that regard, so thank you very much for taking the time to contact our elected officials when we ask.  It will only take a few minutes and it will make a difference.  NAIOP SoCal is sending a letter, but individual letters are very important.

Yesterday, the California Business Properties Association (CBPA), our legislative advocates in Sacramento, sent out an alert on amendments to SB 939, a COVID-19 commercial rent moratorium eviction bill, that will upend existing real estate leases throughout the state.  Details on the amendment are outlined below

Click here for a sample letter in a Word document for you to simply put on your letterhead, sign and email.  Action is needed TODAY to ensure comments are included in the committee analysis.

PROTECT YOURSELF – OPPOSE SB 939!  (CBPA Analysis)

California State Senator Scott Wiener (D-San Francisco) yesterday amended SB 939, a COVID-19 commercial rent moratorium eviction bill, in a manner that upends existing real estate leases throughout the state.

Our reading is that SB 939 clearly violates the Contracts Clause of the U.S. Constitution and fails the basics of the Blaisdell Test that any court will apply to this legislation. 

This bill allows withholding of rent for more than a year, removes existing legal remedies, and rights from, and gives one party to a contract the right to walk away from a valid lease.

Additionally, SB 939 is too broad, poorly written and confusing, does not balance the needs of both parties, is not a reasonable solution, and would prolong the economic pain it purports to address.

SB 939 would bring great harm to the economy and your business: 

  • SB 939 makes it illegal to even serve notice to terminate a tenancy until a FULL YEAR AFTER the State’s COVID-19 Emergency Order expires.   
  • SB 939 gives one party the upper hand by making the common act of serving a notice to terminate tenancy a VIOLATION OF THE STATE’S UNFAIR BUSINESS PRACTICES and creates a $2,000 penalty. 
  • SB 939 enables the confusing patchwork of local ordinances on the same topic, making it even more complicated for any business that has buildings in multiple jurisdictions. 
  • SB 939 allows restaurants, bars, and entertainment venues with a decline in revenue of 40% as compared to before shelter in place and will face an ongoing reduction of capacity of 25% or more, to engage in good faith negotiations with their landlord to modify any rent or economic requirement regardless of the term remaining on the lease. 
  • Under SB 939, should the tenant and landlord not be able to reach a mutually satisfactory agreement, the tenant shall have the option to terminate the lease and not be liable for more than three months rent from the start of the Shelter in Place to cover the entire rest of the lease term. 
  • Under SB 939, any third-party guarantees will expire with the lease termination. 
  • SB 939 will be in effect for at least 22 months from March 2020 until December 31, 2021, OR two months after the end of the state of emergency, WHICHEVER IS LATER.