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May 27, 2020

Proposed Bill in California Could Devastate Commercial Landlords


Mortgage Professional America
by Kasi Johnston

A California bill born out of the COVID-19 pandemic, which would have major impacts on the state's landlords and tenants, is one step closer to the floor of the Senate. The state's Senate Judiciary Committee advanced SB 939, which would enact a moratorium on commercial eviction for small businesses and nonprofits during the COVID-19 state of emergency. The bill was recently amended to also allow hospitality tenants who have lost over 40% of their revenue or operating at 25% capacity to renegotiate and modify their lease deals. If an agreement can't be reached after 30 days of negotiations with their landlords, the tenant would be allowed to break the lease with no penalty.

Landlord advocates, like the California Business Properties Association (CBPA), are calling the bill unconstitutional, especially considering no relief of equal benefit is being provided to the landlord community.

“Most of the landlords in California right now are attempting to work with their tenants to try to reconfigure leases and figure out how to make all this work,” said Rex Hime, president and CEO of CBPA. “[SB 939] does nothing but upend the entire process, and it makes it even more difficult than to negotiate new leases.” Read more.

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