Businesses are closed due to government mandate. In the San Francisco Bay area, other than in San Mateo county until it ended up on California’s county watch list, businesses like movie theaters, gyms, and salons have not been able to operate at all. What business can sustain four months to a year of no income?

Other than salary, the next largest operating expense for businesses is often rent. 

These are the evaluations that businesses and landlords are making moving forward:

1. How will backrent be addressed?
2. Can the business continue in a post-Covid world and remain in the leased premises?
3. What are the consequences for terminating the Lease?

Since the outbreak of COVID-19 began, business as usual has been disrupted. As a result of various government interventions, there has been a disruption of supply chains across all industries. Manufacturing, processing, transportation, and agriculture have either slowed or ground to a halt. As a result of these disruptions, businesses find it increasingly difficult to meet their demands and, in some cases, their contractual obligations.

This leaves an unanswered question, who should bear the losses and face the consequences of a contractual breach?

California Judicial Council Adopts New Rules to Lower Jail Population, Suspend Evictions and Foreclosures

By Julia M. Wei, Esq.

On April 6, 2020 by teleconference, the Judicial Council issued 11 temporary rules effective immediately. The full text of the emergency rules here.

As our firm’s earlier update regarding eviction moratoriums noted, there has been movement both on the state and local government level to halt or otherwise slow the progression of evictions due to non-payment of rent for COVID-19 related reasons. The practical implications are that any unlawful detainer must be filed in the courts and now the California Rules of Court emergency rules are in effect as to ALL unlawful detainer actions (whether COVID-19 related or not). My reading of the new rules is that it applies to both commercial and residential eviction.

by Henry Chuang and Julia M. Wei

            In these unprecedented times, many local and state governments have taken various steps to protect tenants, in some instances including commercial tenants, from eviction.  On the state level, on March 27, 2020 Newsom issued an Executive Order effectively delaying all residential unlawful detainer actions.  The text of the Executive Order is here.  The Order gave all residential tenants an additional 60 days to respond to an eviction lawsuit if the tenants notified their landlord that they were unable to pay rent due to Covid-19 issues.  The California order did not stop or delay any evictions that were occurring for other reasons such as illegal activity on the property or an owner move-in.  This protection is to last until May 31, 2020 unless otherwise extended.

COVID Employment Law Update

On March 18, 2020, the Families First Coronavirus Response Act was signed into law.  This new law expands many employers’ obligations to provide sick leave to employees impacted by COVID-19.

Generally, the Act provides that all covered employers must provide all employees with up two weeks of paid sick leave at the regular rate of pay for up to two weeks if the employee is:

• personally experiencing symptoms of COVID-19 and seeking a medical diagnosis; or
• is personally subject to a quarantine instruction from a Federal, State, or local government or a medical professional.

Businesses of all kinds will be forced to keep their doors closed in the coming weeks in the face of COVID-19 and the orders from Governor Newsom [1] and the Santa Clara County Health Officer. [2] Business owners should be turning to their insurance policies to consider what help they will be able to obtain. Each business will have different results depending on the kind of coverage they have. This article outlines a few of the common insurance issues that will be relevant in the current crisis.

Co-author Josue Uribe Fonseca

We are getting a lot of questions about contract enforcement during this state of emergency. Many people need to be excused from contract performance for reasons entirely out of their control. That means we are throwing around terms like "force majeure" to address whether performance is excused due to COVID-19's' effects such as the State of Emergency and California's Executive Orders, and the various counties' shelter-in-place orders.

Palo Alto City Council voted last night to adopt the Urgency Ordinance to halt residential evictions for COVID-19 related hardship. 

The city's moratorium on evictions will remain in effect until the city's state of emergency expires. After that, residents would have 120 days to make full payment of the back rent.

Looking at the Agenda for the Palo Alto meeting reveals that the council is also evaluating to extend the eviction moratorium to small businesses, non-profits and commercial tenants also impacted by the State of Emergency. Agenda found here.

The San José City Council has enacted a temporary eviction moratorium in response to the COVID-19 pandemic. The moratorium is in effect through April 17, and the City Council may extend it.

The new ordinance is effective immediately.

The moratorium applies to all residential properties in San José, including single-family homes, rooms rented in single-family homes, duplexes, condominiums, income-restricted apartments (i.e., affordable housing), rent-stabilized apartments, market-rate apartments, and mobilehomes.

Please note the moratorium only applies to residential evictions for nonpayment of rent due to impacts of the COVID-19 outbreak. There is no moratorium on lawful evictions for other just causes.