On March 16, 2020, Governor Gavin Newsom announced new eviction protections for tenants statewide in light of the coronavirus pandemic. He issued an executive order suspending any provision of California state law prohibiting local governments from exercising their police power to impose substantive limitations on residential or commercial evictions.
Consistent with the Governor’s order, on March 17, 2020, the Monterey County Board of Supervisors adopted Urgency Ordinance No. 5325 (the “Urgency Ordinance”), prohibiting residential and commercial evictions.
More specifically, the Urgency Ordinance suspended the “authority of any landlord to commence evictions on any residential or commercial property within the unincorporated area …through May 31, 2020” on the basis of “non-payment of rent, or a foreclosure, arising out of a substantial decrease in household or business income.”
The causes for such decreases in household or business income include, but are not limited to, “layoffs or a reduction in the number of compensable hours of work, or a substantial decrease in business income caused by a reduction in opening hours or consumer demand, or substantial out-of-pocket medical expenses.” However, in order to qualify for this protection, a renter must show that either the decrease in income or the increase in out-of-pocket medical expenses was caused by the pandemic or the government’s response to it.
Many other counties in California have enacted similar urgency ordinances effecting the rights and remedies of landlords and tenants during the COVID-19 pandemic. While this article will focus on the language of the Monterey County’s Urgency Ordinance and its effects, some of its analysis may apply generally to other counties and/or municipalities in the state.
Where Does the Monterey Urgency Ordinance Leave Landlords & Tenants?
It is important to note that the Urgency Ordinance does not relieve a tenant from the obligation to pay rent nor restrict a landlord’s ability to recover rent payments that are due after the Urgency Ordinance is lifted. This means that the rent is not abated and the tenant still owes the rent and as soon as the Urgency Ordinance is lifted or lapses (without extension), the landlord can proceed with and file an Unlawful Detainer lawsuit (eviction lawsuit) against the tenant.
Additionally, while the Urgency Ordinance does not specifically address and/or prohibit pre-litigation procedures, such as the service of a Three (3) Day Notice to Pay Rent or Quit (a “Notice”) pursuant to California Code of Civil Procedure 1161(2), service of a Notice could be considered invalid as a part of the “authority of any landlord to commence evictions“, which is “suspended” under the Urgency Ordinance.
Put more simply, the Notice could be invalid/ineffective, and the landlord would have to serve a second Notice once the Urgency Ordinance is no longer in effect which would cost the landlord additional time and money.
So where does this leave landlords and tenants? What options are available them when a tenant is unable to pay rent due to a decrease in household or business income caused by the COVID-19 pandemic or by any government response? The answer will vary depending on the basis for the decrease, the type of tenancy (residential or commercial), and the specific language of the lease, with some contractual theories having more applicability in a commercial contexts than a residential one.
First, the decrease in a tenant’s household or business income must have been caused by:
- “Layoffs or a reduction in the number of compensable hours of work” (residential lease),
- A “substantial decrease in business income caused by a reduction in opening hours or consumer demand” (commercial lease), or
- “Substantial out-of-pocket medical expenses” (both residential and commercial)
The above must have been caused the pandemic or the government’s response to the same. If not, then the Urgency Ordinance would not prohibit a landlord from commencing an eviction.
Second, depending on the type of tenancy (i.e., residential or commercial) there may be contractual defenses which can be raised, such as impossibly, impracticability, and/or frustration of purpose. Because of the nature of these contractual doctrines and their narrow application, an in-depth analysis of the facts and the language of the lease/rental agreement would be necessary to determine if they apply to a particular situation. In addition, they are more likely to apply to commercial leases rather than residential leases.
Third, the specific language of the lease needs to be analyzed to ascertain if its language could be interpreted to apply to a pandemic event and, if so, what are the parties’ rights and remedies regarding the same. An example of this are Force Majeure clauses, which can excuse the payment of rent during the Force Majeure event, but which is difficult to apply to if the Force Majeure event (i.e., a pandemic) is not specifically set forth in the lease. Understanding the applicability of Force Majeure clauses, as well as clauses related to hourly, weekly, or monthly hours of operation minimums, could be critically important.
Lastly, subsequent extension/modification of the Urgency Ordinance could extend its duration or grant additional rights and/or relief, some of which could have a substantial effects on the landlord’s or tenant’s position, rights, and remedies.
In conclusion, it is important to review the language of your lease or rental agreement and analyze the facts of your specific situation as well as the law in order to determine your rights and possible course of action. JRG Attorneys at Law stands ready to assist you with this and all of your landlord-tenant needs.
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