San Francisco lawmakers look to cement protections for residential and commercial tenants

As the pandemic seemingly dissipates, the San Francisco Board of Supervisors is adamant in preserving residential tenant protections. Lawmakers also want to give clemency to businesses that have been forced to close their doors because of shutdown orders.

Listen to Daniel Bornstein discuss what is at stake for both residential and commercial landlords in San Francisco. 

 

 

News for San Francisco residential landlords

No-fault evictions were already banned in San Francisco, but on May 25, the Board of Supervisors has extended the freeze for yet another 90 days.

 

 

Enter the "Tenant Lifeline Act," another proposal that would shield renters from evictions for nonpayment of rent if 25% of the rent is paid by December 31. As it stands now under state law, tenants have until June 30 to pay a quarter of the rent to be insulated from eviction.

 

In other words, tenants will buy more time to fork over 25% of the rent. This would unfairly elongate the state of malaise for many landlords who have been waiting months on end to recoup rent debt. 

 

Senate Bill 91 has given a flicker of hope to qualifying rental property owners with the state promising to pay 80% of COVID-related debt. Governor Newsom went a step further by proposing that 100% of rent arrears be paid by California.

Yet for landlords bereft of cash flow, these words have rung hallow. Rental assistance programs thus far have been slow and dysfunctional, as Daniel explains in this podcast.

 

It doesn't get any better for commercial landlords

Figures vary, but it has been estimated that more than $400 million of rent debt is owed by San Francisco businesses that have been forced to shut down or scale back on their hours. 

As we stated earlier, there is no statewide ban on evicting commercial tenants. Through executive orders and their extensions, local governments can go to the drawing board and enact their own protections.

In response, San Francisco has put together a rather convoluted moratorium on commercial evictions, based on tiers that take into account square footage, number of employees, and gross revenue. 

View the city's official web page to see if a business qualifies for the eviction moratorium →

 

Now, there are calls to strengthen commercial tenant protections

If lawmakers have their way, some businesses could in certain circumstances, terminate the lease and cease paying rent upon 30 days' written notice. Many nuances apply.

The cerebral types can read the entire proposal here »

The chief architect of the measure is Supervisor Dean Preston, who stated at the outset of the pandemic that lawmakers have an imperative to make it a matter of law to allow mom-and-pop businesses that are the backbone of the economy to make it through the pandemic. He submits that those small businesses that have been legally required to shut down should not be evicted for the failure to pay rent during that period.

 

“The fact that some landlords expect to get 100% of their rent for the periods that businesses were fully shut down is totally unfair and it’s disappointing that we have to address it through legislation, but we do..."

 

The whole idea is that when parties enter into a contract, certain obligations must be met. But when it is impossible for the tenant to perform their end of the bargain because they have been essentially told they cannot be open for business, it is argued, the tenant should be let off the hook and have the ability to bow out of the lease without penalty.

 

Issues abound

An initiative to tamper with commercial tenancies raises some serious constitutional concerns. We strongly suspect that if passed, the law will be met with litigation challenging the government's interference with contracts and "cherry-picking" which merchants are absolved from paying rent and which businesses have to fulfill the terms of the lease.

There is a lot to sort out, but Bornstein Law is here to help landlords navigate these choppy waters. We are not a crusading law firm that sets off to challenge laws, but one thing we do very well is help manage landlord-tenant relationships.