Business Journal: What California Eviction Relief Means For Retail Tenants

This week, Gov. Gavin Newsom signed a new law to prevent some residential evictions during the COVID-19 pandemic. But the Sacramento Business Journal’s Sonya Sorich spoke with CapRadio’s Steve Milne about what this means for commercial tenants.

On why a new wave of commercial business evictions could be on the horizon

For the most part, it seemed that landlords had been cooperating with their commercial tenants whose businesses had been disrupted by COVID-19. But a local attorney called it forced cooperation. That’s because there was a statewide measure in place from the Judicial Council of California that made commercial evictions nearly impossible during the pandemic.

That rule expired last week, but some local measures remain in effect. For example, the city of Sacramento adopted an ordinance protecting first-floor retail tenants from eviction if they can’t pay rent due to coronavirus. That ordinance has been extended through Sept. 30.

On what measures landlords can take if they can’t evict some retail tenants

Landlords can always sue their tenants for unpaid rent. Lawyers say it can be a costly process that doesn’t always make sense, especially if the landlord is dealing with a small business. But nonetheless, some landlords think it’s the right move in certain cases, and we’ve seen some examples of that in the Sacramento area.

Prominent Sacramento area landlord Ethan Conrad is currently suing Goodwill Industries of Sacramento Valley and Northern Nevada, alleging that the nonprofit owes hundreds of thousands of dollars in rent and other fees.

Goodwill says Conrad hasn’t been willing to cooperate with the organization after it lost significant revenue due to its temporary retail closures during the pandemic. Conrad denies the allegation and says Goodwill is making money, and should be able to pay its rent.

On the potential for more disputes like this in the future

It could depend on whether businesses receive more federal aid. Landlords have told the Business Journal that what’s really needed is more money to help local businesses, in amounts that only the federal government can provide.

Congress is currently deadlocked on a possible extension of the Paycheck Protection Program, and is scheduled to be out of session until Labor Day.

On businesses like hair salons and barber shops that were allowed to reopen indoor operations this week

They’re obviously happy to be back in business, but they’re also operating with a certain level of uncertainty, especially since many of them didn’t expect the most recent round of shutdowns. There are a lot of questions of how people will behave over Labor Day weekend, and whether we’ll see a spike of COVID-19 cases, and subsequent business shutdowns, as a result of that.