Real Property Law
My Commercial Tenant Won’t Pay Their Rent! Can I Evict Them?
On or about September 2020, California Governor Gavin Newsom signed into law Assembly Bill (“AB”) 3088. AB 3088 forestalls evictions of California residential tenants who have suffered financial hardships resulting from the COVID-19 Pandemic but does not forgive or cancel a tenant’s obligation to pay rent, or back rent owed. Importantly, AB 3088 does not apply to commercial tenants.
On January 29, 2021, Governor Newsom also signed into law Senate Bill (“SB”) No. 91, which extended California’s residential eviction moratorium but, like AB 3088, did not offer any protections to commercial tenants. SB 91 extends the moratorium on residential evictions to June 30, 2021 and provides a rent reduction to residential tenants who declare a financial hardship caused by the COVID-19 pandemic.
AB 3088 was codified in California Code of Civil Procedure (“CCP”) sections 1179.01.5, et seq. CCP § 1179.01.5 provides, in pertinent part:
(b) Notwithstanding any other law, before October 5, 2020, a court shall not do any of the following:
(1) Issue a summons on a complaint for unlawful detainer in any action that seeks possession of residential real property and that is based, in whole or in part, on nonpayment of rent or other charges.
(2) Enter a default or a default judgment for restitution in an unlawful detainer action that seeks possession of residential real property and that is based, in whole or in part, on nonpayment of rent or other charges. Code Civ. Proc., § 1179.01.5.
As noted above in CCP § 1179.01.5, a Court will not issue a summons on a complaint for unlawful detainer when a landlord seeks possession of the premises for nonpayment of rent. Note, subdivision(d) of CCP § 1179.01.5 clarifies that, “This section does not prevent a court from issuing a summons or entering default in an unlawful detainer action that seeks possession of residential real property and that is not based, in whole or in part, on nonpayment of rent or other charges.” CCP § 1179.01.5. The Courts also require a landlord/plaintiff to file an additional coversheet with the Court which requires a party, or their counsel, to specify whether the property is commercial or residential, and whether this action is based on “an alleged default in payment of rent or other charges.” See CCP § 1179.01.5, subdivision (c)(1). CCP section 1179.02 clarifies that, “for purposes of this chapter… “(h) ‘Tenant’ means any natural person who hires real property except any of the following: (1) Tenants of commercial property, as defined in subdivision (c) of Section 1162 of the Civil Code…”
As noted above, California eviction moratoriums only apply to residential tenancies. Because of the ever-evolving changes to the laws regarding evictions and moratoriums related thereto, commercial landlords should consult with a real estate attorney regarding their rights and available remedies following a commercial tenant’s refusal to pay rent.