Member Article

Key Points:

• SF Major extends commercial eviction moratorium through May 17, 2020.
• Moratorium applies only to commercial tenants registered to do business in San Francisco meeting certain requirements.
• Moratorium applies to all attempts to recover possession due to non-payment.
• Moratorium covers security deposits.

SF Mayor Breed, by Executive Order on April 15, 2020, determined that emergency conditions continue to exist due to the ongoing public health crisis arising from COVID-19 and the economic impacts it has caused, warranting an extension of the commercial eviction moratorium originally set to expire on April 17, 2020.Any commercial tenant registered to do business in San Francisco under Article 12 of the Business and Tax Regulations Code, with 2019 combined worldwide gross receipts equal to or below $25 million, may be afforded protection under the Order provided that certain requirements are met.

If a covered commercial tenant fails to make a rent payment that was due on or after March 17, 2020, the landlord is required to provide the tenant written notice of the violation and an opportunity to cure the same. The landlord notice must specify a cure period of at least one month, although the Order encourages landlords to offer a longer period. Upon receipt of the landlord notice, the tenant will have the cure period to either pay the rent or provide documentation to the landlord showing that the tenant is unable to pay the rent due to a financial impact related to COVID-19. A financial impact is "related to COVID-19" if caused by the COVID-19 pandemic or by any local, state, or federal government response to COVID-19.

If the tenant provides the landlord documentation of the tenant's inability to pay rent due to a financial impact related to COVID-19, then the cure period is extended by one month. Subject to submission of updated documentation each month, for a period not to exceed six months after the rent was originally due, the tenant may obtain additional monthly extensions of the cure period. The cure period requirements survive the expiration or termination of the Order.

The Order applies to all attempts to recover possession of a unit due to nonpayment, including situations where a tenant is occupying a unit on a month-to-month periodic tenancy, holdover basis, or similar arrangement. The Order also includes situations where the landlord has the right to terminate or not renew the agreement at the landlord's discretion. Unless the landlord, in such situations, can demonstrate an alternative, non-pretextual reason for recovering possession of the unit, the moratorium will apply.

The moratorium is also intended to cover security deposits. Although the moratorium does not prohibit a landlord from deducting rent from a security deposit, it discourages landlords from doing so. If the landlord does deduct rent from the security deposit and the agreement requires that a tenant replenish the security deposit, the landlord cannot attempt to recover possession of the unit if the tenant is unable to replenish the security deposit because of the financial impacts of COVID-19.