Creative Strategies for Landlords and Tenants to Survive the COVID-19 Shutdown

It is important to note that eviction moratoria and related restrictions differ across states, counties, cities and regions. While city and local jurisdictions seek to employ their state's guidelines, they often take it a step or two further, or not far enough, based on local conditions, which can be impacted by politics and lobbying. New law, rules and ordinances are not relieving any tenants of rent liability, but rather merely extending the tenant's time to pay. Thus, unless a lease provides for rent abatement under these particular conditions, the burden of the pandemic is still left squarely on tenants' shoulders. Few, if any, leases shift the financial burden of the pandemic shut down to the landlord. Few, if any, insurance policies insure against pandemic shutdowns. However, although contractually it appears that landlords will not bear the burden of the shutdown, in fact many will lose a lot due to necessary evictions, vacancies, and the probability of a more competitive rental market and tenant insolvencies.

Tenants and landlords should be proactive and cooperative in strategizing solutions to minimize financial ruin on both sides, regardless of what the lease says. Tenants should be transparent and forthcoming with information that the landlord should consider in deciding on lease modification requests and terms. Hopefully, the landlord will be reasonable, empathetic and cooperative. If not, tenants still have options. For example, tenants can form alliances with other tenants of the same landlord, lobby politicians and, as a last resort, file bankruptcy to reorganize the debts. Whether you are a landlord or a tenant, the first step in the negotiation process is to know the laws that apply to you and make sure you meet the requirements in those laws.

Examples of Moratorium/Delayed Rent Laws

In California, Governor Gavin Newsom issued an executive order on March 25, 2020 allowing local governments to impose protections for residential and commercial tenants unable to pay their rent due to COVID-19. Two days later, Newsom issued a second executive order prohibiting landlords from evicting residential tenants for nonpayment of rent through May 31, 2020. This order also authorized local governments to pass further restrictions and extend eviction moratoriums, and indeed they have. For example, on April 30, 2020 the City of Santa Monica extended the end date for its eviction moratorium from May 31 to June 30, 2020. Meanwhile the City of Los Angeles enacted Ordinance No. 186585, which prohibits residential evictions during the "Local Emergency Period" if the tenant is unable to pay rent due to COVID-19. This period is defined as "March 4, 2020 to the end of the local emergency as declared by the Mayor."