The economic impact of the response to the COVID-19 pandemic has reverberated through the small business community over the past few months. Most business insurance policies do not cover losses due to COVID-19 impacts. However, federal, state, and local governments have been scrambling to pass measures to extend a lifeline to small businesses until they can begin generating income as the economy slowly reopens. In addition to the federal Paycheck Protection Program, local and state measures have been passed to assist small businesses through tough times, including rent relief for commercial tenants.
Commercial leases do not generally include the same protections for business tenants as residential tenants enjoy. However, many of the rent relief measures enacted by both the City of Seattle and the State of Washington provide a measure of rent relief for business tenants regarding their commercial leases, in addition to residential tenants. On March 16, 2020, Seattle Mayor Jenny Durkan issued an Emergency Order prohibiting eviction of commercial tenants for non-payment of rent that applied to small businesses and nonprofit organizations, in response to the economic impacts of COVID-19. Originally 60 days in duration, the Seattle moratorium on evictions for commercial tenants has been extended through August 1, 2020. Further, Washington Governor Jay Inslee issued a separate proclamation, most recently updated on June 2, 2020, offering rent relief to both business and residential tenants throughout Washington state that also has been extended through August 1, 2020.
While landlords are prohibited from evicting tenants for non-payment of rent, charging late fees and interest, or increasing rent during this time period, these measures by no means eliminate a commercial tenant’s obligation to pay rent. Commercial tenants cannot simply skip rent payments during the eviction moratorium and resume payments after August 1. Business tenants who cannot make all or a portion of their rent payments during the moratorium still must pay back the missed rent within a year. Further, landlords and tenants are required to enter into a payment plan or otherwise attempt to negotiate an agreement regarding payment of rent when a business is unable to meet its rent payment obligations under a commercial lease. Finally, while landlords are prohibited from increasing rent for small businesses and nonprofits until COVID-19 is no longer an emergency, rent increases included in existing commercial leases executed prior to February 29, 2020 are still permissible.
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This post is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting with an attorney.