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Understanding How the Executive Order on COVID-19 Protects Businesses

March 17, 2020

With all of the evolving news surrounding the novel coronavirus, we wanted to take a moment and let our business clients know there are some silver linings in an Executive Order that was signed Monday, March 16, 2020, by Governor Newsom. While many news articles have solely described it as an Order to protect residents who are renting from being evicted during the COVID-19 emergency, there are several protections for businesses, as well. Here are some of the highlights:

  1. Local Governments can use their police powers to limit residential and commercial evictions for non-payment of rent due to loss of wages and/or business income relating to the COVID-19 pandemic and/or restrictions that relate to the pandemic;
  2. Judicial Foreclosures and Unlawful Detainer actions are suspended until May 31, 2020 in those areas where Local Government has enacted this Order. Note, to protect landlords, back-due rent owed and incurred during this time period must be paid.
  3. Financial institutions holding home or commercial mortgages are to implement an immediate moratorium on foreclosure actions where the non-payment arises out of a substantial decrease in household or business income relating to the COVID-19 pandemic or regulations by any government (local, state or federal) relating to the pandemic.

While it is not yet clear how this will be applied locally, the State is trying to ensure businesses are able to bounce back after being closed and commercial landlords, in return, are able to postpone foreclosure actions and hold onto their properties in the event commercial tenants are unable to pay. Business owners who lose income should also be protected from losing their residential homes at this time in the event Local Governments adopt this Executive Order.

We realize this is a stressful time for businesses and the regulations are changing by the day, so if we can be of any help during this time, we are happy to answer questions. To read the full Executive Order, click here.

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