CALIFORNIA’S SB 939: AN END TO COMMERCIAL LESSEE RENT OBLIGATIONS?
The road to economic recovery in this season looks to be paid by the small owner/operator of commercial property (independent landlords). As a Riverside law firm with experienced business lawyers, Reid & Hellyer recognizes the need for a recovery path out of the shelter-pandemic economic conundrum. A current bill pending in Sacramento, however, is not the way.
California Senate Bill 939 sends a message statewide that qualified tenants need not worry about evictions or late fees so long as they request a rent reduction and show some related financial hardship. If the goal is to bring parties to the renegotiation table, why undercut the strength of one of the parties in the negotiation?
If Senate Bill 939 becomes law, these independent commercial landlords face their own economic uncertainty as property owners with mortgages and operating costs. They are now caught between re-negotiations with nation-wide anchor tenants and their sophisticated teams of experts and re-negotiations with the qualified tenants who will have all the leverage to hold out for better terms.
Rather than market intervention by statute, laissez-faire economics may be the optimal approach to the desired outcome. If the parties are attuned to the realities of the current marketplace, they will realize they need each other economically. They have a need to reach a mutual “buy-in” such as reduced rent for an agreed upon time (forbearance) with a pa y-back (catch-up) plan initiated at a date certain.
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