There is no doubt that the global pandemic has placed a significant amount of stress on almost every aspect of life. Business owners and landlords in particular have faced considerable financial challenges.

California lawmakers proposed a bill to help resolve this financial stress, but it failed to pass the Senate committee, leaving a wide range of mixed emotions in its wake.

Bill regarding commercial rent did not make it out of the Senate

Senate Bill 939 was introduced back in February. The proposed bill would have allowed small business owners and nonprofits to:

  • Miss rent payments to their landlords if they cannot pay;
  • Renegotiate their rent payments; and
  • Pull out of the lease if they could not reach an agreement within 30 days.

The bill also aimed to suspend evictions during the pandemic and California’s lockdown, to reduce stress for small business owners. The lawmakers who created the bill strived to benefit small businesses, avoid closures and promote the economy.

However, this bill created quite a controversy for real estate groups and landlords. These groups reported they would either lose tenants or lose money if the bill passed. They claimed they would challenge the law.

However, the Senate committee voted against it on June 18.

Both parties still searching for a solution

Landlords may be relieved that SB 939 did not pass, but the issue surrounding income and rent for commercial properties and small business remains.

It is critical for small business owners – as well as landlords – to be aware of the options they do have to reduce the financial strain they both face, including:

  • Reducing or deferring rent payments;
  • Determining if a force majeure clause applies; and
  • Reconsidering lease obligations.

Even though all small business owners and landlords are experiencing the same kind of stress, each situation is different. Solutions will require a strategic and individual approach. In these cases, it might be beneficial to consult an experienced business and real estate attorney to determine how to move forward in these tough circumstances.