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AB-255 COVID-19 Emergency Small Business Eviction Relief Act.(2021-2022)



Current Version: 06/01/21 - Amended Assembly Compare Versions information image


AB255:v95#DOCUMENT

Amended  IN  Assembly  June 01, 2021
Amended  IN  Assembly  May 05, 2021
Amended  IN  Assembly  April 19, 2021
Amended  IN  Assembly  March 25, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 255


Introduced by Assembly Member Muratsuchi
(Coauthors: Assembly Members Chiu and Reyes)

January 14, 2021


An act to add and repeal Section 1952.9 of the Civil Code, relating to COVID-19 relief, and declaring the urgency thereof, to take effect immediately. relief.


LEGISLATIVE COUNSEL'S DIGEST


AB 255, as amended, Muratsuchi. COVID-19 Emergency Small Business Eviction Relief Act.
Existing law provides that a tenant is guilty of unlawful detainer if the tenant continues to possess the property without permission of the landlord in specified circumstances, including when the tenant has violated the lease or rental agreement by defaulting on rent, and requires the tenant be served a 3 days’ notice in writing to cure the default, as specified. Existing law provides that an unlawful detainer action is subject to the COVID-19 Tenant Relief Act of 2020, which provides tenants with specified temporary protections from eviction, if the default in the payment of rent is based upon COVID-19 rental debt, as defined.
This bill, the COVID-19 Emergency Small Business Eviction Relief Act, would, until July 1, 2025, require a landlord, who receives a statement signed by a commercial tenant, as defined, and supported by documentary evidence that evidences that the tenant requests emergency rent relief because the business of the commercial tenant has experienced a decrease in average monthly gross revenue of at least 50%, which is reasonably attributable to public health regulations adopted to address the COVID-19 pandemic, during the qualifying time period, as defined, as compared with the 12 months immediately preceding the qualifying time period, to conduct a good faith negotiation to form a plan to allow the commercial tenant a reasonable opportunity to repay COVID-19 lease debt while minimizing the hardship to the landlord. The act would provide that failure by a landlord to comply with that requirement constitutes an affirmative defense in an unlawful detainer action.

This bill would declare that it is to take effect immediately as an urgency statute.

Vote: TWO_THIRDSMAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 This act may be cited as the “COVID-19 Emergency Small Business Eviction Relief Act.”

SEC. 2.

 (a) California small businesses are drivers of economic growth by creating two-thirds of new jobs and employing nearly half of all private sector employees.
(b) California is home to 4.1 million small businesses, representing 99.8 percent of all businesses in the state and employing 7.2 million workers in California, which is 48.5 percent of the state’s total workforce.
(c) The COVID-19 pandemic has presented a significant challenge to small businesses, employers, and employees. An August 2020 Small Business Majority survey found that 44 percent of small businesses are at risk of shutting down. Data released through the United States Census Current Population Survey found that minority-owned businesses are disproportionately impacted. The number of active businesses owned by African Americans dropped by 41 percent, Latinx by 32 percent, Asians by 25 percent, and immigrants by 36 percent.
(d) Small business support is critical to ensure these Californians are connected to the resources they need to pivot and adapt to the COVID-19 marketplace.
(e) It is the intent of the Legislature to support small businesses by enacting commercial eviction relief as businesses work to safely reopen and recover from the COVID-19 pandemic.

SEC. 3.

 Section 1952.9 is added to the Civil Code, to read:

1952.9.
 (a) As used in this section:
(1) “Certificate of hardship” means a statement signed by a commercial tenant and supported by documentary evidence, evidencing both of the following:
(A) The tenant requests emergency rent relief because the business of the commercial tenant has experienced a decrease in average monthly gross revenue of at least 50 percent during the qualifying time period as compared with the 12 months immediately preceding the qualifying time period.
(B) The decrease in average monthly gross revenue described in subparagraph (A) is reasonably attributable to public health regulations adopted to address the COVID-19 pandemic.
(2) “Commercial tenant” means a person or entity, whose offices are in the state, that meets all of the following criteria:
(A) The person or entity hires real property in this state that is not a dwelling unit, as defined in Section 1940, or a mobilehome, as defined in Section 798.3.
(B) The person or entity employs no more than 50 employees.
(C) The person or entity operates an independently owned and operated business or nonprofit organization that has its principal office in the state.
(D) Between January 1, 2018, and January 1, 2021, the person or entity had average annual gross revenues not exceeding two million five hundred thousand dollars ($2,500,000).
(3) “COVID-19 lease debt” means an unpaid financial obligation of a commercial tenant under the tenancy that came due during the qualifying time period.
(4) “Qualifying time period” means the period of time between March 4, 2020, and June 30, 2021.
(b) (1) If a landlord receives a certificate of hardship from a commercial tenant, the landlord and the tenant shall conduct a good faith negotiation to form a plan to allow the commercial tenant a reasonable opportunity to repay COVID-19 lease debt while minimizing the hardship to the landlord.
(2) A landlord shall be deemed in compliance with this subdivision if the landlord is unable to consent to the plan described in paragraph (1) without subjecting the landlord to significant risk of default on the landlord’s own financial obligations.
(3) A landlord shall be deemed in compliance with this subdivision if the landlord and the commercial tenant entered into an agreement providing the commercial tenant an opportunity to repay COVID-19 lease debt before the date on which the landlord received the certificate of hardship from the commercial tenant.
(c) In an unlawful detainer action, failure by a landlord to comply with subdivision (b) shall constitute an affirmative defense.
(d) This section does not prohibit the termination or amendment of a lease for reasons other than a failure to pay a COVID-19 lease debt for the reasons described in paragraph (1) of subdivision (a) or for reasons other than a failure to pay a COVID-19 lease debt.
(e) (1) This section establishes a minimum standard to protect a commercial tenant from eviction.
(2) This act does not preempt a local law that provides greater protection to a commercial tenant.
(f) This section shall remain in effect until July 1, 2025, and as of that date is repealed.

SEC. 4.

This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:

In order to mitigate the economic hardship to tenants of commercial real property, including businesses, nonprofit organizations, and eating or drinking establishments, resulting from the COVID-19 pandemic, it is necessary that this act take effect immediately.