By Fernando Landa, Partner, and Jamie Altman Buggy, Partner
In response to the COVID-19 crisis, the City of Los Angeles implemented a temporary eviction moratorium to protect residential and commercial tenants during a time of widespread economic hardship. The moratorium went into effect on March 4, 2020 and did not expire until February 1, 2023, long after the majority of California cities' moratoriums had already lapsed.
Landlords in Los Angeles can once again deliver eviction notices to tenants who are behind on rent, but tenants continue to have significantly expanded rights, causing confusion among landlords and tenants alike, neither of which may understand the full implications of expiration of the eviction moratorium.
Most importantly, landlords should be aware that, beginning February 1, 2023, tenants must pay their full, current monthly rent in order to avoid eviction for non-payment of rent. Commercial tenants have until April 30, 2023 to repay any rent that came due during the moratorium – i.e., from March 4, 2020 to January 31, 2023.
We recommend the following to clients with commercial tenants in the City of Los Angeles:
- Unlawful detainer courts in Los Angeles are going to be very busy after an almost three-year eviction moratorium. Therefore, any tenant that did not timely pay rent for February 2023 (or fails to pay any month thereafter) immediately should be sent a notice to pay or quit. An unlawful detainer complaint should be brought promptly after expiration of the notice so that the landlord can get in front of the eviction line.
- For tenants with past due balances of rent that came due from March 4, 2020 to January 31, 2023, landlords should send a demand letter as soon as possible advising tenants of the expiration of the moratorium and demanding payment by April 30, 2023 of the outstanding rent that came due during the pandemic.
- For any tenant that does not pay the entire past due rent by April 30, 2023, landlords should serve a notice to pay rent or quit on May 1, 2023, followed by an unlawful detainer complaint immediately upon expiration of the notice, so that the landlord can get in front of the long line of evictions.
Landlords should understand that, while eviction moratorium has lifted, tenants may still rely on several legal defenses to the non-payment of rent that came due during the COVID-19 moratorium period (e.g., force majeure, impossibility of performance and impracticability). Based on case law in California and other states, the strength of such defenses will vary depending on the particular facts and circumstances of each tenancy. For example, a gym that was forced to close or operate at reduced capacity by government order will have a much stronger defense against a landlord than a tenant that was deemed an “essential business” and whose operations were uninterrupted by COVID.
Given the expected surge of unlawful detainer actions and resulting backlog in Los Angeles courts, it may be in a landlord’s best interest to work with the tenant to find a mutually agreeable solution to the past due rent, such as a payment plan or negotiation of a lease termination agreement, rather than proceeding with an eviction. Prior to agreeing to any such concession, landlords should undertake an asset investigation of such tenants and any related guarantors to ensure a tenant that can pay rent or a large lease termination fee is required to do so. The expiration of the Los Angeles eviction moratorium marks the end of a frustrating period for landlords whose legal hands were tied for several years. Both tenants and landlords should be aware of the detailed protections that are still in place, and landlords are advised to consult counsel and move quickly to resolve past due balances.