On April 1, 2020, Oregon Governor Kate Brown issued Executive Order 20-13, expanding certain coronavirus-related eviction protections to include commercial tenants. This order follows a series of emergency moratoria issued by Governor Brown, the City of Portland, and Multnomah County, which specifically addressed residential evictions.
As it relates to commercial tenancies, this new order has three consequences. First, commercial evictions are largely on hold. For the next 90 days, non-residential landlords are generally prohibited from terminating a lease or otherwise pursuing a commercial eviction based on nonpayment of rent. These protections, however, only cover tenants who have timely invoked the order’s protections—as described below. Commercial landlords may send demand letters or default notices to a delinquent tenant, but should be careful not to automatically terminate the tenancy under the lease by doing so. The order also bans late charges or other penalties from being assessed for coronavirus-related nonpayment. However, commercial evictions for reasons other than nonpayment are not impacted by the April 1 order.
Second, commercial tenants need to thoroughly document any COVID-19-related business disruptions. The moratorium only applies if the tenant provides the landlord with documentation or evidence that any missed rent payments were caused by the pandemic. That documentation—like proof of loss of income due to coronavirus restrictions—needs to be provided to the landlord within 30 days of when the unpaid rent was due. So, tenants should proactively document and share the effects that the virus is having on their business, or risk facing a commercial eviction in a matter of weeks.
Third, commercial tenants need to notify their landlords and continue paying rent if they are financially able to do so. Importantly, the order does not relieve tenants from their obligations to pay rent—it only temporarily restricts landlords from evicting non-paying tenants. If a tenant is or will be unable to pay its full rent, the tenant must notify its landlord as soon as reasonably possible. And if partial rent payments are financially feasible, tenants must make those payments as well.
The moratorium is a significant—if temporary—benefit to commercial tenants, but places a sizable burden on landlords, who have not received comparable relief from lenders. As the effects of the coronavirus on business continue to evolve, please visit Tonkon’s COVID-19 resource page as we track new developments.