Seattle Considering Commercial Rent moratorium and Mandatory Payment Plans
On Tuesday, April 13, 2020, the Seattle City Council passed Council Bill 119766, relating to commercial tenancies involving small businesses or nonprofits. The ordinance would temporarily place a moratorium on rent increases for these tenants and would require landlords to negotiate payment plans for overdue rent. As of this writing (April 16, 2020 ), the ordinance is awaiting the signature of Mayor Durkan. It is unknown at the present whether she will sign it.
Moratorium on Rent Increases:
Specifically, the moratorium would prohibit rent increases charged to small businesses and nonprofits under a month-to-month tenancies, or that are subject to an existing lease that is being renewed. It would not apply to rent increases that were previously agreed to in an existing lease, and would not apply to any new lease or rental agreement. The moratorium would end when the COVID-19 civil emergency ends.
Mandatory Payment Plans:
The ordinance would also require landlords to enter into payment plans for late rent from these tenants. It would apply to rent not paid during the COVID-19 civil emergency. Any payment plan agreed to under this section must meet the following conditions:
- The repayment schedule cannot require the tenant to pay more than one third of late rent within any month.
- The repayment schedule cannot last longer than one year from the date the civil emergency ends
- no late fees interest or other charges can be added to the late rent payments.
For purposes of this ordinance, small businesses are defined as any sole proprietorship, corporation, partnership or other legal entity, including franchises of five or fewer units, that has 50 or fewer employees, and has been either forced to close because of the pandemic or who has experienced a 30% drop in gross receipts for the same month of 2019. The definition excludes a sales or service business with 10 or more establishments or an entertainment business with five or more establishments.
Helsell Fetterman’s Real Estate and Land Use Practice Group is keeping close tabs on this and other ordinances relevant to the pandemic, and will update our COVID-19 website as applicable.
