We have an important update regarding current commercial landlord/tenant issues and small business evictions. On April 6, 2020, Gov Ducey issued Executive Order 2020-21, “Prohibiting Small Business Evictions”. Click Here to read a copy of the Order.
The Order suspends, until May 31, certain commercial evictions or similar actions against tenants unable to pay rent due to financial hardship caused by the COVID-19 Pandemic unless a court determines suspension of eviction is not appropriate. It also requires landlords, tenants and lenders to take or consider taking certain actions.
Tenants may see this Order as a rent holiday. But, the Order does not forgive any tenant from its obligation to pay rent. It does not require Landlords to permanently forgive unpaid rent. It only temporarily suspends eviction or other similar actions.
The Order requires landlords to work with “commercial tenants” (those entities and persons that qualify for relief under the Payroll Protection Program) that are suffering financial hardship caused by the pandemic. For those tenants, Landlords must consider deferring or adjusting rent payments. Landlords are also encouraged to waive late fees, penalties and interest for late payments and develop repayment plans for unpaid rent.
Landlords are not, however, guaranteed any relief as a result of this Order. Lenders who have made loans secured by property in Arizona are asked to consider forbearance for borrowers that offer tenants protection under the Order, but Lenders are not prohibited from enforcing their rights.
More specifically, in response to this Order: (1) tenants subject to the order should consider requesting relief from landlords in accordance with the Order, (2) landlords should revise default notices and responses to tenant relief requests to comply with the Order while still complying with any applicable loan covenants, and (3) lenders should consider requests from borrowers in accordance with the Order.
We are assisting clients with these matters, if you have questions or would like assistance, then please contact a Gammage & Burnham lawyer.