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As Oregon’s Moratorium on Commercial Evictions Comes to an End, Tenants’ Grace Period for Payments Begins

| Sep 29, 2020 | Business Law |

Times are tough for businesses. Many have struggled to stay afloat as they’ve weathered the economic impacts of the pandemic. Those hit the hardest—retailers, restaurants, bars, hotels, and others in the food/beverage and hospitality industries—have faced difficult decisions about whether to close their doors permanently.

On April 1, 2020, Governor Kate Brown issued a 90-day moratorium on commercial evictions, expanding on an earlier executive order prohibiting residential evictions. On June 26, the Oregon Legislative Assembly enacted House Bill 4213 (HB 4213), which extended the temporary evictions moratorium until September 30. Under HB 4213, commercial landlords could not, and could not threaten to:

  • Pursue evictions against commercial tenants who are unable to pay rent due to the pandemic;
  • Terminate the lease due to nonpayment of rent; or
  • Impose late fees or other penalties on overdue rent payments.

When the moratorium ends on September 30, commercial tenants have a six-month grace period (ending March 31, 2021) to pay their outstanding rent balances that became due between April 1 and September 30, 2020.

The bill was a positive development for commercial tenants, providing much-needed relief that may have helped stave off permanent business closures.  The Oregon Legislature provided no equivalent relief to the landlords who still had to pay their mortgages and operating costs, despite being forced to keep tenants who could not pay their rent.

Taking Advantage of the Grace Period

Beginning on October 1, landlords may send notices to commercial tenants stating certain information—including the balance the tenant owes and that the tenant must pay the balance within no less than 14 days unless the tenant notifies the landlord that it intends to take advantage of the six-month grace period for repayment. So, in order for a commercial tenant that receives such notice to utilize the grace period, it must give the landlord written notice of its intent to do so. If the tenant fails to give that notice, the landlord can recover 50% of one month’s rent from the tenant after the grace period.

What about Washington?

Commercial tenants in Washington were temporarily protected from evictions and lease terminations until August 1. Although Washington’s moratorium order did not include a grace period for repayment, the order does establish a defense to any lawsuit for tenants if a landlord fails to offer a reasonable repayment plan.

Looking Ahead

Tenants should not count on being able to get out of rent payments entirely. HB 4213 doesn’t forgive those payments; it simply offers temporary relief and prohibits late fees. Additionally, commercial tenants must resume making timely payments under the lease that become due after the emergency period ends on September 30.

If the end of Oregon’s six-month eviction moratorium impacts your business, you should be aware of other possible tenant protections. Certain commercial leases may still be subject to similar federal or local moratoriums. Additionally, you may be able to negotiate modified lease terms or a reasonable repayment plan. An attorney can help you explore all options.