Commercial leases during COVID-19

The ordinance does not permanently absolve tenants from their rent obligations. After the emergency ends, tenants who defer rent will still owe the back rent to their landlord unless they are able to negotiate new lease terms.

• Deferred rent
• Limit on rent increases
• Personal liability protection
• Legal resources

Deferred rent

Businesses and non-profits can qualify for deferred rent if they:

• had to close due to COVID-19
• have had to reduce operations to limited virtual, take-out, or pickup services only
• have suffered a material loss of income

Impacted tenants will have twelve months after the local state of emergency ends to pay back the rent they owe. Landlords may not charge late fees, fines, or interest on deferred rent during this period.

To qualify for deferred rent, tenants should notify their landlord no more than 7 days after rent is due. A simple written notification via email or mail is sufficient. Tenants do not need to provide documentation showing how the business was impacted by the pandemic in advance. However, it is important to save documentation such as bank statements or records of closure, as landlords may request this information when the state of emergency is over.

Limits on rent increases

The maximum rent increase a landlord may impose on commercial tenants who have been impacted by COVID-19 is 10% as long as the Governor’s Executive Order executive order authorizing local governments to halt evictions is in effect.

This Order has been extended to September 30, 2021. Unless the Order is extended, this restriction will also expire at that time.

Personal liability protection

Individual business owners who were forced to close or limit capacity due to the pandemic are protected from personal liability for unpaid rent during the pandemic.

In Berkeley, landlords may not enforce personal liability provisions in commercial leases for rent or other charges a business was not able to pay between March 16, 2020 and July 30, 2021 due to being forced to close, limit capacity, or incur other costs as a result of COVID-19 emergency restrictions.

Legal resources for commercial tenants and landlords

The City cannot provide legal advice on lease negotiations. The organizations below may be able provide legal assistance or referrals.

• UC Berkeley Law Community Law Clinic provides free legal assistance to survive the COVID-19 pandemic to small businesses that can't afford an attorney. Email newbusinesslaw@berkeley.edu for support.

• Alameda County Small Business Development Center offers free business counseling, including referrals for legal guidance.

• Alameda County Bar Association Lawyer Referral Service (LRS) can provide information about pro bono legal programs in the area and will match clients with attorneys for a $40 nonrefundable referral fee. Depending on income and the type of legal assistance needed, some clients may be eligible for reduced rates.

For information on negotiating a percentage based rent or other rental fee structures that take into account earnings and landlord/tenant costs, see a webinar on Retail and restaurant lease negotiations during COVID-19 hosted by Northern California Small Business Development Centers.

Last updated July 16, 2021