[WSBARP] Seattle Ordinance 126116 (Commercial Lease Enforcement)

[Andrew Hay]

Hi Gabe – thanks for bringing this one up.  My replies are below

From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Gabriel Dietz
Sent: Thursday, August 20, 2020 3:10 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: [WSBARP] Seattle Ordinance 126116 (Commercial Lease Enforcement)

Colleagues:

I would appreciate a discussion, and any insights, with respect to Seattle Ordinance 126116 (linked here<https://seattle.legistar.com/LegislationDetail.aspx?ID=4590650&GUID=D9CC697B-125B-4F96-89BE-16DBCF967382>) regarding prohibition of enforcement of commercial leases.

My questions include, among others:

This appears to be a blanket prohibition against enforcement of rent and triple net charges against tenants and guarantors for small businesses. Do you read this any different way?

I WOULD AGREE.  ONE WOULD EXPECT SOME TIME LIMITATION, BUT THIS SEEMS TO BE OPEN-ENDED.

2(A) STOPS THE OWNER FROM ENFORCING ONLY THROUGH THE EMERGENCY AND 6 MONTHS AFTER.

BUT 2(B) SAYS THE LEASE IS UNENFORCEABLE AGAINST A GUARANTOR IF THE BUSINESS CLOSED OR CEASED OPERATIONS DUE TO PROCLAMATIONS.  NO TIME LIMIT.


Do you read any time limits in Subsection 2(B) on page 5?

2(B) – INTENDED OR NOT – APPEARS TO STOP COLLECTION OF ANY RENT AND CAMS IF THE BUSINESS CLOSED DUE TO THE PROCLAMATIONS.

SO IF THE BUSINESS MEETS THE DEFINITION OF CLOSED OR CEASED OPERATIONS, THEN THE LEASE IS NOT ENFORCEABLE AGAINST INDIVIDUAL TENANTS OR GUARANTOR.

Do you have any thoughts on the takings clause and contracts clause arguments as applied to this rule?

ALL THESE ORDERS AND PROCLAMATIONS POTENTIALLY RUN AFOUL OF THE TAKINGS CLAUSE.  I HAVENT RESEARCHED THAT ISSUE, BUT IT SEEMS DEFERRING COLLECTION IS A LOT MORE LIKELY TO SURVIVE A CHALLENGE  THAN TERMINATING CONTRACTUAL RIGHTS PERMANENTLY.

Any other thoughts or comments regarding the effect this rule will have on landlords and tenants are appreciated.

Thank you,
Gabe Dietz

Gabriel A. Dietz
Partner
(206) 451-3859
gabe at hdpnw.com<mailto:gabe at hdpnw.com>
www.hdpnw.com<http://www.hdpnw.com/>

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