California SB 939—a new bill that will provide protections forcommercial tenants impacted by the pandemic—has passed the SenateJudiciary Committee, and will go for a vote in the Committee onAppropriations later this month. The bill has been highlycontroversial, in that it will place a moratorium on commercialevictions and allow commercial tenants to open new negotiations onlease terms or terminate existing leases. However, the bill itselfdoes not provide guidance on how landlords should renegotiate leaseterms.

"SB-939 does not provide any guidance as to how landlords andtenants should renegotiate rent and other economic lease terms,"Jonathan Zweig of Cox, Castle &Nicholson, tells GlobeSt.com. "Once a tenant is eligibleunder Section 1951.10, it can attempt to renegotiate by engaging in'good faith negotiations.' However, this is a subjective standardthat may provide a means for abuse, as tenants can engage in arenegotiation without any intent to continue the lease, and thenterminate with minimal liability."

Until now, landlords have largely and willingly entered intolease negotiations with tenants to work through the economicfallout related to the pandemic. Most already have deferral plansin place. "I have found that landlords have been eager to helptenants through this unprecedented period and are willinglynegotiating rent deferral plans with all sorts of tenants, rangingfrom national companies to mom-and-pop stores," says Zweig. "In myexperience, these arrangements carefully balance the needs of bothparties and typically include two to three months of base rentdeferral—but not common area operating expenses, taxes orinsurance—that is paid back in 12 monthly installments beginning ona specified date, usually in early 2021."