On Thursday, May 7, California rolled out a modified stay-home order and issued guidance to move into “Stage 2” of reopening certain sectors of the economy. In “California Allows Localities to Reopen Certain Businesses Consistent with State Guidance,” colleagues Robert A. James, Callie A. Bjurstrom, Michelle A. Herrera and Stacie O. Kinser discuss how this new statewide order, and the county-level reactions to it, create another layer in the patchwork of compliance requirements, but provide a pathway for certain industries to open doors sooner than others.
This past week, multiple states extended States of Emergency or Stay at Home Orders, while simultaneously issuing orders regarding reopening their states. Because construction was deemed essential in the majority of the states, many re-opening orders have very little direct impact. However, even in states where construction was never ordered to cease, orders have nevertheless included construction in their reopening focus. For example, the District of Columbia established a ReOpen DC Advisory Board, and included a Real Estate and Construction Committee. Kentucky issued “Requirements for Construction Businesses” to open and remain open as the state reopens. And in Pennsylvania, where construction was previously halted, the Governor issued an order allowing construction to resume in certain counties.
For more details on orders and guidance in all 50 states and the District of Columbia, see our Updated COVID-19 Construction Chart.
Please join us on May 6, 2020, for a conversation with Rachel Horsch and Nancy Fischer of Pillsbury as well as Jonathan Schaefler, Managing Director of real estate company Newmark Knight Frank, regarding foreign direct investment, CFIUS, changes in regulation and what the market holds.
For America’s economic recovery to move forward with relatively few hitches, liability limits are essential. History has shown how easily the mere threat of lawsuits by aggressive tort lawyers can derail critical recovery efforts. The White House and Congress should therefore work together to establish effective and appropriate liability limits. By modifying existing statutes that limit liability in a way that assures both fewer frivolous tort suits and effective pandemic mitigation and recovery policies, Washington will have done its part to prevent unscrupulous lawyers from needlessly hindering the economic recovery that Americans so desperately need. Colleague Brian Finch discusses key considerations in the whitepaper, Liability Protections Are Critical to Ensuring Economic Recovery originally posted on The Heritage Foundation.
In the wake of COVID-19, default rates for commercial real estate loans, including those supported by personal guaranties, will likely accelerate. Inevitably, borrowers will consider seeking bankruptcy protection to implement a restructuring of debt or a sale of real property collateral, and lenders should not assume that personal guaranties will prevent borrower bankruptcies. In “Personal Guaranties May Not Deter Property Owner Bankruptcies,” colleagues Patrick J. Potter, Joshua D. Morse, Deborah B. Baum and Dania Slim discuss that lenders should plan for real estate owner bankruptcies despite having a non-recourse carveout guaranty triggered by the owner’s bankruptcy filing.
Boston Mayor Martin J. Walsh first limited construction in the City of Boston to essential work on March 17. This pause in non-essential construction has been extended indefinitely by order of the Boston Public Health Commission on April 24. On April 27, Mayor Walsh confirmed that he will not re-open the City on May 4, the date the Commonwealth is scheduled to re-open (Massachusetts Governor Charlie Baker extended his stay-at-home order on April 28 to May 18). In “City of Boston, Massachusetts Extends Construction Moratorium,” partner Paul Shapses discusses how non-essential construction is not presently permitted in Boston, but draft best practice guidelines and an associated contractor certificate identify the way forward for owners and contractors.
With many struggling to make housing payments due to COVID-19, dues owed to multifamily condominium associations are likely to go unpaid—especially if homeowners feel deprived of the use of common areas, such as pools, gyms and playgrounds. In “How Chapter 11 Solved One Multifamily Condo Regime’s Dual Challenges of Mounting Liabilities and Unpaid Dues,” colleagues Patrick J. Potter, David L. Miller and Dania Slim discuss how multifamily condominium regimes with mounting liabilities and unpaid dues during COVID-19 may find answers in bankruptcy to the obstacles posed by individually titled units.
In the wake of government-ordered moratoriums on commercial tenant evictions, how does a California commercial tenant’s security deposit come into play as an available landlord remedy for a lease default? In “California Commercial Tenant Security Deposits in a COVID-19 World,” partner Eric A. Kremer addresses this question by exploring how commercial lease tenant security deposits are subject to provisions under California law that may restrict a landlord’s use. However, such provisions can be waived by tenants.