News & Insights

CGS3 understands the concern about the impacts of the coronavirus (COVID-19) pandemic on the commercial real estate industry.  We are actively monitoring the rapidly changing situation and assure you that we will endeavor to continue providing you with reliable legal advice and guidance to help to protect you and your business in these uncertain times.  This health crisis has put into new perspective how truly connected we all are as a global community, and we will do our best to update you as new information affecting our market sector becomes available to the public.

What do I do if a tenant or an employee of a tenant tests positive for COVID-19?

• Immediately report to the Centers for Disease Control and Prevention (CDC) and the relevant county public health officials and follow all CDC/health official guidelines.
• Visit the CDC’s Interim Guidance for Businesses and Employers: https://www.cdc.gov/coronavirus/2019-ncov/community/guidance-business-response.html
• Inform all building tenants of a confirmed case in the facility but do not disclose the patient’s personal information, which conforms with the requirements of the Americans with Disabilities Act (ADA).
• Clearly communicate to the affected tenant that it must follow the CDC guidelines with regard to sick employees. The CDC recommends that any employee who appears to be sick upon arrival to work should be separated from other employees and be sent home immediately.
• The U.S. government has not given specific guidance about recommended procedures for affected apartment buildings. However, if there is a confirmed case within a residential building, take steps to ensure that common areas do not become hotbeds for transferring the virus by increasing cleaning and disinfection of frequently touched surfaces, such as interior and exterior door handles, countertops and elevator buttons.

What is a landlord’s duty in terms of notifications and distributions of health information?

• Education is the one of the best defenses against COVID-19, and property managers and building owners can play a major role in preventing the contamination of a building. Landlords should act reasonably to protect the health and safety of tenants and avoid actions that are either negligent or reckless with regard to the health and safety of those tenants and their employees, service providers and invitees. Visit the World Health Organization’s (WHO) website for educational resources, including infographics and videos:  https://www.who.int/health-topics/coronavirus
• The CDC issued guidelines for landlords and employers to encourage sick employees to stay home and increase sanitizing measures in office buildings. These obligations apply to landlords or property managers who provide cleaning, janitorial and security services such as in a commercial office building or shopping center. In a net leased property, however, the landlord or property manager’s obligations would be more limited because the tenant is responsible for its own maintenance and cleaning services.
• In general, a tenant is not required to inform the building owner or landlord regarding a positive diagnosis of COVID-19. Therefore, it is important to be proactive in communicating with tenants and encouraging them to share information that will be used by owners and managers in a responsible manner and that is consistent with an overall health and safety strategy for the building or project.
• Take steps now to involve tenants in a health and safety strategy for the building or project, even if there are no known COVID-19 cases in the community. This includes:
  • Designating a single point of contact for distributing information to tenants relating to COVID-19. Always refer tenants to appropriate channels such as the CDC and the World Health Organization’s website.
  • Temporarily suspending large social gatherings, meetings, and events in apartment complexes and office buildings.
  • Displaying posters in high traffic/visibility common areas within buildings and facilities (such as entrances and common amenity rooms) that encourage good hygiene practices. Links to the CDC posters can be found through the CDC website and the link above.
  • Installing hand sanitizer stations in common areas, restrooms, elevator lobbies and parking structures.

Are there any special laws or temporary measures relating to a health crisis that a landlord or property manager should be aware of?

• California’s State Attorney Xavier Becerra issued a stern reminder to the public about Penal Code 396, which prohibits businesses from raising prices on crucial goods and services, including rental housing, by more than 10% during the declared state of emergency. The anti-price gouging law applies to building materials, repair or reconstruction services, emergency cleanup services, transportation, freight and storage services, hotel accommodation and rental housing.  It also limits the initial offering price to no more than a 10% increase above the previous rent.
• San Jose city leaders have implemented a temporary moratorium on the evictions of tenants who may be facing extraordinary financial hardships due to COVID-19. It will be in effect for at least 30 days and may be extended for an additional month. The moratorium is expected to receive final approval by the end of March.  Next week, the city council is expected to decide whether to include small businesses under commercial leases to the eviction moratorium.  Expect that other jurisdictions will enact similar legislation.
• San Jose city leaders have emphasized that this is only a temporary measure to give tenants the opportunity to stay housed (and potentially safe from coronavirus transmissions) until the COVID-19 emergency abates. Tenants will not be relieved from their obligations to pay rent.

CGS3 Insight Alerts are curated with you in mind. They deliver focused, relevant, and timely information on trending topics to our clients, colleagues, and others in the industry.  Please note that they are intended for general informational purposes only, and should not be construed as legal advice for any specific situation.  Always remember to contact an attorney to obtain advice with respect to a particular issue or problem.