On June 26, 2020, Gov. J.B. Pritzker signed an extension to Executive Order 2020-30 until July 26, 2020, and has suggested as of June 17, 2020, that potential tenant assistance grants may be available in August 2020 for those who have accrued rent due to a COVID-19 related hardship.
This suspension effectively halts evictions for nonpayment of rent or condominium assessments, all of which are recovered pursuant to provisions of the Eviction Act (formerly known as Illinois’ Forcible Entry and Detainer Act). Though this executive order stops eviction proceedings, generally and broadly, it is not viewed as a hindrance to landlords arranging for repayment with tenants or residential association boards initiating payment plans with owners. Further, we do not read the executive order to preclude issuing demand notices for arrears. If the tenant is residential and located in Chicago, particular requirements will apply, including limitations on the rejection of renewals and pending potential changes to repayment timelines. As Chicago’s provisions are subject to change, it is important to discuss residential tenant recovery or lease changes with an attorney, as each case may have particular issues that trigger new and different requirements due to the COVID-19 pandemic.
There are exceptions, and landlords and condominium associations are not without recourse or protection for safety matters. Presently, exceptions for all evictions include actions where “a tenant poses a direct threat to the health and safety of other tenants, an immediate and severe risk to property, or a violation of any applicable building code, health ordinance, or similar regulation.” Note that the threat to safety should be bona fide and not simply a substitute for non-payment of rent, but each situation will be unique. Courts will likely afford consideration to the safety concerns of neighbors, other tenants at the development and the safety of the property’s operations in general. Depending on the county in which the property is located, courts may view the necessity of a safety-based eviction with the safety of court personnel and others around, so it is important that options are weighed before seeking relief.
Gov. Pritzker also announced an initiative to make funds available for tenants who are experiencing COVID-19 related hardships and need grant funds to cover unpaid rent. As further details are revealed, Chuhak & Tecson attorneys will communicate the findings but general information available for this project suggests that the state would make funds available for tenants to apply and receive a grant to cover unpaid rent, so long as they meet certain hardship and income requirements. The rent would be paid directly to the landlord to whom the tenant owes the funds. While this will not be great relief for commercial operators or those who cater to high-end residential rentals, it may be a source of some relief for tenants (and their landlords) during this crisis.
To the extent that commercial tenants have obtained Paycheck Protection Program loans or other short-term business-support loans to cover their operating expenses, it is important for commercial landlords to remain vigilant in situations where rent recovery may be possible. As noted in our most recent update regarding Judge Cassling’s decision on a bankruptcy matter, in which he deemed a rent reduction was warranted for a business that slowed during stay-at-home orders, there may be an increasing trend towards reduction of rent based on business operations and productivity. However, this decision pertains to a bankruptcy case and bankruptcy comes with a general preference of claim reduction and disposition, so it is not yet the prevailing standard or the benchmark in a non-bankrupt context. It is wise to anticipate that commercial tenants may use this argument in the future.
As matters change and the situation develops, Chuhak & Tecson attorneys continue to suggest that every situation is different, each fact pattern is not built from one mold, and all questions should be addressed by a qualified attorney.
Client alert authored by James R. Stevens (312 855 4344), Principal.
This Chuhak & Tecson, P.C. communication is intended only to provide information regarding developments in the law and information of general interest. It is not intended to constitute advice regarding legal problems and should not be relied upon as such.
