What Seattle’s Suspension of Personal Lease Guarantees Means for Commercial Landlords and Tenants

Published on August 19, 2020

On July 31, 2020, Seattle Mayor Jenny Durkan signed Ordinance 12166 which aims to protect small business tenants and nonprofits from enforcement of “personal liability” provisions of lease agreements.

In response to COVID-19, on March 3, 2020, Mayor Durkan issued a proclamation of civil emergency (the “Civil Emergency”).  The Civil Emergency is ongoing.  Additionally, Governor Inslee has issued numerous proclamations in response to the COVID-19 pandemic, including ones that affect how businesses operate, the occupancy of their businesses, and other restrictions.

Qualifying Tenants

Nonprofit corporations with tax-exempt status and certain small businesses are protected under Ordinance 12166.  A qualifying small business must meet the following criteria:

• The business must be owned and operated independently from all other businesses, and any franchisee with five or fewer franchise units;
• The business must have fifty or fewer employees per establishment or premises; and
• The business must not be a general sales or service business with ten or more establishments in operation anywhere in the world, nor an entertainment use business with five or more establishments in operation located anywhere in the world. (“Sales or service” business and “entertainment” business are categories defined under Seattle’s land use code.  Landlords and tenants with questions about these categories should contact one of Ryan Swanson’s Real Estate, Development & Finance )

How Does the Ordinance Affect Landlords and Tenants?

During the Civil Emergency, and for six months thereafter, landlords will not be able to enforce provisions in commercial leases or other commercial rental agreements that make the tenant, or other person(s) wholly or partially personally responsible for payment of rent, utilities, taxes, fees, building maintenance, and other charges under the lease.

Any guaranty or similar provision in a commercial lease is not enforceable during the Civil Emergency and for six months after the Civil Emergency terminates if:

• The qualifying tenant’s business or operations were subject to in-person limitations under Gubernatorial Proclamations 20-07, 20-13, 20-14; 20-24, 20-25, 20-25.1, 20-25.2, 20-25.3, 20-14 25.4, 20-25.5, 20-25.6 (and subsequent extensions); or
• The tenant’s business or non-profit closed or ceased operations pursuant to the Gubernatorial Proclamations.

If you are a commercial landlord or tenant who needs help understanding the various commercial lease and guarantor protections in place for COVID-19 or understanding your legal rights and obligations under a lease agreement, please contact any member of our Real Estate, Development & Finance group at Ryan Swanson.

Danielle Flatt is an attorney in Ryan Swanson’s Real Estate, Development & Finance Group and can be reached at [email protected].