On October 16, 2020, Maryland Governor Larry Hogan issued Executive Order No. 20-10-16-01, extending the State’s prohibition of certain residential and commercial evictions until Maryland’s state of emergency comes to an end.  On October 30, 2020, Governor Hogan renewed Maryland’s state of emergency for the tenth time. In tandem, these two executive actions extend the protections from eviction for some residential tenants and commercial tenants whose businesses have struggled due to the ongoing COVID-19 pandemic.

 

Executive Order No. 20-10-16-01 prohibits certain evictions which result from two causes of action: 1.) Failure to Pay Rent under Maryland Code, Real Estate Article § 8-401, and 2.) Breach of Lease under Maryland Code, Real Estate Article § 8-402.1. In either cause of action, no Maryland court may give a judgment for possession (or repossession) or issue an order of eviction of residential, commercial, or industrial property, if the tenant can demonstrate to the court, through documentation or other objectively verifiable means, that the tenant suffered a “Substantial Loss of Income.”

 

With respect to an individual, the Executive Order defines “Substantial Loss of Income” as a substantial loss of income caused by the COVID-19 pandemic because of, but not limited to, job loss, reduction in compensated work hours, closure of place of employment, or the need to miss work to care for a home-bound school-age child. With respect to entities, the Executive Order defines “Substantial Loss of Income” as a substantial loss of income caused by the COVID-19 pandemic because of, but not limited to, lost or reduced business, required closure, or temporary or permanent loss of employees.

 

Unfortunately, guidance as to what constitutes “Substantial Loss of Income” is limited to the definitions above since Maryland courts have not had the occasion to rule on whether a tenant has demonstrated a “Substantial Loss of Income.”  However, with no end of Maryland’s state of emergency in sight, Courts may soon have such occasion as landlords will inevitably begin to bring suit against tenants who continue to not pay rent. And, in the event that a tenant cannot demonstrate to the court that they have suffered a “Substantial Loss of Income,” an eviction may proceed.

 

As the COVID-19 pandemic endures, the attorneys at Liff, Walsh & Simmons will continue to monitor Maryland’s legislature, executive office, and courts for guidance on how to manage residential and commercial lease disputes. Please contact me, or any other attorney at Liff, Walsh & Simmons should you need a review of any of your leases in anticipation of potential disputes.

 

About Liff, Walsh & Simmons

Liff, Walsh & Simmons is a full-service business law firm serving the legal needs of small businesses and privately held companies, their owners and operators, and individuals throughout their business and family life cycles.  From helping entrepreneurs bring their business visions to market, to representing middle-market companies in business transactions and disputes, to preserving the wealth that a family business has worked so hard to earn, we take pride in providing value-driven solutions and great results.  Our responsive service is focused on general and transactional business advice, commercial and civil litigation, real estate, land use, finance, and estate planning and administration.

 

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