Earlier this year, the City of Seattle adopted Ordinance 126982 which established new restrictions on commercial leases executed after January 27, 2024. The Ordinance imposes limits on the maximum amount a landlord may require for a personal guaranty of a lease and imposes a limit on any required security deposit or letters of credit. For a more detailed summary of the new restrictions on commercial lease guaranties, please see the HCMP Client Alert: Seattle Passes New Restrictions on Commercial Lease Guaranties, which was distributed in January.
One of the requirements in the Ordinance is that landlords of commercial property must provide a City-drafted summary of the requirements to all existing and prospective commercial tenants within 90 days after the City publishes the summary. The City has published the summary linked here, and has set a deadline of August 15 for distribution to existing commercial tenants.
The Ordinance defines “commercial property” as space that is intended to generate a profit and is used for commercial or retail activities, but excludes and does not apply to leases for the following activities:
- Rental as a residence or for lodging
- Office space
- Research and development laboratory space
- Use as a medical practice, clinic, or dispensary
- Farming or cultivation
The ordinance will, however, apply to leases for commercial properties where the anticipated use is for commercial and retail activities that do not fall into one of the above. Examples include restaurants, retail clothing stores, and nail salons. This means that all landlords of commercial property need to distribute the City-drafted summary to all existing tenants no later than August 15.
Whether you are a business owner considering entering into a new commercial lease or you are a commercial property owner within the City of Seattle, our team is ready to help you understand the implications of the Ordinance on your existing leases and future negotiations. For more information about the Ordinance, please contact Matthew Markovich, Emily Fenster, or Robert Garcia.
The information contained in this update is provided for informational purposes only. It should not be construed as business, legal, accounting, tax, financial, investment or other advice on any matter and should not be relied upon as such.