Under Quarantine? Here's What California CRE Professionals Can And Can't Do
As part of an effort to contain the deadly novel coronavirus, California Gov. Gavin Newsom has ordered 40 million residents to stay and work from home except those deemed as essential critical infrastructure workers.
On Monday, the state's public health office created a 14-page list of workers exempt from Newsom's orders.
Under the order, those who work at gas stations, pharmacies, grocery stores, takeout restaurants, banks, dry cleaners/ laundromats, healthcare, law enforcement, property managers and logistics are exempt.
Also exempt are construction and workers who support parts of the construction process, including inspectors, plumbers, electricians and others.
"Construction workers who support the construction, operation, inspection, and maintenance of construction sites and construction projects (including housing construction)," according to the order.
But when it comes to the broader parts of commercial real estate, a mostly hands-on industry, there is a lot of confusion regarding the order. Are architects (design, housing, interior, landscape, etc.) allowed to be on the job site? Are brokers allowed to tour a property with a client?
Some cities and counties have stricter measures in place than the state. Which one supersedes the other?
"It's just very uncertain right now," Greenberg Glusker counsel Josh Geller said. "Given the speed that all of this has happened, and the speed of which state and local authorities have gone down with these orders, there are still a lot of questions and gaps and in some cases, apparent contradictions."
Geller said there are a lot of gray areas and to expect more guidance from the state and local authorities as officials attempt to contain the contagious COVID-19 respiratory illness.
Bisnow spoke with Geller from Greenberg Glusker as well as Cox, Castle & Nicholson partner Alicia Vaz to get their opinion on what is allowable and what is not in the state's commercial real estate industry.
Bisnow: We know construction is allowed under Newsom's order. What kind of construction is allowed?
Geller: What the state website says right now, "including housing construction," is exempt. So the way we're reading that is that it isn't limited to housing construction. As currently written, the state guidance appears to apply to all construction.
Vaz: There is no simple or single answer ... Some of the categories are treated differently in cities and counties than the state order. For example, all construction is permitted in the state order. However, some cities and counties say, "No. You can't do any construction at all or if you can do construction, it is limited to housing."
It's a case-by-case analysis. The problem is, nobody knows for sure if the state order [supersedes] the local orders or not. If the local order is less stringent than the state order, the state order applies. If the local order is more stringent than the state, the city or county order applies. One example is the Bay Area orders that came out before the state's, all of them restricted construction only to housing.
Bisnow: How about mixed-use projects with residential components?
Vaz: We're taking the position anything housing means housing, anything residential. If your project is mixed-use, go for it because it's partially residential ... As long as you meet the social distancing requirement, which everyone has to meet, then we should take the position that housing is covered.
Bisnow: Are architects, landscape, designers, interior, allowed on the job site during the quarantine?
Geller: We don't know the answer to that right now. The general guidance is to stay home to the greatest extent possible. While there [is] ambiguity to the order, the clear takeaway from the order is that unless it's essential service and critical for infrastructure, the state wants everyone to come home. A lot of this can and should be done remotely.
Vaz: Yes. But the state order says, construction workers who "support" [construction], which is very broad, it would be anyone that supports that. Workers that ensure the continuity of certain functions [such as] maintaining the safety and function of the project, concrete pouring, plumbers, electricians, anyone else similarly situated are permitted.
Bisnow: Relating to brokers and other commercial real estate professionals, are they allowed to tour prospects at a subject property who are interested in buying or leasing opportunities?
Geller: We don't know for sure. But the best guess, looking at the order, is probably not. Unless it's essential for the actual construction or permitting or property management, probably not. We encourage people, if there's a way to do it virtually, do virtual tours especially with leasing.
Vaz: There is no express exemption that is put on the state or local order relating to sale of home or property or brokers or agents. So it's not clear. I don't personally believe brokers or agents come under the exemption of these orders, state and local.
Bisnow: Are inspectors including contractors entitled to do their respective jobs in connection with the leasing or sale of a property?
Geller: If it is a legally mandated activity, yes.
Vaz: Yes, so long construction is permitted, then yes.
Bisnow: Are commercial real estate professionals allowed to maintain a physical office in order to support their efforts in leasing or selling commercial real estate?
Geller: Probably not. We don't know for sure but that is something that can and should be done remotely.
Vaz: Certain offices are permitted to stay open. Security guard and janitorial services are permitted. If you're in one of the exempt categories, supporting construction of the site you can probably continue to operate. But a sales offices, they are not exempt. People who do payroll or billing or IT functions those people can continue to work and maintain the bare minimum business function. But not the actual work of the company.
Bisnow: Are mobile notaries allowed to visit people's homes for the signing of grant deeds and mortgage documents?
Geller: That's a very interesting question. It's unclear and not specifically provided. The big question in this is, is it necessary right now? Can it wait a few months? There are a lot of things that are important right now, but are they so important that it can't wait three months?
Vaz: I don't have a clear answer for that. I know that people are doing it. I know pending in Washington, D.C., is a nationalized authorization for remote notary via video; 22 states have already enacted it. California is not one of them. They are looking to pass that ASAP. So it's unclear.