In short, the new regulations establish limits on the personal guarantee, security deposit, and letters of credit requirements that most landlords can require in or as a condition of certain commercial leases for property located within the City of Seattle. For more information regarding these new requirements, including the applicability to landlords leasing property in the City of Seattle, scope of restrictions, and tenant exemptions, please see our January blog post.

Link to Summary

As required by SMC 6.104.040, the Seattle Finance & Administrative Services (SFAS) recently prepared a summary of the new requirements, available here. Landlords must provide a copy of this summary to prospective commercial tenants when they offer a new commercial lease to such prospective tenant and must provide a copy to any existing commercial tenants by August 15, 2024 (SMC 6.104.050).

Recommendations

As is typical with new regulations, there has been little interpretation of how the new rules will be enforced. We recommend commercial landlords currently leasing property in the City of Seattle or anticipating leasing such property review and consider adding explicit terms in their form lease agreements to ensure compliance with the new regulations, including adding an acknowledgement that a prospective tenant has received the SFAS summary, instituting necessary procedures to provide  the SFAS summary to prospective tenants when presenting such tenants with a proposed lease agreement, and revising their form guaranties and security deposit and letters of credit requirements to clarify that such requirements will be enforced and only applicable to the extent permitted by the new regulations.

If you have any questions about how the new regulations may impact your business or if your form lease agreements comply with the new regulations, please contact Stephanie Gero Dahlstrom or any of the attorneys in Montgomery Purdue PLLC’s real estate department.