Bill Summary – FastDemocracy

HB 719
                       Department of Legislative Services
                               Maryland General Assembly
                                     2021 Session
                            FISCAL AND POLICY NOTE
                                 Enrolled - Revised
House Bill 719                   (Delegate Moon)
Judiciary                                                               Judicial Proceedings
           Commercial Tenants - Personal Liability Clauses - Enforceability
This emergency bill establishes circumstances under which a personal liability clause
included in a commercial lease is unenforceable during the period of the state of emergency
and catastrophic health emergency beginning March 5, 2020, as specified, and ending
180 days after the expiration or rescission of the Governor’s proclamation. Specifically, a
personal liability clause is unenforceable if the following conditions are met: (1) as a result
of the Governor’s declarations issued March 5, 2020, or other proclamations issued related
to the COVID-19 outbreak, the tenant was required to either cease serving food or
beverages for on-premises consumption or close to the public because of its status as a
nonessential business or a specific provision contained in an executive order or
proclamation; and (2) the default causing the individual to become wholly or partially
personally liable occurred between March 23, 2020, and September 30, 2020, inclusive.
These provisions remain in effect until 180 days after the expiration or rescission of the
Governor’s proclamation of March 5, 2020, “Declaration of State of Emergency and
Existence of Catastrophic Health Emergency – COVID-19,” after which time they are
abrogated with no further action required by the General Assembly.
                                     Fiscal Summary
State Effect: The bill is not anticipated to materially affect State operations or finances.
Local Effect: The bill is not anticipated to materially affect local operations or finances.
Small Business Effect: Potential meaningful.
                                          Analysis
Bill Summary:
Select Definitions
“Commercial lease” means a lease for building floor space, including any addenda or
modifications to the lease, intended to be used by the tenant for a nonresidential use
whether or not the lease expressly sets forth a use. “Personal liability clause” means a
clause or provision in a commercial lease or an associated agreement that requires an
individual who is not a commercial tenant under the commercial lease to become
personally liable to the commercial landlord, in whole or in part, for fees or charges,
including rent, taxes, utility fees, or fees for routine building maintenance, owed by the
commercial tenant in the event of a default.
Prohibited Personal Liability Clause
A commercial landlord is prohibited from attempting to enforce a personal liability clause
that the landlord knows or reasonably should know is rendered unenforceable under the
bill. The bill authorizes the court to enter a judgment against a commercial landlord for
reasonable attorney’s fees and court costs for a violation of this restriction. A commercial
landlord’s lawful action for nonpayment of rent, lawful termination of a tenancy
established by a commercial lease, lawful refusal to renew or extend a commercial lease or
associated agreement, or lawful reentry and repossession of the covered property may not
be construed as a violation of the bill’s provisions.
The bill also establishes that the period during the declared state of emergency and
catastrophic health emergency beginning March 5, 2020, and ending on the expiration or
rescission of the proclamation may not be considered for the purposes of calculating time
limitations restricting the filing of an action alleging liability that accrued during the state
of emergency and catastrophic health emergency under a personal liability clause.
Small Business Effect: Small businesses that operate as landlords may be adversely
affected by the bill to the extent that the provisions regarding the enforcement of personal
liability clauses against individuals under specified circumstances restrict or delay recovery
that may have otherwise been available. Other small business owners may benefit from not
being subject to personal liability under the circumstances in the bill.
Additional Comments: On March 5, 2020, Governor Lawrence J. Hogan, Jr., declared a
state of emergency and catastrophic health emergency in an effort to control and prevent
HB 719/ Page 2
the spread of COVID-19. The state of emergency was most recently renewed on
April 16, 2021.
                              Additional Information
Prior Introductions: None.
Designated Cross File: SB 582 (Senator Hettleman) - Judicial Proceedings.
Information Source(s): Prince George’s County; Judiciary (Administrative Office of the
Courts); Department of Legislative Services
Fiscal Note History:    First Reader - February 8, 2021
rh/jkb                  Third Reader - March 25, 2021
                               Revised - Amendment(s) - March 25, 2021
                               Revised - Updated Information - March 25, 2021
                        Enrolled - May 3, 2021
                               Revised - Amendment(s) - May 3, 2021
                               Revised - Updated Information - May 3, 2021
Analysis by: Donavan A. Ham                         Direct Inquiries to:
                                                    (410) 946-5510
                                                    (301) 970-5510
HB 719/ Page 3
Statutes affected: 
Text - First - Commercial Tenants - Personal Liability Clauses - Enforceability: 2-020 []
Text - Third - Commercial Tenants - Personal Liability Clauses - Enforceability: 2-020 []
Text - Enrolled - Commercial Tenants - Personal Liability Clauses - Enforceability: 2-020 []