For informational purposes only. Please be aware that the law is in a state of flux. The monstrous bill of AB 832 is subject to interpretation and there are many questions that remain unresolved. You are well-advised to consult an attorney and take into account your unique circumstances before acting on any information.
State lawmakers have brokered a deal to extend protections from financially distressed renters and spelled out new procedural requirements for landlords and tenants to follow.
Bornstein Law has digested AB 832 and Daniel chimes in here.
From our podcast: how to best manage your property in the age of COVID
Under the previous law, California's ban on evictions for nonpayment of rent was set to expire on June 30, 2021.
With households faced with a mountain of rent debt and with over $5 billion in rental relief funds slow to get into the hands of landlords and tenants, Sacramento politicians decided to extend the eviction moratorium until September 30, 2021.
However convoluted the application process and dysfunctional the system of disbursing payments has been to date, lawmakers also went along with Governor Newsom's proposal to pay 100% of rent debt.
Below are answers to frequently asked questions about how the new AB 832 extends and revises the COVID-19 Tenant Relief Act (CTRA). For information purposes only - please consult an attorney with Bornstein Law before taking action.
You've got questions. We've got answers.
Who is eligible for rental assistance?
Landlords who rent to tenants with an income at or below 80% of the Area Median Income are eligible, although the state is making exceptions for high-income households who could demonstrate a loss of wages.
Encouragingly, while the last bill required the tenant to be in possession of the rental unit in order to qualify for rental assistance, the law was revised to eliminate this requirement. Rental relief now can be sought even if the renter moved out to seek greener pastures during the pandemic.
If the tenant no longer occupies the rental unit, the state has pledged to pay landlords 100% of the rent that has accrued between April 1, 2020, through September 1, 2021. In exchange for this payment, the landlord must agree to release all claims against the tenant for nonpayment of rental debt covered by the rental assistance. As of the date of this writing, however, no forms or mechanisms have been put into place to recoup rent owed from tenants who have abandoned the rental unit - let's stay tuned and keep our fingers crossed.
Who can apply for rental assistance?
Either landlords or tenants can apply, but we highly recommend that both parties work together. There is a great deal of household information that must be gathered from the tenant in order for the landlord to complete the application.
Do landlords have to reapply to receive the additional 20% of rental assistance?
No. A landlord who already has received the 80% payment from the rental assistance program will automatically be paid the remaining 20% without having to resubmit an application.
Is the landlord required to participate in the program if the tenant applies for assistance?
Yes. Under state law, the landlord cannot discriminate based on "source of income," and rental assistance is a source of income. If the landlord refuses to participate, qualified residents will directly receive the entire 100% of the payment and are required to remit that payment to the landlord within 15 days, excluding weekends and judicial holidays.
Are there new notice requirements the landlord has to comply with?
Yes. Landlords must send a notice about the revamped law to all tenants who owe one or more rental payments that became due between March 1, 2000, and September 30, 2021. This includes those residents:
- who owe rent for this time period;
- have not yet received a notice to pay rent or quit;
- have received a 15-day notice, but failed to return the declaration of hardship; or
- have received a 15-day notice and did dutifully return the declaration of hardship.
Landlords must send the notice no later than July 31, 2021. If landlords already have served a 15-day notice, they must notify those residents of changes to the law. No new 15-day notices can be issued if the landlord fails to comply with this requirement. The updated notice must be served even if the landlord served, as required by law, notices back in September 2020 and in February 2021.
To which tenants should the informational notice be sent?
The law explicitly states that the notice must be furnished to renters "who as of July 1, 2021, have not paid one or more rental payments that came due during the covered time period." The covered time period is March 1, 2020, to September 30, 2021. It should be noted that outstanding rental payments not only include past due rent but encompass utilities, parking fees, and other charges under the rental agreement.
Please do not send the notice to residents who are current on rental payments, as this would only educate them on how to legally stop paying rent.
What if a cooperative tenant is working out a payment plan? Should the landlord still serve the notice?
Regardless of how amicable the rental relationship is and what arrangements have been made to pay back rent arrears, the law clearly states that all tenants must be informed of their protections and obligations under the new law, provided that the tenant owes rental payments that became due on or after March 1, 2020.
When does the tenant have to pay 25% of the total rent owed to avoid eviction?
As the law was originally enacted, tenants had until June 30, 2021, to pay 25% of the total rent debt to be insulated from eviction. Tenants now have until September 30, 2021, to meet this requirement. When we say "total rent debt," we are referring to rent that has accrued between September 1, 2020, and September 30, 2021, and nonpayment was due to a COVID-related hardship. This can be paid incrementally or in a lump sum and regrettably, we suspect that many cash-strapped tenants will not be able to cough up even a quarter of the rent that has been missed.
As of October 1, 2021, the tenant must pay 100% of the rent owed in order to be insulated from eviction. They do not merely have to pay 25% and if they don’t, the landlord can proceed with an unlawful detainer action.
What effect does the law have on "just cause" eviction requirements?
The law expands the just cause protections of AB 1482 until October 1, 2021. In case you were wondering, AB 1482 is a piece of legislation that established statewide rent and eviction controls, with certain exemptions. We’ve covered the law in-depth here.
Because of the pandemic, however, just cause rules cover all properties, even those previously exempt from AB 1482. These properties include single-family homes and new construction, and all residents of covered properties from the first day of the tenancy, meaning tenancies cannot be terminated (including requiring a resident to vacate at the end of a fixed-term lease) unless the landlord's notice is based on – and states one – of the "just causes" spelled out in AB 1482.
Notably, eviction for demolition or "substantial rehabilitation" is permissible only if it is necessary to comply with health and safety laws.
Can tenants who do not submit a declaration of financial hardship still be evicted?
Yes. Protections are only afforded to renters who declare financial distress. If a tenant ignores a 15-day notice, it's appropriate for the landlord to file an unlawful detainer action, unless a local government prohibits doing so through moratoria enacted prior to August 19, 2020.
However, it is possible that in response to an eviction action, the tenant could claim that he or she failed to return the declaration because of "mistake, inadvertence, surprise, or excusable neglect." If the court convenes a hearing and is convinced of this argument, the tenant will still be protected.
What about late fees?
If the tenant has submitted a declaration of COVID-related hardship, the landlord cannot collect or seek fees.
Do we turn the page on October 1? Can we revert back to the 3-day notice and any changes to eviction actions once the moratorium expires?
Yes, but the new rules only do not apply to tenancies that begin on or after October 1, 2021. Keep in mind that lease renewals or extensions, and new leases with at least one resident who already lawfully occupies the premises are not considered new tenancies.
The law prescribes new procedures for eviction actions filed between October 1, 2021, and March 31, 2022. A 3-day notice to pay or quit must be accompanied by a notice that includes specific information informing the tenant about how to apply for rental assistance.
The court will not issue a summons that seeks repossession of the rental unit based on nonpayment of COVID-related rent debt unless the plaintiff landlord checks either of two boxes:
The landlord files both of the following:
(1) The landlord files both of the following:
(A) A statement verifying, under penalty of perjury, that before filing the complaint, the landlord completed an application for government rental assistance to cover the rental debt demanded from the tenant defendants in the case, but the application was denied; and
(B) A copy of the "final decision" from the pertinent governmental rental assistance program denying the rental assistance application for the property at issue in the case.
2) The landlord files a statement, under the penalty of perjury, verifying that all four of the following is true:
A) Before filing the complaint, the landlord submitted a completed application, as defined in Section 50897 of the Health and Safety Code, for rental assistance to the pertinent government rental assistance program to cover the rental debt demanded from the defendant tenant in the case.
B) Twenty days have passed since the latter of (1) the date that the landlord submitted the rental notice assistance application, or (2) the date that the landlord served the resident with the three-day notice underlying the complaint.
C) The landlord has not received notice or obtained verification from the pertinent government rental assistance program indicating that the resident has submitted a completed application for rental assistance to cover the unpaid rent debt demanded from the defendant tenant in the case.
D) The tenant is uncommunicative as to whether or not he or she has applied for government rent assistance to cover unpaid rental debt demanded by the landlord.
What is a “final decision” anyway?
A final decision is rendered when:
1) A government rental assistance program has approved or denied the application because the resident is not eligible for governmental funds or the program has been depleted of money to dole out. Given such a large pot of funds, we can't foresee the latter.
2) The landlord meets his or obligations under the rental assistance program by completing the portion of the application that is the responsibility of the landlord, but the tenant does not, within 15 days (excluding Saturdays, Sundays, and judicial holidays), do his or her part by completing the portion of the application that is the responsibility of the renter.
Bornstein Law continues to urge landlords to work cooperatively to get the application done.
My tenant does not speak English. Do I need a translator?
If the lease was negotiated in a language other than English or any material changes to the lease were communicated in a foreign language, notifications must also be made in the tenant's native tongue. The Department of Real Estate is tasked with this translating these informational notices and they can be found in several languages here: https://housing.ca.gov/landlord/forms.html.
I am looking for new tenants. Can I turn down a rental applicant if the last landlord tells me that the prospective tenant hasn't paid rent?
The new law dictates that a landlord, resident screening company, or other agents that screen applicants cannot use rent debt accrued from March 1, 2020 through September 30, 2021 as a negative factor for the purpose of evaluating a rental application. Interestingly, this requirement stands even if the resident's reason for not paying rent was unrelated to COVID distress.
When it comes to communicating the reason why a tenancy is denied, less is more. We do not want you to get trapped, so do not make emphatic or discriminatory statements as to why a rental applicant has been turned down.
Are there any rules relating to collecting rent debt?
Collecting rent debt is a thankless task and so many landlords would prefer to outsource this to a collection agency. However, the law prohibited the sale or assignment of COVID-related rent debt accrued between March 2020 and September 2021.
Under the new law, this ban is partially lifted. As of October 1, 2021, landlords could sell or assign debt to a third party with one big caveat: the tenant who owes the rent debt must not qualify for federal rental assistance. If delinquent tenants are eligible for federal rental assistance, the landlord cannot sell or assign COVID-related rent debt.
How does the state law relate to local ordinances and regulations?
Fortunately, we will have a consistent set of policies throughout California, as state law preempts the impulse of local governments to come up with their edicts.
Up until now, it’s been frustrating to make sense of a patchwork of local eviction bans, but lawmakers have solved these quandaries by essentially stripping the emergency power of municipalities to extend moratoria on non-payment of rent.
If there is any ban on evictions for nonpayment of rent at the local level, so long as they went into effect before August 19, 2020, the moratorium can remain, but cannot be extended. Landlords can breathe a sigh of relief knowing that the days of county and city officials perpetually reinstating their own eviction bans are over.
It is still the prerogative of local governments to enact or extend their own rules regarding evictions unrelated to the nonpayment of rent.
Are there any other protections I should be aware of?
During the pandemic, sheriffs have refused to, or have been slow to enforce writs of possession, but as things come back to normal, they will carry out lockouts. Under the new law, the tenant can stave off eviction by showing that he or she obtained approval of an application for rental assistance with some of or all of the rent debt owed. Armed with proof of an approved rental assistance application, the court will hear the matter within 5-to-10 days to determine whether the tenant has or will obtain rental assistance.
Are there any other ways to transition the tenant out of the unit, besides nonpayment of rent?
Depending on the locale the property is situated in, yes. Certainly, behavior that constitutes a threat to public health or safety like violence or criminal conduct will be prioritized by the courts. Please consult an attorney before proceeding on any theory for eviction.
Our firm has negotiated many tenant buyout agreements during the pandemic whereby the tenant agrees to voluntarily vacate the premises in exchange for compensation, the forgiveness of rent debt, return of the security deposit, a rent waiver, or any combination of motivators.
This is tough stuff and you likely have more questions. Contact the firm built for rental housing providers.