Never in our careers have property owners been tasked with digesting so much legal information and updates than in the past 18 months or so, but you can rely on Bornstein Law to make sense of it all.
What the COVID-19 Tenant Relief Act of 2020 means for landlords
Flirting with a deadline, the California legislature and Governor Newsom rose to the occasion on Monday, August 31 to pass Assembly Bill 3088, a law aimed to strike a compromise between cash-strapped tenants who have been financially impacted by the pandemic, and landlords who have experienced a loss of rental income. Bornstein Law is committed to helping you recoup rents, staying compliant, and optimizing your rental business in this new regulatory regime.
Daniel Bornstein had the privilege of hosting a webinar on recent legislation Tuesday, September 22nd, and you can replay it here.
Get the Reader's Digest Version of the new law in a succinct, one-page PDF.
We have put together answers to some pointed questions.
Does the new law apply to my property?
Yes, all residential units are covered, including mobile home parks, boarding houses, and even (in most cases) short-term rentals, such as Airbnb. The only exemptions carved out are for commercial tenants, corporate rentals where a renter is not a natural person, and transient living arrangements like hotels and motels.
My tenant has not been paying rent. Can I evict them for nonpayment of rent?
Not anytime soon, and you may not be able to evict for nonpayment of rent at all, depending on when the rent debt became due and if the tenant has made a good-faith effort to pay part of the rent. There are important dates to put a finger on.
If rent was missed from March 1, 2020, through August 31, 2020:
Landlords cannot evict for non-payment of rent during this period if the tenant signs a declaration of hardship under penalty of perjury that states their finances have been adversely affected by COVID-19. That is, the tenant has experienced a loss of income or increased expenses related to the pandemic.
If rent is missed from September 1, 2020, through January 2021:
Provided that the tenant has signed a declaration of financial hardship suffered because of COVID-19, the law gives tenants until January 31, 2021, to make a partial payment of 25% of the total rent due. Only if the tenant fails to make the 25% payment can he or she be evicted.
What if the tenant owes me money for amenities and other things besides rent?
The law defines rental payments as rent or “any other financial obligation of a tenant under the tenancy.” This includes utilities, parking fees, pet rent, and damage charges, etc. Any money owed falls under the protections.
What is a hardship anyway?
Unless the tenant is deemed to be earning “high-income,” the mere assertion of financial hardship under penalty of perjury is sufficient.
An important point to remember is that even if the tenants themselves remain employed during the pandemic and have had uninterrupted income, they can assert distress when they incur increased expenses or have been tasked with taking care of relatives.
I believe my tenant to be wealthy or hasn’t lost their job. Does that make a difference?
If the tenant earns a high income, he or she will be required to produce documentation that shows financial distress if the landlord asks the affluent tenant to produce proof of hardship. High income is defined as households earning $100,000 or 130% of the median income, as defined by HUD, for the county they reside in.
The key term is “household.” We can’t just focus on the income of an individual breadwinner — we have to take into account the household size, including minor children, when calculating if the rental unit is deemed to be occupied by a high-income tenant.
What are the documentation requirements to ask for documentation of financial distress?
It is important to note that the landlord cannot play detective by digging up information to prove the tenant has a high income. Rather, the landlord must already have independently verifiable information in hand such as tax returns, W-2’s, written statements from the employer, pay stubs, and the like. This can normally be ascertained from the tenant screening process or rental application. Hopefully, you have preserved this.
If the landlord has preexisting evidence that the tenant falls into the category of a high-income earner and serves a 15-day notice, the notice must include statutory language when asking whether the well-to-do tenant has been impacted by a COVID-related hardship.
After the high-income tenant has been asked to furnish substantiating evidence of hardship, the tenant must do so. This can come in many forms but must be more than the mere assertion they have fallen on tough times.
When I seek the repayment of rent, can I still use the standard 3-day notice?
No. Under the new bill, landlords are required to give a 15-day notice before seeking to evict for unpaid rent or other charges that have become due during the period of March 1, 2020, and January 31, 2021. Saturdays, Sundays, and judicial holidays are excluded.
For rent debt that has accrued between March 1, 2020, and August 31, 2020, tenants cannot be evicted for nonpayment of rent when the tenant submits a declaration of hardship to the landlord within this 15-day period. This declaration can be returned by email, mail, or hand delivery.
Do not worry — we have the notice and the declaration of hardship prepared so that you can be in compliance with the law.
Are there any required statements to include in the newfangled 15-day notice?
Yes. Statutorily required language must be included in the 15-day notice, depending on the timeframe of when rent was missed.
For payments from March 1, 2020, and August 31, 2020, specific language must be included.
For payments between September 1, 2020, and January 31, 2021, a different statement must be included.
What if the tenant does not return the declaration of hardship they are supposed to do within 15 days? Do they forfeit the right to claim hardship?
That will be up to a judge during an eviction hearing. The tenant can claim there is an acceptable reason for not returning the declaration in a timely manner.
Are there any other notices or paperwork I need to be aware of?
Yes. For tenants who have missed rent payments anytime in the period between March 1, 2020, and August 31, 2020, the tenants must be provided a notice that informs tenants of their protections under the new law. We have this notice already prepared.
It is important to understand that this notice must be properly served through personal service, substituted service, or by posting and mailing. In other words, the notice must be served in the same manner as a notice to pay rent or quit.
My tenant did not return a declaration of hardship. When is the earliest a tenant can be evicted for nonpayment of rent?
The court system has been given until October 5, 2020 to prepare for unlawful detainer cases. Until then, the courts will not be issuing summons and a default judgment cannot be entered unless the eviction involves public health and/or safety issues.
What if I can’t evict someone for non-payment of rent and other charges? Is there any other way I can recoup the rent debt?
Landlords can pursue an action in small claims court and interestingly, the new law allows these cases to be heard regardless of the dollar amount owed, that is, the amount is not limited to $10,000 as in other small claims cases. Plaintiffs can also file more than two actions in a calendar year, removing a previous restriction. The drawback is that in small claims court, the landlord cannot be represented by an attorney unless the defendant appeals the decision. Small claims court lawsuits cannot be commenced until March 1, 2021.
Owners still have the prerogative to seek recovery of the unpaid rent in the Superior Court. One advantage of choosing Superior Court over small claims court is that not only can the plaintiff be represented by an attorney; the landlord who prevails can also recover attorneys’ fees. This can be used as leverage — the tenant might be more motivated to pay the rent debt knowing they will be liable to pay the landlord’s legal bills if the matter is filed in Superior Court.
What about nuisances and other types of evictions besides non-payment of rent?
Evictions for reasons other than non-payment of rent can resume September 2. Keep in mind, forward-thinking lawmakers feared retaliatory evictions and so they extended “just cause” protections to all residents in California through January 1, 2021.
Just causes are delineated in the Tenant Protection Act of 2019 (AB 1482), a law we covered extensively here. Exceptions to the expansion of AB 1482 include single-family homes and condo owners who are selling if they are already exempt from AB 1482, have a contract for sale, and the buyer intends to occupy the property.
The new law makes a couple of tweaks to AB 1482 we will discuss below.
Also, be aware that local ordinances may have eviction controls that are more restrictive than state law.
Can I still evict for demolition or substantial rehabilitation?
If you want to transition a tenant out in order to tear down a building or do a huge remodel, not so quick — these evictions are limited to circumstances where it’s necessary to comply with health and safety laws. This is a big asterisk because AB 1482 does not have this qualifier.
Do I have to still pay relocation assistance to tenants who are evicted through no fault of their own?
Yes. If the tenancy is terminated for a no-fault reason, AB 1482 and local relocation assistance obligations still apply to covered properties. Interestingly, however, landlords can offset any unpaid rents from the covered period of March 2020 — January 2021 against their relocation payment obligation.
The city/county where my property is located already has its own moratorium. How does this mesh with state law?
This is a complicated issue. Generally speaking, local moratoriums will have full force until their expiration dates, but local officials cannot renew them until February 1, 2021. Furthermore, any repayment periods prescribed by local ordinances will be overwritten by state law. Repayment periods are to begin by March 31, 2020, and complete by March 31, 2020. There are several other nuances — please contact our offices to discuss them.
Anything else I should be aware of?
We have always admonished landlords to refrain from illegal lockouts and other “self-help” eviction measures, but now the penalties have gone up dramatically.
Hardship declaration forms must be provided in the tenant’s native language if the rental agreement was negotiated in a different language. See our earlier blog: What landlords should know amid the immigration debate →
Bornstein Law can provide these declarations in several of the most popular languages used locally.
If you have a property covered by the CARES Act — that is, you have a federally backed mortgage or participate in federal subsidy programs — we have compliant 15/30-day notice forms at our disposal. For more information on relief for small landlords, you can download this one-page PDF.
When the landlord secures an eviction judgment in a nonpayment of rent case that was filed between March 4, 2020 — January 31, 2021, the judgment is subject to masking and is not publicly available, regardless of the outcome. This protection sunsets on February 1, 2021.