Bills incubating in the statehouse will either help or hinder rental housing owners and operators
We all know that landlords and tenants alike are facing rapid changes and growing uncertainties during the public health crisis, but California lawmakers have wildly different versions on how to provide relief.
One bill would allow the courts to force landlords to reduce rents by 25 percent, while another proposal calls for rental assistance that would pay at least 80 percent of the rent that goes missed because of the pandemic. Let’s take a glance at them.
AB 828 by Assemblyman Phil Ting, a Democrat from San Francisco
If this bill comes to pass, courts would be empowered to reduce rents by 25 percent, whether or not a COVID-related hardship exists. Indeed, it would allow courts to rewrite rental contracts by slashing rents and setting long repayment plans if it is determined that the “tenant’s inability to stay current on the rent is the result of increased costs in household necessities or decreased household earnings”.
The bill would also protect tenants who engage in nuisance conduct - tenants would not be required to answer an unlawful detainer complaint and moreover, the rental property owner would have to demonstrate an *economic hardship to collect contracted rent.
Not surprisingly, the rental housing industry is up in arms over the proposed legislation, and the California Apartment Association led a grassroots response to oppose the measure, with at least 55,000 emails sent to lawmakers.
The California Association of Realtors lambasted AB 828, citing among other things, the bill is unconstitutional. From recent memory, we are reminded that both Richmond and Berkeley retreated from proposals to suspend rent payments because of constitutional concerns - freezing rent payments would be tantamount to an illegal seizure of property.
According to one vocal lawmaker, AB 828 would make California’s housing crisis worse
SB 1410 takes a more balanced approach, helping both renters and rental property owners endure the financial impact brought on by the virus.
If the COVID-19 Emergency Rental Assistance Program becomes law, renters with a demonstrated hardship will receive direct rental payment relief, if his or her landlord agrees to reasonable concessions, such as forgoing rent hikes and late charges, and a pledge not to pursue any remaining rent owed for the moths paid by the program.
The bill would cover at least 80% of unpaid rent attributable to the crisis.
Along with our industry partners, Bornstein Law applauds this legislation, because, in the words of CAA’s Debra Carlton, it is a “solution that will help housing providers continue to pay their bills and their employees, while also making it a little easier for struggling renters to get back on their feet financially when the pandemic ends."
It should be clear what legislation is more sensible.