If you are not an income property owner or a renter, then you might want to skip this week’s blog as I go through some of the new rules from the state’s newly enacted COVID-19 Tenant Relief Act of 2020.
That said, I still believe it is a beneficial read for those interested in broadening their knowledge on California housing laws and new rules.
First and foremost, this is a confusing time for all business owners and customers alike to comply with new laws surrounding the Coronavirus pandemic.
It is no different for landlords, tenants, and even now, some casual property owners (and renters) that may not know they are affected.
There are tenants struggling due to loss of job, sickness, or no access to child support.
And, there are landlords struggling with buildings collecting zero rent to cover their expenses.
To be clear, I am not here to opine on the new state law, but rather to briefly explain it as best as I can so you know your rights as a tenant and a landlord.
Summary of New Law
The summary of this law is probably best broken down with bullet points:
- Tenants legally do not have to pay rent between March 1, 2020 and January 31, 2021 if a tenant makes a declaration that they cannot pay rent due to circumstances related to the pandemic.
- For rent due between September 1, 2020 and January 31, 2021, tenants are responsible for paying at least 25%. However, that amount only needs to be paid in full by January 31, 2021.
- On February 1, 2021, a landlord may enact eviction proceedings (an unlawful detainer) for non-payment of rent, but only for the 25% of unpaid rent between September and January.
- All other unpaid rents between March 2020 and January 2021 are still owed. Beginning March 1, 2021, the new law permits a claim for unpaid rent to be brought in small claims court, even if that amount exceeds small claims court limits.
- All residential landlords in California must comply with just cause eviction procedures of The Tenant Protection Act of 2019 (California Assembly Bill 1482). For a refresher on this law, please see my September 2019 blog here.
What Does it All Mean?
I hope that the above breakdown of this new law made sense. I tried to take the simplest form of the new law, however, I know many of you may have follow up questions or may be confused on parts of the new rules.
Essentially, what this all means is that tenants can claim hardship due to COVID-19 and not pay rent until January 31, 2021.
Landlords can only begin eviction proceedings on February 1, 2020, if tenants do not pay 25% of rent between the months of September 2020 and January 2021.
The remaining outstanding rent can be tried in small claims court to win a judgement for the rent, however, there is no legal mechanism to begin an eviction.
Additionally, all residential properties are subject to “just cause” evictions in AB 1482. This means if you own a single-family home that was not subject to the new California rent-control law…well, you are now subject to it.
So, if a tenant has resided for more than a year in a single-family home or a property that was built less than 15 years ago, that property is no longer exempt from just cause evictions until February 1, 2021. Only in the event if a property is sold and the buyer plans to take occupancy, can you terminate a tenancy that is not just cause.
What Will Happen Now and, in the Future
So you may be wondering what will happen right now? Unfortunately, not much.
Tenants will continue to feel the weight of their rent never being forgiven. However, they can take some peace of mind that as long as 25% of their rent is paid over the next five months, then there is no legal mechanism to remove them from their homes.
Landlords will continue to feel the weight of having no legal right to collect rent to pay their expenses or remove non-paying tenants. However, they can take some peace of mind that they have legal rights to collect 25% of rents and evict next year if unpaid, and that they can still try to collect unpaid rent in 2021.
No one can predict the future, but here is what stands to happen down the road…
- No mass evictions are coming anytime in 2020, at least in California.
- Small claims courts will be completely overwhelmed in March 2021.
- Landlord and tenant laws just got a lot more complicated and there will likely be even more complicated changes in 2021.
COVID-19 has created an incredibly difficult situation in residential income property markets for tenants and landlords alike. It is likely impossible to solve or come close to resolving these issues until there is a vaccine and economic recovery.
Happy Labor Day weekend! Be safe and stay well.
Richard Haynes
DRE: 01779425
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The Richard Haynes Real Estate ShowA leader in South Bay real estate for the better part of a decade, Richard thrives as an advisor to his clients with over $248 million in sales as a broker or investment principal at his boutique agency, Haynes. Richard is known for his keen local market insights which have been featured in the L.A. Times, The Street, and Forbes, along with his weekly South Bay real estate blog. [read more]