September 2020

On August 31, 2020, the California Legislature enacted the COVID-19 Tenant Relief Act of 2020 (the “Act”) in response to the impact of the COVID-19 pandemic on residential tenants and their ability to pay rent.

On September 4, 2020, the CDC published an order (“CDC Order”) entitled “Temporary Halt in Residential Evictions to Prevent the Further Spread of COVID-19.” Below are the main take-away from the Act and the CDC Order related to residential unlawful detainer actions. 

The Act

The Act intends to cover COVID-19 rental debt during: (i) the protected time period between March 1, 2020 and August 31, 2020 (“Protected Period”) and (ii) the transition time period between September 1, 2020 and January 31, 2021 (“Transition Period”).

Halt on Unlawful Actions for Non-Payment of Rent Until October 5, 2020

Until October 5, 2020, California courts cannot issue a summons for unlawful detainer or enter a default on unlawful detainer actions where such actions are based, in whole or in part, on non-payment of rent or other charges.

Notice of Pay or Quit

The Act modifies the requirements pertaining to any notice demanding payment of COVID-19 rental debt. The Act requires strict compliance.

For a notice demanding payment of rent that came due during the Protected Period, that is, between March 1, 2020 and August 31, 2020, such notice must:

• Provide the tenant with 15 business days to pay or quit;
• Set forth the amount of rent demanded and the date each amount became due;
• Advise the tenant that he/she cannot be evicted for failure to pay or quit, or failure to perform covenants or quit, if the tenant delivers a signed declaration of COVID-19 related financial distress before the notice expires;
• Include a specific notice informing the tenant of his/her rights and obligations pursuant to the Act, including the fact that the integrality of the rental charges not paid will remain due;
• Include an unsigned copy of a declaration of COVID-19 related financial distress.

Where a notice demands payment of rent that became due during the Transition Period, that is, between September 1, 2020 and January 31, 2021, the requirements are the same except that, to benefit from the protective measures afforded by the Act, a tenant must pay at least 25% of each rental payment that comes due during the Transition Period. During the Transition Period, a landlord may require that the tenant submit a new declaration form for each rental payment that the tenant does not pay.

However, if a tenant fails to pay 25% of rent when it becomes due during the Transition Period, such tenant can still avoid an eviction if the tenant provides a Covid 19 related financial distress declaration within 15 business days of each notice to pay or quit that a landlord may serve, and pays an amount equal to 25% of all rental payments that become due by January 31, 2021.

Further, if a tenant owes COVID-19 rental debt for rent due during both the Protected Period and the Transition Period, two separate notices must be served.

For a notice to pay or quit related to rent due during the Transition Period, a landlord cannot commence an unlawful detainer action before February 1, 2021.

High Income Tenant

The Act provides landlords with additional rights for “high income tenants”.  For purposes of the Act, a “high-income tenant” means a tenant with an annual household income of 130% of the median income for the applicable county.  However, a “high income tenant” does not include a tenant with a household income of less than $100,000.  Before requesting such documentations, the landlord must have proof of income on file.

A landlord can require that a high-income tenant served with a notice to pay or quit submit, in addition to the Covid -19 related financial distress declaration, documentations supporting the claim that the tenant has suffered COVID-19 related financial distress. Failure to provide said documentations may result in the removal of the protective measures provided in the Act.

Limited Grounds for Eviction Until February 1, 2020

Before February 1, 2021, a court is precluded from finding a tenant guilty of an unlawful detainer unless any of the following applies:

• The tenant was guilty of the unlawful detainer before March 1, 2020;
• The Tenant failed to provide a signed declaration of COVID-19 related financial distress in response to a notice demanding payment of Covid-19 rental debt; or
• The unlawful detainer arises out of the termination of tenancy based on the following grounds: (i) at-fault just case as defined in Civil Code Section 1946.2(b)(1); (ii) no-fault just cause as defined in Civil Code Section 1946.2(b)(2), except that for intent to demolish or substantial remodeling, additional requirements must be met; (ii) for a single-family home not owned by a corporation or real estate investment trust, the owner has entered into a contract for sale of the property with a buyer who intends to occupy the property.

Notice to Tenants

The Act further mandates landlords to provide, on or before September 30, 2020, a specific notice to their tenants who, as of September 1, 2020, have not paid one or more rental payments that came due during the Protection Period.  The content of such notice can be found in the Act. A landlord must provide said specific notice before or concurrently with the service of any 15-day notice to pay or quit.

Small Claims Court

For residential rental debt incurred between March 1, 2020 and January 31, 2021, the Act provides an expeditious, inexpensive and fair judicial forum: small claims court.  Indeed, landlords and tenants will have the option to litigate their disputes regarding unpaid rent for the period identified above in small claim courts without regard to the jurisdictional limits. In other words, small claims court will be available for rental debt disputes even if a landlord may have brought two or more small claims actions for an amount exceeding $2,500 in the calendar year.

The full text of the Act may be found at: http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200AB3088

 

The CDC Order

The CDC Order is a moratorium on evictions through December 31, 2020 applicable for every state and territory with reported cases of Covid-19, except where an existing state or local moratorium on residential evictions provides same or greater level of protection.  The CDC Order applies to tenants who meet five criteria:

1. Income of less than $99,000 in 2020 or receipt of a stimulus check;
2. Inability to pay full rent due to an income loss or extraordinary medical bills;
3. Best efforts have been made to obtain governmental rent assistance;
4. Likelihood of becoming homeless or being forced to live in close quarters, if evicted; and
5. Promise to make timely partial payments that are as close to the full payment as the person’s circumstances may permit.

The CDC Order applies to any property leased for residential purposes and to any tenant who meets the criteria described above and sign a specific form declaration. 

The CDC Order does not preclude evictions based on the following grounds: (1) criminal activities on the premises; (2) threat to health or safety of other residents; (3) damage or immediate and significant risk of damage to property; (4) violation of health and safety code or regulations; (5) violation of other contractual obligations, other than the timely payment of rent or charges.

Source: https://www.federalregister.gov/documents/2020/09/04/2020-19654/temporary-halt-in-residential-evictions-to-prevent-the-further-spread-of-covid-19

For more information contact

Johanna Monon

jmonon@gibbsgiden.com

(310) 734-3317

Johanna Monon is an associate at Gibbs Giden. She practices in the area of business and commercial transactions as well as commercial litigation. Ms. Monon also provides general counsel services.

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