On Monday, during a marathon legislative session and only hours before the statewide eviction moratorium was scheduled to end, Governor Gavin Newsom signed into a law a bill extending the moratorium until January 31, 2021.
The Tenant, Homeowner, and Small Landlord Relief and Stabilization Act of 2020
Assembly Bill 3088, authored by Assemblyman David Chiu (D-San Francisco), will also protect tenants on property with liens that have no more than four units who can’t make payments due to COVID-19 until January 1, 2023. Homeowners will also see relief through the COVID-19 Small Landlord and Homeowner Relief Act of 2020 part of the bill, as they are now protected from foreclosure if they had been up to date on house payments until February 2020 and had been affected by COVID-19 or the subsequent economic downturn as a result. Under AB 3088, the mortgage servicer would have to follow federal guidelines to collect.
The bill, also known as the Tenant, Homeowner, and Small Landlord Relief and Stabilization Act of 2020, would also require 3 days notice of payment demands from COVID-19 rental debt, as the renter in question can have time to produce a COVID-19 financial distress declaration for being late on payments from the period between March 2020 and January 2021. However, AB 3088 also lays out the ‘unlawful detainer’ proceedings for tenants who don’t pay or refuse to move out when the time comes.
Renters cannot be kicked out until February as long as they have a signed declaration of financial hardship due to COVID-19 and pay at least 25% of their rent. After January, landlords can then go to small claims court to collect any missed missed payment during this time if the tenant refuses to pay or if a back pay agreement is not reached.
Additional protections for renters, such as “just cause” protections to make sure landlords are really evicting tenants over not paying rent due to COVID-19 hardships and additional financial hardship documentation for those who make more than $100,000 a year, were also supported in the bill.
Support and opposition of AB 3088
Assemblyman Chiu and supporters supported the bill to protect tenants from being evicted during the pandemic and stopping a larger-scale homelessness crisis resulting from the expected high number of evictions. The end of the eviction moratorium on September 1st also spurred a rapid approval and signing of the bill.
“That is why we must act today to establish new protections to get us through the next few months to prevent a wave of mass evictions in the middle of a public health emergency with no clear end in sight,” reiterated Senator Anna Caballero (D-Salinas) on Monday. “Our goal here was to protect tenants so they would not get evicted and to encourage the banks and get them involved and make sure they don’t foreclose on properties.”
AB 3088 had a fair share of detractors, notably landlord groups who fear this will only send many more landlords to bankruptcy or being forced to sell their properties.
Susan Chang, a Los Angeles landlord who also represents a small contingent of independent rental unit owners, told the Globe that this only “continues the nightmare.”
“About half of my tenants, half, are either not paying rent or paying the 25% minimum. Others are not as lucky, with others maybe having one or two,” Chang said. “But you also have to remember a lot of landlords have maybe 1 or 2 rental properties as their income or as a retirement nest egg. If renters refuse to pay, and we can’t legally get rid of them, it ruins us.”
“That’s what we’ve been seeing. They don’t want to sell to larger corporations or to other people, but that’s been happening too. We understand that COVID-19 is there and that there is a homeless crisis, but we can’t get by on 25% rent. Or being unable to get people out for those that can pay.”
“You can either have affordable housing, or you can do this so we sell to people who won’t make it affordable anymore. You can’t have both. But those politicians up there don’t seem to grasp the reality. They aren’t looking at thew LA market or the San Francisco markets. They don’t know this only leads to bankrupt landlords, us selling properties, and rents going up after COVID-19 is over. Not to mention the gigantic wave of evictions that is only going to get worse each month they stall on this.”
Governor Newsom’s near-midnight signing
AB 3088 had several marathon hearings on Monday, beginning the day with neither the Assembly or Senate approving the bill. Most Republicans and several Democrats had questioned different aspects of the bill, notably the issue of how unpaid rent would be resolved and when evictions could continue. Assemblyman Chiu placated many by reiterating that these were only temporary measures.
“This is a temporary, stopgap measure,” explained Assemblyman Chiu on Monday.
Many Republicans, including Senator Shannon Grove (R-Bakersfield), noted that AB 3088 would likely be challenged in court, and abstained from voting. However, she did note that landlords would still be on the line for expensive repairs in the meantime and may not be able to afford such repairs if tenants aren’t paying rent.
“Those things cost money every month that the landlords and these small landlords are continuing to have to pay for,” explained Senator Grove.
Shortly before midnight on Monday, with both houses passing the bills throughout the day, Governor Newsom signed AB 3088 into law.
“COVID-19 has impacted everyone in California — but some bear much more of the burden than others, especially tenants struggling to stitch together the monthly rent, and they deserve protection from eviction,” said Governor Newsom in a statement on Monday. “This new law protects tenants from eviction for non-payment of rent and helps keep homeowners out of foreclosure as a result of economic hardship caused by this terrible pandemic.”
AB 3088 went into effect at midnight and will currently bar COVID-19 related evictions in California until February 1st, barring a lawsuit overturning the new law.
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