AB-3088 Tenancy: rental payment default: COVID-19 Limon signs bill that hurts landlords for votes


A conversation with Bill Christiansen, Vice President of the Apartment Assoc. of Orange County about AB 3088.

A conversation with Malcolm Bennett, President of the Apartment Association of California Southern Cities about AB 3088.

Enacts the “Tenant, Homeowner, and Small Landlord Relief Act of 2020,” which prohibits landlords from using missed rent payments accrued between 3/1/20 and 8/31/20 as a legal basis to evict tenants, so long as the tenant fills out legal paperwork attesting to financial hardship from COVID-19. Requires high-income tenants who can’t pay to submit financial documentation if the landlord asks. Requires tenants financially impacted by COVID-19 to pay 25% of their rent between 9/1/20 and 1/31/21 to avoid being evicted starting on 2/1/21. Authorizes evictions starting 9/1/20 for other lease violations. Chills rental housing investment as state government continues to interfere with property rights.

Senate Amendments: Gut the bill and insert new language.

Gut-and-Amend: This bill was gutted-and-amended in the Senate to insert major and far-reaching provisions dealing with tenants’ non-payment of rent and allowable eviction proceedings for rental property owners. As it left the Assembly, this bill merely corrected technical provisions in AB 1482 (Chiu) from last year which imposed statewide rent control.

OPPOSITION: Affordable Housing Management Assns. of Pacific Southwest and Northern CA/Hawaii; Apartment Assn. of Greater Los Angeles (unl. amended); Apt. Assn. of Orange County/Apt. Assn. CA Southern Cities/East Bay Rental Housing Assn; CA Assn. of Realtors (Concerns); CA Rental Housing Assn.(concerns).

COMMENTS:

Issue: Before COVID-19, over half of California renters were considered rent-burdened, paying over 30 percent of their income on rent. During the emergency, the state’s unemployment rate has skyrocketed. US Census Bureau data from July 9-14 indicate that over 4.3 million of California’s renters report “little or no confidence” in their ability to pay the next month’s rent. While voluntary agreements are being made, the Democrats contend property owners must shoulder more.

Arguments in Support:

Arguments in Opposition:

  1. Opposition comes from small property owners who can least absorb the costs and are least able to follow the new legal guidelines. Many of these are immigrant families of color where English is not the first language. Many of them invested their savings in these properties. This bill is neither just nor equitable.
  2. While there are several protections for tenants, there is no mortgage forbearance for small property owners. Where do they turn for financial help if, and until, that 25% rolls in?
  3. Democrats want the private sector to shoulder the costs of their aggressive shutdowns of business. Why can’t property owners get government help when everyone else does considering the taxes they pay? Small housing providers could go out of business.
  4. Low- and moderate-income tenants need only sign a document attesting to financial suffering before halting the payment of rent — with no way for the small landlord to verify — whilst high-income tenants must submit to invasive demands for W-2s or papers showing 401(k) distributions.
  5. After rental property owners were forced to digest AB 1482 –which imposed rent control and became law just last January — they are facing new burdens on their investment and ability to provide housing. Amazingly, these burdens are only temporary until the Democrats can impose even more stringent requirements in keeping with their activist tenant base in 2021. According to the author’s fact sheet, “these temporary protections will bring meaningful relief to renters until federal relief comes or the California Legislature can reconvene to create a longer-term solution for renters and landlords.”

Summary: 

  1. Requirements for unpaid rent March 1, 2020 – Aug 31, 2020.
    1. States that tenants can never be evicted based on this missed rent.
    1. Requires tenants to eventually owe the full amount and property owners can bring a small claims court action to recover this rent on March 1, 2021.
  2. Requirements for unpaid rent Sept 1, 2020 – Jan 31, 2021
    1. Provides that if a tenant pays at least 25% of their rent each month during this time period by Jan 31, 2021, then they cannot be evicted.
    1. Provides that the remaining amount can be recovered by their landlord in small claims court starting March 1, 2021.
    1. States that if a renter is unable to pay 25%, the property owner still cannot proceed with an eviction until Feb 1, 2021.
  3. Requirements for the eviction process.
    1. Provides that the usual 3-day “quit-claim” notice to evict that landlords post – mandatory before they go through the court process to evict a tenant — is now a 15-day-notice. 
    1. Provides that once the new 15-day “quit-claim” notice is posted, low- and moderate-income tenants can file with their landlord that they have a pandemic-related hardship to which they must testify under penalty of perjury.
    1. States that if a tenant earns 130% of a county’s area median income or higher, a landlord can ask for them to produce proof of a pandemic-related financial hardship, such as a W-2 or layoff notice from an employer.
    1. Authorizes evictions based on nuisances or criminal activity.
    1. Allows local ordinances related to COVID-19 renter protections to continue if they were in place prior to Aug 19, 2020 and permits new local ordinances to become operational on or after Feb 1, 2021.
    1. Adds new penalties between $1,000 and $2,500 for “illegal lockouts” that remove tenants outside of the eviction process.
  4. Requirement for courts. Provides that courts will have until Oct. 5, 2020 to begin processing evictions for non-payment of rent in non-COVID cases.
  5. Requirements for lenders.
    1. Requires mortgage servicers to provide borrowers with a disclosure about why forbearance requests are denied.
    1. Requires a mortgage servicer to provide a borrower to whom forbearance is given with post-forbearance options.

Related Legislation: AB 1482 (Chiu, Ch.597, 2019) imposed statewide rent control and “just cause” eviction protections. Assembly Floor vote was 48-26. NOES: all Republicans, NVR: Fong).

Related Legislation: AB 1482 (Chiu, Ch.597, 2019) imposed statewide rent control and “just cause” eviction protections. Assembly Floor vote was 48-26. NOES: all Republicans, NVR: Fong).

VOTE HISTORY:

Senate Floor Vote 8/31/20:  33-2 — AYES: Borgeas, Chang, Nielsen, Wilk; NOES: Bates, Morrell; ABSTAIN: Dahle, Grove, Melendez, Moorlach.

ALL PRIOR VOTES IRRELEVANT DUE TO AMENDMENTS.


POLICY CONSULTANT: William Weber 8/31/2020