On August 31, 2020 California passed Assembly Bill 3088 to help the millions of people in California struggling to pay rent as a result of Covid-19. Based upon the new law, a tenant cannot be evicted for unpaid rent from March 4 to August 31, 2020. Moreover, a tenant that only paid 25% of the rent that accrued from September 1, 2020 to January 31, 2021 can also not be evicted for failure to pay rent. Both time periods require a declaration of hardship to be supplied by the tenant to the landlord. A landlord is required to give notice of their rights to the tenants under this state law.
If a tenant does not catch up on the missed payments, the landlord has a right to take the tenant to small claims court and pursue a monetary judgment against the tenant in the form of consumer debt. Since unpaid rent accrued during the applicable time periods cannot result in an eviction, and can only result in a small claims court monetary judgment….that means that a tenant can then file bankruptcy and discharge the unpaid rent and not be evicted. In many cases, the unpaid rent can be a substantial amount. If you are struggling to pay rent and are many months behind, proper planning may help you to wipe out a large amount of unpaid rent through bankruptcy.
The highlights of the new law are posted below (from the State of CA website). You can read the language of AB 3088 here. If you are interested in exploring your bankruptcy options, please contact us at (818) 305-6200.
Tenant, Homeowner, and Small Landlord Relief and Stabilization Act of 2020
• No COVID-19-Related Evictions Until February 1, 2021
- Tenant cannot be evicted for a COVID-19 related hardship that accrued between March 4 – August 31, 2020 if tenant returns declaration of hardship under penalty of perjury.
- Tenant cannot be evicted for a COVID-19 related hardship that accrues between September 1, 2020 – January 31, 2021 if tenant returns declaration of hardship under penalty of perjury and pays at least 25% of the rent due.
- Higher income tenants (over $100K household income or over 130% of median household income, whichever is higher) must provide documentation to support their declaration upon a landlord’s request.
- Applies to all residential tenants (including mobile home tenants), regardless of immigration status.
• Tenants Still Responsible for Paying Unpaid Amounts to Landlords
- So long as the tenant with COVID-19 related hardship follows the bill’s procedures, any unpaid rent due between March 4, 2020 – January 31, 2021 is not a ground/basis for eviction, but is still owed to the landlord as a form of consumer debt.
- Small claims court jurisdiction is temporarily expanded to allow landlords to recover these amounts.
- Landlords may begin to recover this debt on March 1, 2021. This expanded small claims court provision sunsets on February 1, 2025.
• Additional Legal and Financial Protections for Tenants
- Extends notice period for nonpayment of rent from 3 to 15 days to provide tenant additional time to respond to landlord’s notice to pay rent or quit.
- Requires landlords to provide hardship declaration forms in a different language if rental agreement was negotiated in a different language.
- Provides tenants a backstop if they have a good reason for failing to return the hardship declaration within 15 days.
- Requires landlords to provide tenants a notice detailing their rights under the Act.
- Limits public disclosure (“masking”) of eviction cases involving nonpayment of rent between March 4, 2020 – January 31, 2021.
- Protects tenants against being evicted for “just cause” if the landlord is shown to be evicting the tenant for COVID-19-related nonpayment of rent.
• Statewide Consistency and a Pause on Local Measures
- Existing local ordinances can remain in place until they expire and future local action cannot undermine this Act’s framework.
- Requires ordinances that provide a repayment schedule to begin repayment no later than March 1, 2021.
- Clarifies that nothing in the Act affects a local jurisdiction’s ability to adopt an ordinance that requires just cause, consistent with state law, provided it does not affect rental payments before January 31, 2021.
• Protections for Small Landlords
- Extends the Homeowners’ Bill of Rights’ anti-foreclosure protections to small landlords, 1-4 units, non-owner occupied.
- Provides new accountability and transparency provisions to protect small landlord borrowers who request CARES-compliant forbearance, and provides the borrower who is harmed by a material violation with a cause of action.
• Significantly Increases Penalties on Landlords Who Do Not Follow Court Evictions Process
- Increases penalties on landlords who resort to self-help (i.e., locking the tenant out, throwing property out onto the curb, shutting off utilities) to evict a tenant, rather than going through the required court process.
