It is Time for Landlords to Fight for the Civil Liberties of Due Process
To our valued clients,
We hope you and your loved ones are staying safe during this unprecedented time. With the novel Coronavirus (COVID-19), many changes have occurred concerning ALL litigation and how evictions have been and are going to be handled. To keep you best prepared, I wanted to make you aware of these changes; however, the laws also seem to change every few days. As to rent payments between tenants and their landlords, there are special rules for tenants and strategies that landlords may want to consider. Please call our office for a consultation or for any forms or notices you may require.
Judicial Council’s moratorium on Unlawful Detainers and Foreclosures
On April 6, 2020, the California Judicial Council issued two sweeping Emergency Rules that bar all unlawful detainer actions and judicial foreclosures in California. The Emergency Rules will be in effect until 90 days after Governor Gavin Newsom’s COVID-19 state of emergency is terminated, unless the Judicial Council amends or repeals the rules earlier. The Emergency Rules, which govern all courts in California, are in addition to the patchwork of orders and ordinances recently adopted by local governments limiting evictions and landlord remedies in response to the COVID-19 pandemic.
You can read more about the emergency rules by clicking here.
Prohibition of Evictions
Emergency Rule 1 prohibits any court from evicting a tenant. Specifically, the Rule prohibits a court from (1) issuing a summons to a tenant on a complaint for unlawful detainer until the 90-day period expires, and (2) entering a default or a default judgment for restitution on an unlawful detainer action for failure of the defendant to appear.
If a defendant makes an appearance in the case, the court may not set a trial date earlier than 60 days after the trial is requested. In eviction cases where a trial request was pending as of April 6, the court must continue the hearing for at least 60 days.
This rule applies to both residential and commercial leases as well as ground leases. The Judicial Council rules prohibit evictions regardless of whether the Unlawful Detainer is due to a default in the payment of rent or other lease default or whether it is a so-called “no-fault” termination, such as the expiration of the lease term. Furthermore, the rule does not require the tenant to show its inability to pay rent due to the COVID-19 pandemic. The prohibition on evictions does not apply if the court finds that the action is necessary to protect public health and safety.
Because the Judicial Council rule only binds the courts, it does not limit the landlord’s right to deliver a notice of default, file a complaint, utilize security deposits, either in the form of cash or a letter of credit, or to sue a guarantor for delinquent rent payments. The rule only delays the eviction remedy, but the law does not reduce or eliminate the tenant’s obligation to pay rent. However, as a result of the law, tenants who are judgment proof and who have provided little or no lease security may be able to occupy the leased premises rent-free throughout the state of emergency, an additional 90 days after that, plus the time necessary to complete an eviction once the state of emergency lifts.
Prohibition of Judicial Foreclosures
Additionally, Emergency Rule 2 prevents judicial foreclosures of any deed of trust or mortgage by (1) immediately staying any pending legal foreclosure actions, and (2) prohibiting a court from taking any action or issuing any decision or judgment in a foreclosure. In recognition of its effect on creditors, the rule tolls the statute of limitations for filing judicial foreclosures. It also extends the period that applies to judicial foreclosures, including the right of redemption from a foreclosure sale in which are applicable for a deficiency judgment.
The rule does not affect non-judicial foreclosures (i.e., trustee sales) or lender remedies against pledges of equity interests.
Local Governmental Actions Limiting Evictions
In response to the COVID-19 pandemic, numerous local governments in California have issued orders or enacted ordinances that also limit evictions. Because the Judicial Council’s rules are statewide and prohibit evictions of all residential and commercial tenants, its provisions will, in most cases, have the practical effect of superseding the local government’s eviction limitations. However, because some municipalities orders and ordinances impose additional constraints on the landlord’s remedies, landlords and tenants will need to check these local rules carefully and frequently, as there have been numerous changes already. By way of example, the local government orders and ordinances adopted by the City of Los Angeles and the County of Los Angeles are stated below.
Los Angeles City
In the City of Los Angeles, the City Council passed, and Mayor Eric Garcetti signed, Ordinance No. 186585, which prohibits evictions of all residential and certain commercial tenants for nonpayment of rent during the emergency period. Commercial tenants that have more than 500 employees are publicly traded or are a “multi-national company” do not have the benefit of the ordinance. In all cases, the tenant must show an inability “to pay rent due to circumstances related to the COVID-19 pandemic,” such as loss of income due to a COVID-19 related workplace closure, child care expenditures due to school closures, health-care expenses, and other factors. Landlords must give written notice to all tenants of the protections afforded by the Ordinance within 30 days of its effective date, and failure to provide notice may result in penalties.
Although the Judicial Council rule extends beyond the Los Angeles Ordinance in many respects, the Ordinance includes provisions that do more than limit the unlawful detainer remedy. For example, the Ordinance purports to prevent landlords from imposing late charges and default interest on unpaid rent during the state of emergency. In addition, the Ordinance includes what is essentially an extensive cure right: qualifying residential tenants have up to 12 months and qualifying commercial tenants up to three months following the expiration of the emergency to repay past due rent.
Los Angeles County
By Executive Order, the County of Los Angeles imposed protections for residential and commercial tenants in the unincorporated areas of the county. These include a prohibition on evictions, whether for nonpayment of rent or no-fault terminations. The protections apply only to tenants who demonstrate an inability to pay due to COVID-19 and provide notice to the landlord within seven days after the rent due date. The County order gives the tenant six months following termination of the Executive Order to pay the landlord the amounts owed.
San Francisco. In San Francisco, Mayor London N. Breed enacted an eviction moratorium via an Emergency Proclamation and several supplements, which applies to all residential tenants and commercial tenants with gross worldwide receipts of $25 million or less in 2019. In the case of residential tenants, the tenant must provide notice to the landlord within 30 days of the missed payment and, within one week of giving such notice, the tenant must show an inability to pay rent due to the COVID-19 pandemic. The San Francisco order gives residential tenants up to six months after the emergency is over to repay past due rent that came due after March 13, 2020, and before (1) April 17, 2020 (as that date has been extended) and (2) the termination of the emergency period, and the right to postpone eviction due to such nonpayment for the same six-month period.
For commercial tenants under the $25 million threshold, the landlord must provide the tenant a notice of nonpayment and provide a cure period of no less than 30 days from the date the tenant receives the notice. Commercial tenants must then pay within the cure period or show an inability to pay rent due to the COVID-19 pandemic in order to obtain a one-month further extension. Commercial tenants may receive consecutive one-month extensions to the cure period by showing a continuing inability to pay due to the COVID-19 pandemic each month up to a maximum of six months from the due date of the missed payment. The San Francisco order currently only applies to rent that came due on or after March 17, 2020, and on or before April 17, 2020, unless the Mayor extends the order.
In addition, the order confirms that the landlord may utilize security deposits of commercial tenants to satisfy past-due rent during the emergency period, but such use is discouraged. However, if the lease requires the tenant to replenish the security deposit after it is depleted during the tenancy, the order gives the tenant additional cure periods to replace the deposit, as with nonpayment of rent up six months. Mayor Breed also issued a clarification that the eviction moratorium on commercial tenants also applies to “all attempts to recover possession of a unit due to non-payment,” thus potentially proscribing other actions a landlord may take against a commercial tenant.
AB 828 (currently before the legislature to be voted on and needs immediate action)
The bill in response to COVID-19 would allow the courts to force rental property owners in California to reduce rents by 25%. The bill, AB 828 by Assemblyman Phil Ting, D-San Francisco, also would force landlords to subsidize the rents of their tenants.
Ting’s proposal ignores the robust rent and eviction controls already established across California. It provides no assurances that landlords can collect rent, remove problem tenants, or get lawful hearing within the court system. Read CAA’s letter opposing AB 828 here.
Landlords can help fight this bill by sending a letter to their legislator, urging them to oppose AB 828.
AB 828 denies equal justice to housing providers by:
- Allowing the courts to force landlords to cut back rents by 25% — albeit a tenant cannot show a COVID-19 hardship or need.
- Allowing the courts to establish rents and modify rental agreements already established.
- Assuming every tenant is facing a COVID-19 hardship and must be compensated for it.
- Protecting nuisance tenants. The bill doesn’t require tenants to answer an unlawful detainer complaint.
- Mandating that rental property owners demonstrate an economic hardship to compile the contracted rent.
This unfair bill would allow the government and courts to grant reduced rent and extended tenancies to any or all renters, even those not facing economic hardships. At the same time, it provides no safeguards for landlords.
We are now asking owners to contact their state legislator and ask him or her to vote no on AB 828 – legislation that cuts rents 25% or visit https://caanet.org/votervoice to send a direct message to your local legislator to STOP AB 828!!
The Judicial Council eviction rule and potentially AB828, are sweeping because it prohibits the eviction of residential and commercial tenants, it does not require a showing that the tenant could not pay rent, and it extends the prohibition for 90 days after the state of emergency is lifted in California.
AB 828 is an unfair attempt to allow the government and the courts to give reduced rent to all tenants even if they have face no economic hardship, and it provides no safeguards for landlords.
Furthermore, some local governments have provided tenants with extended periods in which to pay past due rent and prohibited landlords from charging late fees or default interest. These local orders and ordinances will surely be challenged in court as impermissibly impairing the terms of a private contract and as an improper use of the local police power. Still, it will be many months before these issues are decided. However, local governments may very well adopt additional tenant protections, such as prohibitions on rent increases.
This is a time of uncertainty for all of us, but I want to assure you that we are doing our best to continue to provide effective legal representation for you. Below you will find a letter addressed to the Judicial Council regarding the numerous affects that the eviction ban causes on landlords.
Call To Action
If you are interested in having your voice heard, please sign the letter we have prepared addressed to the Judicial Council and we will make sure it gets to them.
Please stay safe and stay well.
– Law Office of M.C Earle/Fast Eviction Service
Filed under: Landlord Legal Issues