Sacramento Report — Collecting Rental Debt Versus COVID-19 Rental Debt; It’s No Small Claim…

Collecting Rental Debt Versus COVID-19 Rental Debt; It’s No Small Claim…

By ron kingston

Prior to March 1, 2020, rental property owners and their agents essentially had only one rule to follow when attempting to collect unpaid rent via the courts. That rule regarded monetary limits to define which California court to file litigation. If the unpaid rent totaled $10,000 or more then litigation was filed in superior court; if unpaid rent totaled less than $10,000 it could be collected through small claims court (with annual limits, of course).

However, the COVID-19 Tenant Relief Act seemed to have lifted the monetary jurisdictions because the Legislature anticipated there, “to be an unprecedented number of claims arising out of nonpayment of residential rent that occurred between March 1, 2020, and September 30, 2021, related to the COVID-19 pandemic.”

So, based on an intent to wave the jurisdictional limits relating to disputes over “COVID-19 rental debt,” the Legislature permitted property owners and their agents the option to litigate disputes regarding this type of nonpayment in small claims court, regardless of how much COVID-19 rental debt a renter owed, and it waived the annual limitation of cases permitted to be filed by the same property owner. The Legislature intended these permissible provisions and/or waivers through October 1, 2025.

The Legislature defined COVID-19 rental debt as unpaid financial obligation of a tenant under tenancy that came due during “covered time period.” The covered time period is defined as, “the

time period between March 1, 2020,

and September 30, 2021.”

The Legislature even went on to erase the statute of limitations, regarding the timeliness of filing litigation, “during any time period,” that property owners or their agents are or were to protect a renter from eviction, “based on nonpayment of rental payments,” in response to the COVID-19 pandemic.

The long and short of it is this — If rental property owners or their agents decide to pursue litigation against a renter to recover COVID-19 rental debt, which is the period between March 1, 2020, and September 31, 2021, then an infinite number of valid actions may be filed in small claims court at any time before October 31, 2025.

Ok, you’re probably thinking, “that’s great, but what about trying to recover unpaid rent for any time after September 31, 2021?”

Well, this is where the Legislature savagely forces property owners to fend for themselves. So, you have a valid question.

The Legislature defined “COVID-19 recovery period rental debt” as rental debt that came due between, “October 1, 2021, and March 31, 2022;” yet, provides no direction on how property owners or their agents go about recovering this type of unpaid rent judicially.

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In fact, even the small claims judicial council forms only provide instruction seeking unpaid rent for the period of March 1, 2020, through September 30, 2021.

Interestingly enough, however, pursuant to Code of Civil Procedure section 117905, subdivision (c), the one-year statute of limitation (provided in Code of Civil Procedure section 1161, subdivision (2)) is tolled during

any time period that a landlord is or was… to protect tenants from eviction based on nonpayment of rental payments… in response to the

COVID-19 pandemic.

There is a sort of bewilderment when thinking about why there would only be an unprecedented number of claims arising out of nonpayment of residential rent for a 19-month period of time when the government permitted the nonpayment of rent, in whole or in part, for a total of 25 months. While it may be argued by some that the Emergency Rental Assistance Program was intended to combat unpaid rent from October 1, 2021, through March 31, 2022, the data undeniably confirms that most of the ERAP funds were disbursed for very low- and low- income renters, which left many market rate property owners, their agents, and renters without recovery or assistance.

Property owners and their agents may still pursue litigation to recover unpaid rent from October 1, 2021, through March 31, 2022, but pursuing that litigation in small claims court is no longer a viable option. Instead, recovery will be based on monetary jurisdictions. This means, in some instances, where a renter owes $10,000 or more, or a property owner who requires to file more than one case with a controversy of $2,500 or more, will be forced to spend exorbitant litigation costs, including a $435 filing fee — just to file.

It seems that if the government forced private property owners to accrue unpaid rental debt for a period it deemed necessary, the government ought to permit full recovery of all unpaid rental debt without “skimming off the top” by collecting filing fees and other court costs — in order to make them whole for involuntary loss during circumstances that were beyond the property owners’ control.

I wonder if you can think of any other private owner who was forced to provide a service without payment for 26 months, and provided reasonable opportunity to recover only some of their losses.

It doesn’t seem fair or right… and that’s No Small Claim.

Ron Kingston is President of California Strategic Advisors and Legislative Advocate for the Apartment Association of Orange County. For questions regarding this article, please call AAOC at (714) 245-9500.