Sacramento Report — A Little Less Rent and A Lot More Possession

A Little Less Rent, and A Lot More Possession

By ron kingston

Assembly Bill 2179 (Grayson) was introduced as a “spot bill” on February 15, 2022. Spot bills are simply considered “placeholder bills.” Generally speaking, they are to be amended later in the legislative session and, once amended, are quite substantive. This bill really lived up to what everyone expected in the landlord and tenant arena. On March 24, 2022, the auther gutted all of the language that was in the bill, as introduced, and replaced it with meaningful and impactful new language extending the COVID-19 Tenancy Act by: 1. Extending through June 30, 2022 the statewide procedural protections against eviction based on the nonpayment of rent that accumulated between March 1, 2020 and March 31, 2022, as long the tenant applied by March 31, 2022 for emergency rental assistance.

2. Mandating another form (or notice) that landlords must provide to

tenants after March 31, 2022 and before July 1, 2022, prior to seeking a court order for eviction based on nonpayment of rent. 3. Extends the statewide preemption of local government laws: a. Local ordinances adopted before August 19, 2020 in response to COVID-19 pandemic, to provide protection against eviction for the nonpayment of rent, were grandfathered in.

b. City and county ordinances are preempted from applying new or additional tenant protections against eviction for nonpayment of rent that accrued on or before March 31, 2022.

C. For rent that accrues on and after April 1, 2022, local governments are free to establish addition protections.

The bill continues to use the remaining $5.2 billion in federal Emergency Rental Assistance Program (known as ERAP) funding. The state administration claims that it will commit all funds on or before June 30, 2022. This, in our judgment, is highly unlikely.

The Bill Notices:

If a lessor served a lessee with a Notice demanding payment of rent that came due during the Transition Time Period, the Notice required specific language if it was served on or after October 1, 2021.

The Bill has added an ending date pertaining to this particular Notice, and its specific language. Lessors are now required to use this Notice with its specific language if served on April 1, 2022 through June 30, 2022.

If rent became due during the same time period, and its Notice is served on or after April 1, 2022, and before July 1, 2022, the Notice shall include the following text in at least 12-point type:

Notice From The State Of California:

If: (1) Before October 1, 2021, you paid your landlord at least 25 percent of any rent you missed between September 1, 2020, and September 30, 2021, and you signed and returned on time any and all declarations of COVID-19 related financial distress that your landlord gave to you, or (2) You completed an application for government rental assistance on or before March 31, 2022, you may have protections against eviction. For information about legal resources that may be available to you, visit lawhelpca.org.

Additionally, if a lessor served a lessee with a Notice demanding payment of rent that came due during the Recovery Time Period, the Notice required specific language be included. Because the Bill has modified applicable dates, lessors are now required to use the same language in its Notice if served before April 1, 2022.

If rent became due during the same time period, and its Notice is served on or after April 1, 2022, and before July 1, 2022, it shall include the following text:

Notice From The State Of California:

If you completed an application for government rental assistance on or before March 31, 2022, you may have protections against eviction. For information about legal resources that may be available to you, visit lawhelpca.org.

It is extremely important to use the

Sacramento — continued on page 8

correct notice to tenants. Our associstion is pleased to provide that notice for members use.

Preemption:

The COVID-19 Tenancy Act previously placed a state preemption on local governments that prohibited the implementation of any NEW local government ordinance that conflicts with the Act. Previous law stated that the prohibition would occur between August 19, 2020 and March 31, 2022; however, The BILL extended the prohibition date to June 30, 2022 in order to continue providing tenant protections against eviction for non-payment of COVID-19 rental debt.

Litigation:

Previous law prohibited the court from issuing a summons and complaint in an unlawful detainer action unless the lessor filed particular documents and statements, if the action was filed on or after October 1, 2021, and before March 31, 2022; however, the Bill extends that time frame to before July 1, 2022.

The Bill also requires an additional statement to be filed with the court, if the action is filed on or after October 1, 2021, and before July 1, 2022; which is as follows:

A statement, under penalty of perjury, that a determination is not pending on an application, filed prior to April 1, 2022, for government rental assistance to cover any part of the rental debt demanded from the defendants in the case.

As it pertains to a judgment or default judgment in favor of the lessor, existing law required the lessor to provide evidence that an application for rental assistance was made to the pertinent governmental rental assistance program, and that the application had been denied based on certain criteria. While this remains true, the Bill keeps those requirements for actions filed before April 1, 2022.

In actions filed on or after April 1, 2022, and before July 1, 2022, a judgment or default judgment shall not be issued in favor of the lessor unless the lessor provides evidence that an application for rental assistance was made to the pertinent governmental rental assistance program; the application was denied based on a lack of eligibility, lack of funding, or the application remained incomplete due to tenant’s failure to properly complete the portion of the application; and a determination is not pending on the application, filed prior to April 1, 2022, to cover all or any part of the rent debt demanded.

Compensation:

Previous law prohibited any provision of any ordinance, resolution, regulation, or administrative action adopted by a local government that was in effect on August 19, 2020, that included language pertaining to COVID-19 rental debt repayment and when it was due. The Bill has also extended the effective dates for when a provision (mentioned above) adopted by a local government may be effective.

Essentially, a lessee may now be expected to begin repayment as of August 1, 2022; however, the provision may not permit a lessee to extend repayment beyond August 31, 2023.

Furthermore, a lessor must be compensated for all of the unpaid COVID19 rental debt incurred on or after October 1, 2021, and before April 1, 2022. The Bill only cleaned up the language here, permitting recovery for the entire month of March, as opposed to excluding March 31st.

The Hearing

Tenant testimony proved to violently oppose the Bill based on the PREEMPTION, seemingly because tenants have figured out that they are now in control of local governments. The Bill prohibits local governments to adopt more restrictive evictions requirements, which would permit tenants to remain in possession without having to pay rent whenever a subsequent COVID outbreak occurs, which

Conclusion

The Bill’s added language and continued extensions maintain an unequitable burdern for lessors to bear while lessees benefit from their contractual rights pursuant to a rental agreement that lessees voluntarily entered into. Clearly, thousands of tenants that are not adversely affected by the pandemic took advantage of the new law by not paying rent during the past 27 months. Clearly, thousands of tenants cannot qualify for rental assistance because they earn too much money, yet the legislature and local governments protect those tenants in the same manner of tenants that were adversely affected by COVID-19 and who do financially qualify for rental assistance.

The Bill also fails to address the “elephant in the room,” which is fact that all a lessee is required to do is simply sign and date a state prepared declaration form that the tenant claims they have been adversely affected by COVID-19 impact that ostensibly prevents them from paying rent, without an iota of evidence proving the inability to oblige their contractual obligation, while at the same time remaining in possession. It is noteworthy that there is no other legal construct that has such a low hurdle for a debtor. It every other situation, debtors must show they cannot meet their financial obligations. …And this is exactly what lessees want — to remain in possession, free of charge…But what happens when a lessee can’t remain in possession for free using COVID-19 impact as a viable excuse to do so?

The COVID-19 Tenancy Act makes collecting COVID-19 Rental Debt from a tenant who has accrued rental debt, but is no longer in possession, extremely difficult. It is clear now that the COVID-19 Tenancy Act is no longer conducive for lessors or lessees because continued extensions are met with opposition.