ab 3088: How the Tenant Relief Act Affects Your California rental property

AB 3088, also known as the Tenant Relief Act, was recently passed in California. This ordinance was designed to help tenants that have been affected by COVID-19 and have struggled to keep up with rent. 

Disclaimer: We are not attorneys. This is not designed to be legal advice. We always recommend that you contact your attorney about your specific properties. Our information on this topic comes from our attorneys at KTS and the California Association of Realtors. Please read the law AB3088 for more information. 

AB 3088 limits a landlord’s ability to evict a tenant for non-payment of rent due from March 1, 2020 to January 31, 2021, if the tenant has experienced a financial hardship related to COVID-19. It bans evictions for tenants who were unable to pay their rent between March 1 and August 31 due to financial hardship caused by the pandemic. It also bans evictions for those tenants through January 31, but only if the tenants pay at least 25% of their rent owed during that time. This can be paid monthly or all at once prior to January 31. You can read the full bill here. 

If a tenant has not paid rent for any period between March 1, 2020, and January 31, 2021, the COVID-19 Tenant Relief Act of 2020 ("Rent Relief Law") will allow most residential tenants to remain in the rental property through January of 2021 so long as the tenant makes a declaration under penalty of perjury that they are unable to pay their rent or meet other financial obligations because of circumstances related to the COVID-19 pandemic. Only a resident who returns a signed declaration after a pay or quit notice is served is protected. The law also extends the standard 3 days to pay rent or quit notice to 15 days. A landlord is able to evict residents who fail to return a signed declaration as of October 5, 2020.

 

Protected Time Period

Rent owed from March 1, 2020 to August 31, 2020 is considered the “protected time period”. If the tenant signs a declaration stating they've been financially hurt by COVID-19, they can’t be evicted. Their debt becomes consumer debt and the landlord can sue for a judgment starting March 1st, 2021.

Transition Time Period

Rent owed from September 1, 2020 to January 31, 2021 is considered the “transition time period”. If the tenant signs a declaration stating that they have been financially hurt by COVID-19, the same rules apply except the tenant must pay at least 25% of their rent by January 31st, 2021. You must sue in small claims court starting on March 1st, 2021 for the remaining 75%. The balance of the unpaid rent is still owed. The Rent Relief Law permits a claim for the unpaid rent to be brought in small claims court, beginning March 1, 2021, even if the amount at hand would otherwise be more than the small claims court limits.

Just Cause Eviction Implications

The Rent Relief Law temporarily requires all residential landlords in California to comply with the just cause eviction procedures of The Tenant Protection Act of 2019 (also known as AB 1482) in order to find a tenant guilty of unlawful detainer on or after March 1, 2020 and before February 1, 2021. This is the case even when the property would otherwise be exempt under AB 1482. However, an owner of a single-family property or condo can terminate a tenancy when they are selling the property to a buyer who will take occupancy. For issues other than nonpayment of rent, courts began hearing cases on September 2nd, 2020. 

CDC Eviction Moratorium Implications

The CDC moratorium that was declared in early September is an unprecedented event. Therefore, it is not entirely clear how their moratorium impacts California and AB 3088. Governor Newsom stated that AB 3088 is more strict than the CDC moratorium, so it takes precedent. However, that is not true in all instances. Here's how they differ. 

• Under both ordinances, the tenant is required to return the declaration prior to any protections taking place. Once the declaration is returned, under AB 3088 the tenant is protected until January 31 so long as they pay 25% of the rent. Under the CDC moratorium, they are only protected until December 31, but are not required to pay any rent. 
• Under the CDC order tenants only need to return the declaration once; under AB 3088 landlords can require a monthly declaration. Additionally, they must provide a copy of the AB 3088 declaration to the tenant along with the 15 day notice. The CDC moratorium does not require this. 
• The AB 3088 declaration must be returned to the landlord within 15 days; the CDC moratorium can be returned at any time--even up to the lockout. 
• The CDC moratorium does not allow for any "no fault" evictions until after December 31, 2020. The only allowed reasons are as follows: breach of lease, criminal activity, behavior that threatens the health or safety of others property damage, or violation of building codes or health ordinances. Under AB 3088, there are several "no fault" reasons that can evict a tenant that are not allowed under the CDC order (removing the unit from the rental market, the owner of the property moving in, etc.) We caution landlords to evict anyone for a reason outside of the CDC provisions. 
• AB 3088 allows a landlord to ask for proof of financial hardship from high income tenants. The CDC moratorium does not. 

Frequently Asked Questions

Can we charge late fees for tenants who are late and do not return a signed declaration?
Depending on where the property is located, you may have a local restriction on late fees or a restriction due to CARES Act. We do not recommend charging late fees at this time. 

If I am a property owner, can I evict my tenant for reasons other than nonpayment of rent?
Prior to February 1, 2021, an eviction can only be filed for “just cause” as described in AB 1482. This does NOT include non-payment of rent if they return the signed declaration they have been impacted by COVID-19. They have added some additional restrictions in cases related to demolition and substantial renovation for health and safety or when the owner is selling the property and the new owners will occupy the property. Landlords are unable to proceed with an eviction based on a Notice of Non-Renewal or a 30/60-Day Notice without cause. This provision applies to all tenancies immediately, including tenancies less than one year, affordable housing, new construction, and single-family homes.

For tenants who previously owe money and we have already worked out a payment plan, what should we do?
You should still send out the mandatory disclosure as they owe a balance. You can also provide a cover letter explaining that California law requires you to provide the following notice.

How does the CDC eviction moratorium affect this?
Governor Newsom has publicly taken the position that the CDC eviction moratorium does not apply in California because the state and local restrictions already in place are more far-reaching. It’s unknown how judges will interpret it.

Can a landlord serve a 3-day Notice to Pay Rent or Quit?
If the landlord is demanding rent that was due between March 1, 2020, and January 31, 2021, the notice has to be modified to a 15-day notice to pay rent or quit or a 15-day notice to perform covenant or quit (when demanding COVID-19 rental debt).

What if the tenant fails to return a signed declaration within 15 days? Can the landlord initiate an unlawful detainer action?
Yes. However, the tenant will be given the opportunity to submit a declaration within five days of receiving the summons that the failure to return the declaration to the landlord was based on mistake, inadvertence, surprise, or excusable neglect when shown at a noticed hearing. This hearing must be held separately from a normal unlawful detainer trial.

Is the tenant required to provide written documentation to the landlord in support of their declaration?
Only if the tenant is a "high-income" tenant. A high-income tenant is one that is earning more than $100,000 in household income or more than 130% of median household income, whichever is greater. Otherwise, no, additional documentation is not required. 

On what basis could the tenant claim to have experienced "COVID-19-related financial distress?"
COVID-19 related financial distress can be based on either or both a loss of income or an increase in expenses including any of the following:
1. Loss of income caused by the COVID-19 pandemic.
2. Increased out-of-pocket expenses directly related to performing essential work during the COVID-19 pandemic.
3. Increased expenses directly related to health impacts of the COVID-19 pandemic.
4. Childcare responsibilities or responsibilities to care for an elderly, disabled, or sick family member directly related to the COVID-19 pandemic that limit the tenant's ability to earn income.
5. Increased costs for childcare or attending to an elderly, disabled, or sick family member directly related to the COVID-19 pandemic.
6. Other circumstances related to the COVID-19 pandemic that have reduced tenant's income or increased their expenses.

 

If you have any additional questions, please reach out to us!