SB 91: COVID-19 Relief for California Landlords and Tenants

Perhaps one of the most important new laws for 2021, SB 91 went into effect on January 29th by Governor Newsom. This bill is designed to assist landlords and tenants throughout the state of California that have been financially impacted by COVID-19. Prior to this bill, AB 3088 was in place to achieve a similar goal. However, those provisions were set to expire on January 31st, 2021. SB 91 expands on these provisions and extends further aid to those affected. 

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 SB 91 for more information.

What is SB 91?

SB 91 was signed into law to extend many of the provisions already outlined in AB 3088. AB 3088, also referred to as The Tenant Relief Act, forbade landlords from evicting tenants that experienced a financial hardship related to COVID-19, submitted a declaration stating so, and paid 25% of their rent from September 1, 2020 to January 31, 2021. This eviction moratorium was set to expire on January 31, 2021. However, SB 91 now states that the eviction moratorium will now be extended to June 30, 2021. Tenants are still responsible for paying unpaid amounts to landlords, but these unpaid amounts cannot be the basis for an eviction, even after the moratorium ends. It also requires landlords to send out a new disclosure by February 28, 2021. 

 

How Does SB 91 Modify AB 3088?

Outside of the eviction moratorium extension, you may recall that there was something called a “transition time period” in AB 3088. This period is defined as rent owed from September 1, 2020 to January 31, 2021. Tenants will still be protected so long as they return the required declaration regarding a COVID-19 financial hardship and pay at least 25% of the rent for each month from September 1, 2020 to June 30, 2021. This is the newly extended “transition time period.”  The 25% doesn’t need to be paid each month on the rent due date; a tenant can pay the entire 25% due on June 30, 2021 in one lump sum in order to avoid being evicted starting on July 1, 2021. SB 91 still allows landlords to request documentation from high income tenants proving that they have in fact been affected financially by COVID-19. 

Additionally, AB 3088 required a notice to be sent to any tenant that had missed a rent payment from March 1, 2020, to August 31, 2020. SB 91 states that a new disclosure must be sent to any tenant that missed a payment from March 1, 2020 to present day. This disclosure must be provided by February 28, 2021. SB 91 also requires landlords to use a new Pay or Quit Notice as of February 1, 2021 when demanding payment of transition time period rent from that date forward. Discontinue use of the previous notices for the transition period, as they are no longer valid as of February 1, 2021. Notices demanding protected rent (from March 1, 2020 to August 31, 2020) remain the same. Note: some properties may fall under the federal CARES Act. While the CARES Act expired on July 25, 2020, the 30-Day notice requirement needed to terminate a tenancy after the eviction moratorium expires does not include an expiration date. As a result, the conservative approach is to serve a 30-Day Notice instead of the 15-Day Notice. 

Small claims court filings have also been pushed back to August 1, 2021. If the tenant provides their signed declaration and pays at least 25% of the unpaid rent from the transition period by June 30, 2021, the landlord will not be able to file an eviction against the tenant to collect the remaining balance. Instead, the remaining portion of the rent which has accrued during the transition time period becomes consumer debt and the landlord can file a small claims action. 

What is the Rental Assistance Program?

A big part of SB 91 is establishing a new rental assistance program. This program has been allocated 1.5 billion dollars to assist those affected financially by COVID-19. These funds will be given to The California Housing and Community Development Agency (HCD) to distribute. A portion of these funds (approximately $150 million) must be given to counties with populations under 200,000. The remaining amount will be set aside as block grants for other counties and cities. 

Rental assistance will be prioritized first to households whose income is below 50% of area median income. Round two priority is allotted to communities that have been disproportionately impacted by COVID-19. Round three will be prioritized for households with income less than 80% of area median income. The rental assistance program will begin accepting applications from property owners and tenants on March 15, 2021.

Eligibility for this new program is outlined as such: At least 1 household member must qualify for unemployment benefits OR must have suffered total or significant income loss or experienced financial hardship caused by COVID-19. Additionally, at least 1 household member must show high risk of becoming homeless by demonstrating they have past due utilities or have an eviction notice or having unsafe living conditions. Lastly, the total household income must be less than 80% of the local median.

One of the main benefits of SB 91 is that landlords will also receive assistance from the government. If the landlord waives 20% of their tenant’s unpaid rent, they will receive up to 80% of the unpaid rent from April 1, 2020 to March 31, 2021. If a landlord refuses to accept the 80% payment, they can only  receive up to 25% of the rent, at which point the remaining 75% of the rent will be converted to consumer debt and the landlord can file a small claims case to collect the balance as of August 1, 2021. 

What Are Some of the New Tenant Protections under SB 91? 

No Late Fees

SB 91 prohibits late fees from being charged between March 1, 2020 to June 30, 2021 for tenants who have submitted their declaration. It also forbids the landlord from charging a tenant new fees for services previously provided by the landlord or from increasing existing fees for services which have already been in place. 

Security Deposits

During the tenancy, the landlord cannot use the security deposit to satisfy unpaid rent payments. Once the tenant vacates, the security deposit can be used for unpaid rent. 

Just Cause Eviction Protections

An eviction can only be filed for “just cause” as outlined in AB 1482 prior to July 1, 2021. This applies to all tenancies (even if not otherwise subject to AB 1482), including tenancies in effect for less than one year, affordable housing, new construction, and single-family homes. Previously, under AB 3088 and now under SB 91, this only adopts the just cause reasonings. It does not adopt anything else on the bill (such as rent caps or moving costs).

Protection for Applicants 

SB 91 forbids landlords from disqualifying an applicant because of financial hardship related to COVID-19. If the applicant is otherwise qualified for the property, they must be treated fairly. If the applicant declared COVID-19 related hardship with their previous landlord, this too cannot be discriminated against. 

Rental Debt Protections 

If a tenant has been declared financially affected between March 1, 2020 and June 30, 2021 AND they have a household income that is below 80% of the area median income, the landlord is permanently forbidden from assigning or selling the rental debt to the tenant. For all other residents whose household income is above 80% area median income, landlords are prohibited from selling or assigning COVID-19 rental debt until July 1, 2021.

How Does SB 91 Coincide with the CDC Eviction Moratorium? 

The CDC has extended their eviction moratorium to March 31, 2021. Under the CDC order, tenants need to provide a signed copy of the CDC declaration. At that point, depending on the basis for the eviction (likely non-payment of rent), the tenant would be protected until March 31, 2021. This moratorium does not cover evictions related to violating the lease, nuisance, or illegal activity. 

How Does SB 91 Help Landlords?

Unlike AB 3088, SB 91 has a provision to assist landlords. If the landlord is willing to forgive 20% of rent owed by the tenant, up to 80% of the remaining unpaid rents will be paid to them by the state. If they do not want to forgive that 20%, the max amount the state will provide to the landlord will not exceed 25%. 

SB 91 FAQ

When does the moratorium on evictions end?

The eviction moratorium is set to end on June 30, 2021. 

 

Can tenants be evicted for nonpayment of rent after June 30, 2021?

If you have been financially impacted by COVID-19, you cannot be evicted for that reason, even after the moratorium ends. You are still responsible for unpaid rent. 

 

Do high income tenants still need to provide proof that they have been financially impacted?

Yes. A landlord can request additional documentation from high income tenants to prove that they have been financially impacted by COVID-19. 

 

When do landlords have to send the new disclosure to tenants?

The new disclosure must be provided to tenants by February 28, 2021. 

 

Who is eligible for the Rental Assistance Program?

  • At least 1 household member must qualify for unemployment benefits OR must have suffered total or significant income loss or experienced financial hardship caused by COVID-19. 
  • At least 1 household member must show high risk of becoming homeless by demonstrating they have past due utilities or have an eviction notice or having unsafe living conditions. 
  • The total household income must be less than 80% of the local median.

 

When can tenants and landlords apply for the Rental Assistance Program?

You can apply starting March 15, 2021. 

 

What kind of assistance do landlords receive?

If a landlord agrees to waive 20% of the tenant’s unpaid rents, they will receive the remaining 80% in assistance from the state. If they do not agree, the maximum amount they can provide is 25%. 

 

Can landlords use the tenant’s security deposit for unpaid rent?

No, not while they are a tenant. Once the tenant vacates, it can be used for this purpose. 

 

Can landlords apply to the Rental Assistance Program for their tenant? 

Yes. The program will require landlords and tenants to work together since eligibility for funds are based on the financial situation of the tenant.

 

Does SB 91 continue to uphold just cause protections outlined in AB 1482?

Yes. The just cause rules apply until July 1, 2021. These just cause guidelines have been expanded to include all properties, even ones that were previously excluded via AB 1482 (single family homes and new construction). 

 

Can a landlord evict a tenant if they do not return a signed declaration of financial hardship?

Yes. If the tenant ignores the 15-day notice, they are subject to an unlawful detainer being filed against them. However, local government protections and the CDC moratorium affect this as well. We highly suggest consulting with your attorney before proceeding. 

 

Can landlords increase the rental rate during this time? 

Technically, yes. However, SB 91 states that you cannot increase fees that were previously in place or add new fees for things that were already provided. 

 

Can landlords sell unpaid rent to a collection agency?

No. SB 91 prohibits this action until July 1, 2021. After that, the ban is partially lifted. If the tenant met all requirements outlined in the Rental Assistance Program, then the ban is permanent. For all other tenants, it is lifted. 

 

If you have any additional questions regarding SB 91 or AB 3088, don't hesitate to reach out to us. As always, we strongly suggest consulting with your attorney about your specific properties. 

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