Robert Leveen Brings News You Can Use From Sacramento – Senate Bill 91 Passes

February 1, 2021 –  Senate Bill 91 Passes – Extends Tenant Eviction Protections Through June 30, 2021

Senior Vice President, Robert Leveen provides that latest news from Sacramento. As anticipated, the California Legislature approved a bill that will use $2.6 billion in Federal COVID relief funding to pay landlords of certain qualifying low-income renters up to 80% of rent owed due COVID-19 financial hardships. Senate Bill 91 passed the California Senate by a 34-to-0 vote and the State’s Assembly on a 71-to-1 vote. Senate Bill 91 replaced Assembly Bill 3088, which expires this Sunday, January 31, 2021.

California renters facing COVID-19 financial hardships will now be protected from eviction until June 30th. The legislation could potentially wipe-out billions of dollars of rental debt owed to our members and other rental property owners throughout California by forcing landlords to forgive 20% of rent owed them and by converting past due rental debt into consumer debt which will likely go uncollected.

Funding is to be dispersed a variety of ways, including directly to some larger jurisdictions (over 200,000 population) or via state block grants or administrative agencies. The program is to prioritize lower-income Californians. At least 90% of the aid would need to be used for housing expenses and 10% can be used to cover administrative expenses. We anticipate that the State and local jurisdictions will establish guidelines and procedures for accessing the rental relief funds.

Here are some of the details contained in this new piece of legislation:

Extension of State’s Eviction Moratorium. The bills would extend Assembly Bill 3088’s eviction protections which had an expiration date of January 31, 2021. The new expiration date will be June 30, 2021 and would be applicable under the following circumstances:

• Tenants who pay 25% of their monthly rent may receive eviction protections. The 25% may be paid monthly or as a lump sum payment no later than June 30, 2021. The 25% should cover rent due between September 1, 2020 and June 30, 2021. The balance of rent due, 75% will be converted into consumer debt and non-payment; therefore, may not be a basis for eviction.
•  Preemptions on local jurisdiction eviction moratoriums are to be extended and therefore, prevents local jurisdictions from revising local eviction moratoriums after regulations put into place as of August 19, 2020.

Additional Tenant Protections. The following additional tenant protections are provided:

• Limits the maximum recoverable amount of attorney’s fees on any unlawful detainer lawsuit seeking to recover COVID-19 rental debt.
• The legislation also requires that for any lawsuit seeking recovery of COVID-19 rental debt, the court may reduce the damages awarded if the court determines that the landlord refused to obtain rental assistance from the State Rental Assistance Program created under Senate Bill 91 in instances where the tenant has met the eligibility requirements and where funding was available.
• Charging of late fees in connection with COVID-19 rental debt are prohibited until June 30, 2021.
• Prohibits any rental housing provider, tenant screening company, or other entity that evaluates tenants on behalf of a housing provider from using an alleged COVID-19 rental debt as a negative factor for the purpose of evaluating a prospective renter’s application or as the basis for refusing to rent a dwelling unit to an otherwise qualified prospective tenant.
• Prevents rental housing providers from applying current tenant payments retroactively to back rent or other charges.
• Prevents rental housing providers from selling or assigning unpaid COVID-19 rental debt, covering the period from March 1, 2020 through and including June 30, 2021. This prohibition remains in effect until July 1, 2021.
• Prevents a rental housing provider from selling or assigning unpaid COVID-19 rental debt, for the period from March 1, 2020 through and including June 30, 2021 for any person that would have qualified under for the rental assistance funding and where the household income is at or below 80% of the area’s median income for calendar year 2020.

The $2.61B Rental Assistance Program. The legislation establishes a rental subsidy program that includes $2.61 Billion of Federal funding for rental relief. A portion of the funding would be distributed by large jurisdictions (200,000 or more in population) with the smaller jurisdictions distributed by the State. Eligibility for this program is based on the Federal government’s eligibility rules.

Rental Assistance Program to Reduce COVID-19 Rental Debt. Subject to applicable Federal rules, the legislation includes a rental assistance program that would be made available to eligible tenants whose household income is no more than 80% of an area median income (AMI) for the 2020 calendar year. Priority is to be given to tenants whose household incomes are no more than 50 percent of the AMI.

Rental property owners would receive 80% of the total amount of rent in arrears covering the period from April 1, 2020 through and including March 31, 2021. Rental housing providers who accept the 80% must agree to forgive the remaining 20% and not pursue evictions or seek to recover the remaining 20% of rental debt. (This does not cover 80% of total rent for the period, but 80% of the amount of rental debt that remains in arrears.) In cases where housing providers do not wish to agree to forgive 20% of the unpaid rent, the State could pay 25% of the rent in arrears to provide protection from eviction.

If a tenant applies for assistance, they could receive 25% of rental debt in arrears if the rental housing provider does not wish to receive the 80% set forth above, to assist the tenant with reducing outstanding rental debt and to meet the 25% criteria necessary to be protected from eviction. The 25% would be made available to cover unpaid rent between September 1, 2020 and March 31, 2021.This assistance would be paid directly to the rental property owners.

Additionally, a tenant can apply for and receive 25% of rent due for up to three (3) months for the months of April, May and June 2021, which assistance would be paid directly to the rental property owner. Rental property owners would be required to notify their tenants of the availability of these funds. Rental housing providers that fail to notify renters of the availability of these funds under the rental assistance program would be precluded from proceeding with an unlawful detainer lawsuit.

Program Administration. The State shall be permitted to contract with a vendor to serve as the program implementer to manage the distribution of the emergency rental assistance funds. This vendor is to be a Community Development Financial Institution (CDFI).

Distribution of Funds Subject to State Funding Formula. Counties with a population below 200,000 and the cities within those counties would be served by the statewide CDFI administrator system. Approximately $150 million has been allocated to serve the constituents of this group.

Cities and counties with populations that are greater than 200,000 are to receive some of the funding available to them directly from the Federal Government. (This is included within the $2.61 billion relief package.) These larger jurisdictions may also choose to administer a portion of funding that would be made available from the State as a block grant. If these larger jurisdictions chose not to administer distribution of the funds on their own, the State will still provide rental assistance to residents of those jurisdictions, and such funding would be distributed by the CDFI administrator system. These large jurisdictions that receive the block grant must use the State’s payment percentages and follow all applicable State rules.

Higher Income Renters Must Continue to Provide Documentation of COVID Impacts. If housing providers have proof of income on file indicating a tenant household makes at least 130 percent of the median income for the county where the rental property is located, (as published by the Department of Housing and Community Development in the Official State Income Limits for 2020), tenants are required upon request to provide documentation which shows that they have experienced a decrease in income or increase in expenses due to the COVID-19 pandemic. Housing providers must request the document along with serving the 15-day notice. Renters may provide any form of “objectively verifiable documentation” that demonstrates the financial impact being experienced such as a letter from your employer, an unemployment insurance record, or medical bills.

New Language to be Contained in Notices Demanding Payment. Senate Bill 91 requires new, 15-day notice language. For notices sent on or after February 1, 2021, the following language in at least 12-point font is required:

NOTICE FROM THE STATE OF CALIFORNIA: If you are unable to pay the amount demanded in this notice, and have decreased income or increased expenses due to COVID-19, you may sign and deliver the declaration form included with your notice to your landlord within 15 days, excluding Saturdays, Sundays, and other judicial holidays, and your landlord will not be able to evict you for this missed payment so long as you make the minimum payment (see below). You will still owe this money to your landlord. You should keep a copy or picture of the signed form for your records.

If you provide the declaration form to your landlord as described above AND, on or before June 30, 2021, you pay an amount that equals at least 25 percent of each rental payment that came due or will come due during the period between September 1, 2020, and June 30, 2021, that you were unable to pay as a result of decreased income or increased expenses due to COVID-19, your landlord cannot evict you. Your landlord may require you to submit a new declaration form for each rental payment that you do not pay that comes due between September 1, 2020, and June 30, 2021.

If you were unable to pay any of the rental payments that came due between September 1, 2020, and June 30, 2021, and you provided your landlord with the declarations in response to each 15-day notice your landlord sent to you during that time period, your landlord could not evict you if, on or before June 30, 2021, you paid your landlord an amount equal to 25 percent of all the rental payments due from September 2020 through June 2021.

You will still owe the full amount of the rent to your landlord, but you cannot be evicted from your home if you comply with these requirements. You should keep careful track of what you have paid and any amount you still owe to protect your rights and avoid future disputes. Failure to respond to this notice may result in an unlawful detainer action (eviction) being filed against you.
YOU MAY QUALIFY FOR RENTAL ASSISTANCE. In addition to extending these eviction protections, the State of California, in partnership with federal and local governments, has created an emergency rental assistance program to assist renters who have been unable to pay their rent and utility bills as a result of the COVID-19 pandemic. This program may be able to help you get caught up with past-due rent. Additionally, depending on the availability of funds, the program may also be able to assist you with making future rental payments.

While not everyone will qualify for this assistance, you can apply for it regardless of your citizenship or immigration status. There is no charge to apply for or receive this assistance.

Additional information about the extension of the COVID-19 Tenant Relief Act and new state or local rental assistance programs, including more information about how to qualify for assistance, can be found by visiting http://housingiskey.com or by calling 1(833) 422-4255.”

In addition, on or before February 28, 2021, housing providers must provide, in at least 12-point font, another new notice to tenants who, as of February 1, 2021, have not paid one or more rental payments:

NOTICE FROM THE STATE OF CALIFORNIA: The California Legislature has enacted the COVID-19 Tenant Relief Act which protects renters who have experienced COVID-19-related financial distress from being evicted for failing to make rental payments due between March 1, 2020, and June 30, 2021.

“COVID-19-related financial distress” means 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 the health impact 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 your 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 your income or increased your expenses.

This law gives you the following protections:

1. If you failed to make rental payments due between March 1, 2020, and August 31, 2020, because you had decreased income or increased expenses due to the COVID-19 pandemic, as described above, you cannot be evicted based on this nonpayment.
2. If you are unable to pay rental payments that come due between September 1, 2020, and June 30, 2021, because of decreased income or increased expenses due to the COVID-19 pandemic, as described above, you cannot be evicted if you pay 25 percent of the rental payments missed during that time period on or before June 30, 2021.

You must provide, to your landlord, a declaration under penalty of perjury of your COVID-19-related financial distress attesting to the decreased income or increased expenses due to the COVID-19 pandemic to be protected by the eviction limitations described above. Before your landlord can seek to evict you for failing to make a payment that came due between March 1, 2020, and June 30, 2021, your landlord will be required to give you a 15-day notice that informs you of the amounts owed and includes a blank declaration form you can use to comply with this requirement.

If your landlord has proof of income on file which indicates that your household makes at least 130 percent of the median income for the county where the rental property is located, as published by the Department of Housing and Community Development in the Official State Income Limits for 2020, your landlord may also require you to provide documentation which shows that you have experienced a decrease in income or increase in expenses due to the COVID-19 pandemic. Your landlord must tell you in the 15-day notice whether your landlord is requiring that documentation. Any form of objectively verifiable documentation that demonstrates the financial impact you have experienced is sufficient, including a letter from your employer, an unemployment insurance record, or medical bills, and may be provided to satisfy the documentation requirement.

It is very important you do not ignore a 15-day notice to pay rent or quit or a notice to perform covenants or quit from your landlord. If you are served with a 15-day notice and do not provide the declaration form to your landlord before the 15-day notice expires, you could be evicted. You could also be evicted beginning July 1, 2021 if you owe rental payments due between September 1, 2020, and June 30, 2021, and you do not pay an amount equal to at least 25 percent of the payments missed for that time period.

YOU MAY QUALIFY FOR RENTAL ASSISTANCE. In addition to extending these eviction protections, the State of California, in partnership with federal and local governments, has created an emergency rental assistance program to assist renters who have been unable to pay their rent and utility bills as a result of the COVID-19 pandemic. This program may be able to help you get caught up with past-due rent. Additionally, depending on the availability of funds, the program may also be able to assist you with making future rental payments.

While not everyone will qualify for this assistance, you can apply for it regardless of your citizenship or immigration status. There is no charge to apply for or receive this assistance.

Additional information about the extension of the COVID-19 Tenant Relief Act and new state or local rental assistance programs, including more information about how to qualify for assistance, can be found by visiting http://housingiskey.com or by calling 1(833) 422-4255.
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Senate Bill 91