UPDATE: Governor Newsom and Key State Legislators Further Proposal to Stabilize Housing – Latest on

As reported earlier this week, the Governor’s office and several top state Legislators have put together a proposal to assist both property owners and tenants. CAUTION: THIS PROPOSED LEGISLATION IS SUBJECT TO CHANGE. As of now, the “key” provisions contained in the proposed legislation are described below.

This proposed legislation is merely meant to be a temporary “stopgap” to get the Legislature through the end of January and provide it with needed time to develop a more permanent solution. The legislation covers rent payments from March 1, 2020 through January 31, 2021 only. The Senate Pro Tem and Governor have stated that this issue will be the first thing taken up in during the December and January time frame when the Legislature reconvenes. The “key” provisions as of right now are:

• Foreclosure / forbearance protections are limited to single family homes and small landlords (4 or fewer units, up to three units, for a total of 12 units per owner).
• There is an eviction freeze (except for health and safety violations) until January 31, 2021. As mentioned before, this is a stopgap.
• All eviction restrictions and payment requirements are broken up into two time periods:
• During the protectedperiod: March 1, 2020 to August 31, 2020
  
  • A landlord must provide a written declaration to each tenant in the tenant’s preferred language informing the tenant that they have rental payments due but cannot be evicted if they self-attest to COVID-related income loss.
  • Residents cannot be evicted if they sign a declaration under penalty of perjury that their income or ability to pay has been affected by COVID-19.
    
    • High-income residents may be required by their landlord to provide additional proof of hardship. High-income defined as income that is 130% of AMI for the county.
    • Landlord must have previous record of proof of income on which to determine if the tenant is high-income.
  • If a tenant signs the declaration, they will not be considered in default
  • To evict someone on or after February 1, 2021, a landlord must give 15-day written notice (not including weekends and judicial holidays).
• During the transitionalperiod: September 1, 2020 to January 31, 2021
  
  • Landlords must provide a different declaration that a tenant has not made rental payments and cannot be evicted if they pay 25% of their rent (either monthly or aggregate between September 1, 2020 and January 31, 2021).
  • Residents cannot be evicted if they pay 25% of the rental payments missed during the transitional period (either 25% of each rental payment or 25% of all rent due during that time).
  • In order to evict someone after February 1, 2021, a landlord must give 15-day notice (not including weekends and judicial holidays). However, this language is ambiguous and clearly envisions the Legislature to act prior to this date to provide better guidance on what happens post February 1, 2021.
• A landlord must give notice for each period, if applicable. For example, if a tenant has not paid during either the protected or transitional period, separate declarations must be prepared. Notice language is contained in the proposed legislation. (Forms will be made available for our members should this pass).
• A tenant has 15 days (excluding weekends and judicial holidays) to respond to the notice. If they do not respond, a landlord can evict beginning February 1, 2021. However, evictions for health and safety reasons will still be allowed, and evictions that began prior to March 1, 2020 are still allowed to move forward.

Due to the 72-hour rule, language of this proposed piece of legislation must be in print no later than Thursday, August 27th to be voted on by the August 31st end of Legislative Session deadline, this Monday. The legislation will either be proposed as a new bill or placed into an existing trailer bill. If it is made an urgency bill, it will require a two-thirds vote for passage. If it is proposed as a budget “trailer” bill, it will require only a majority vote. If passed, the proposed new law would take effect upon signing by the Governor. However, it was announced this morning that two Senators have tested positive for COVID-19 and the current session is now cancelled until called back by the Senate Pro Tem. Accordingly, timing is very much in flux.

While the Legislature and Governor’s office are offering rental property owners an “end date” of January 31, 2021 for the eviction moratoriums, there is nothing in this proposed piece of legislation that will stop local jurisdictions from passing much more restrictive moratoriums or requirements. In effect, rental property owners are being forced to carry interest-free rent debt of their tenants for nearly two years without any assistance other than limited foreclosure protections for smaller owners.

Your Apartment Association of Greater Los Angeles is working through its statewide lobbyists and affiliated apartment associations to significantly modify this piece of legislation. Unless modified, we will stand in opposition. We will continue to update our members as more information is known.

We anticipate that the proposed legislation will be finalized early during the week of August 31, 2020. We can only hope that if this legislation is signed by the Governor that agreement will be worked out with Governor Newsom to come out and opposed Proposition 21.