Eviction Relief: Updates in California

Dodging right, the boxer avoided the initial punch but opened himself up to a mean left hook that sent him to the canvas.  

Maybe you can relate with your experience as an apartment owner or landlord in the year 2020.  

This unprecedented event in American history continues to shake the very foundation of our economy, and the fallout for renters and landlords alike continues to reveal itself and cause frustration.

We’re not here to simply go through the new law in mundane detail, but more importantly, to offer concrete solutions to protect your properties and livelihood.

Let’s get started!

Progression of National Eviction Relief 

On March 27th, tenants living in federally backed housing who were behind on rent were aided by the CARES Act, which offered four month’s of eviction relief.  Added to that was a cushion of 30 days to vacate the property. 

Although it didn’t remove their obligation to pay, your hands were tied when it came to applying various charges normally associated with a late rent payment.  

Right on its heels came the most recent national eviction relief program that built upon the CARES Act by including all 43 million families who rent.  It officially went into effect September 1st and will expire December 31st.  

What surprised many of us was that the Centers for Disease Control and Prevention (CDC) used authority from a 1944 public health law to issue the ban on evictions.  The good news is that the new order doesn’t let tenants avoid paying late fees or back rent owed.  

It doesn’t cover:

  • Tenants who make over $99,000 annually (or over $198,000 for joint filers)
  • Lease violations for infractions other than missed rent payments (ie. criminal conduct)

California Builds Upon National Eviction Relief 

Back in April, the Judicial Council of California which oversees the rule-making for the state’s court system, put an end to most evictions.  Fast forward to August 31st when lawmakers expanded upon the federal governments’ order and extended the ban on evictions for those same folks through January 31st.

The frustrating part about the bill for landlords and apartment owners is that it doesn’t require a verification of an actual financial hardship on the part of the renters.  What seems to be neglected is the reality that many landlords are facing a year or more without receiving rent payments.    

But we want you to take heart and note two important things:

  1. This eviction relief only applies to tenants that pay at the very least 25% of the rent owed 
  2. Missed payments aren’t forgiven and you can ask a judge to order the tenant to make financial restitution

Some politicians such as Republican Sen. Andreas Borgeas are recommending a landlord tax credit for those receiving only 25% of rent that is owed them.  Earlier this year a similar proposal didn’t pass in the state Assembly, but there is general hope that things will be different this time around.    

Landlords Affected By Eviction Relief Program

Are you one of the many property owners who are reeling from these hits that keep on coming?  

You are not alone, and coming together with others in the same situation can lead to real progress and mutual benefits.  May we suggest reaching out to other industry professionals for brainstorming and strategy sessions on how these events are affecting you all?  Your peers are ultimately the best resource available for coming out on top of these changes.

But in the meantime, we want to offer some suggestions for concrete steps to take towards turning a negative into a positive.  It may seem like this eviction relief fund favors your tenants, but you’ve gotten to this point in your career by adjusting to major changes in the economy.

Receiving even a portion of the monthly rent is much more appealing than not receiving any.  Along those lines, here’s what our own brainstorming came up with.

  1. Offer those with a legit financial hardship an incremental payment option
  2. Allow the repayment of rent and any late fees over the lifespan of the lease
  3. Downgrade them to a less expensive unit
  4. Help them in a search for roommates

Although these may require some extra effort on your part initially, it may prevent a bigger headache down the road when legal actions are required for repayment.  

In relation to the recent order from the CDC, know that you have the right to challenge or deny their declaration.  This requires the tenant to provide necessary documentation in evidence of their stated hardship.  

Eviction Relief and Landlord Insurance

Our team at Landlord Insurance aims to help you focus not on what’s wrong with these recent rulings, but instead help you move forward to the next stage…evolving back into a revenue generating machine!

You can learn to “bob and weave” just like a boxer and turn the tide on eviction relief.  California has created resources for landlords so feel free to check them out at your convenience.

Our team specializes in landlord insurance for landlords, apartment owners with more than 1 rental property, property managers and property investors.  Contact us today and let’s face this current reality together and turn it into a positive for your business!

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