Landlord Tenant Law in the COVID-19 Age
We have already heard from many clients needing advice on residential and commercial leases that are impacted by the COVID-19 virus and shelter-in-place orders. Tenants who are not working and cannot pay rent, landlords who need to understand their rights to evict tenants who can’t pay their rent—all needing assurances that they will be able keep their small businesses afloat and put food on their tables for their families. Many mom and pop landlords rely on income from their rental properties for their day to day expenses, so waiving a tenant’s obligation to pay rent is simply not an option. We recommend initiating the conversation now, whether you are a landlord or a tenant, so together you can reach agreement on each parties’ responsibilities moving forward.
What are the laws on evictions?
The legal landscape is changing practically by the hour. Cities and counties are struggling with limited resources to quickly adopt emergency ordinances to address the shelter-in-place orders and still have the capacity to ensure that businesses don’t go bankrupt before the COVID-19 pandemic can be brought under control and people can finally go back to work.
Several Executive Orders issued by Governor Newsom have allowed and encouraged local governments to adopt ordinances to protect tenants from evictions during the pandemic emergency. Beginning last week, cities and counties began passing such legislation. Based on the ordinances we have reviewed, most cities are implementing emergency ordinances that prohibit landlords from evicting both residential and commercial tenants for as long as the state of emergency continues, provided the tenant’s inability to pay the rent is a result of the COVID-19 emergency. In other words, if you are a residential tenant who is able to work from home or is able to actually go to work because you work in one of the Essential Businesses that are allowed to remain open during the emergency, and your income has not been affected by the emergency, you do not qualify for protection under the ordinance. You must continue to pay your rent in full on time or be subject to eviction. Most of the ordinances we’ve reviewed specifically state that the ordinance does not relieve the tenant from paying rent; it only prohibits evictions during the stated term. Because the duration of the pandemic is impossible to know now, many cities have provided that their ordinance is effective until a date certain, for example May 31st, with the option to extend that date if the stay-at-home order continues into June, July, or even later. So, these cities will be reconsidering the ordinances on a periodic basis, in most cases monthly. Some cities are providing details on the timing when the rents will need to be paid, while others are merely imposing an eviction moratorium but remaining silent on how the rents will eventually get paid.
Most of the ordinances we have seen provide that the landlord may request documentary evidence substantiating the tenant’s assertion that he or she is unable to pay the rent and that such inability is a result of the COVID-19 emergency. Such evidence might include a letter from an employer citing COVID-19 as a reason for reduced work hours or termination, employer paycheck stubs, and bank statements.
It is important to know what your city and county are doing because the Governor so far has left it up to the local governments to decide whether to adopt eviction moratoriums. This may change if the State decides to step in with state-wide orders as it did with the stay-at-home order. Initially, six Bay Area counties issued stay-at-home orders on March 16th, and then on March 19th, Governor Newsom decided to issue a state-wide order. This may happen with eviction moratoriums, too, so it’s important to stay informed through your own research or by consulting with experienced real estate attorneys.
Are the Courts Open?
If you are a landlord that initiated an eviction proceeding before the declaration of emergency, or your tenant can’t demonstrate that their inability to pay rent is a result of the COVID-19 situation, you are legally allowed to proceed with your eviction. However, in practice, you still may not be able to get relief. Many California courts are either closed or operating on an extremely limited schedule. For the most part, the courts are treating each day that the emergency lasts as a court holiday. This means that deadlines are extended until the court opens again. As with the local eviction moratoriums, check your local courts frequently to find out whether or not they are open, what kinds of cases they are hearing, and any special rules regarding filing your pleadings. The best resource we’ve found for the most current information on California court updates is at https://support.onelegal.com/california-court-updates-covid-19.
Tenants who need landlords to address maintenance issues or need something repaired in their rental unit might need to live with some delays. Before you contact your landlord, think first about whether or not you really want workers tromping through, and possibly bringing the virus into, your home. If you have an issue that can wait a few weeks, put the landlord on notice as required by the terms of the lease, but ask that the landlord not send someone out to fix it until the stay-at-home order expires or you feel comfortable having people in your home. If the maintenance issue is an emergency, put your landlord on notice but require that anybody coming into your home wears the proper and recommended personal protective equipment.
Small Business Assistance
For many of our landlord clients, their rental property income stream is their sole source of income. These eviction moratorium ordinances will no doubt cause extreme hardship for many of these landlords. If you are one of these landlords, first look to see if you have business interruption insurance, which is often covered in a general liability policy or under a stand-alone business interruption policy. There are also many resources out there at the federal and the state level, and to a lesser extent at the local level, for small business assistance. At the federal level, start with the Small Business Administration. They have a dedicated website link for COVID-19 claims. https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources. California also has resources for small businesses through the Office of the Small Business Advocate (OSBA). OSBA has a network of small business centers throughout the state to offer consulting and training and access to capital. The best place to start is at https://static.business.ca.gov/wp-content/uploads/2020/03/CA-Small-Business-FAQ-COVID19.pdf Not many cities have the financial resources to provide loans and other similar assistance, but some larger cities are working with the corporations to offer assistance. For example, San Jose is considering offering small loan support, and is partnering with business and non-profit organizations to provide technical support, helping businesses think about marketing and recovery strategies. Check your city and county websites frequently for the most up-to-date information.
We haven’t yet received any feedback on how streamlined these programs are and whether or not the money is actually flowing. Time will tell if small business owners and mom and pop landlords will be able to weather this storm.
If you would like to schedule a free initial 30-minutes consultation, go to www.sanceslaw.com.