City of Beverly Hills proclaimed a local emergency in response to COVID–19 and literally the first order of business was the protection of tenants. Agenda item #2 read: Enacting a moratorium preventing landlords from evicting any tenant who is unable to pay rent as a result of losing income caused by COVID–19 for the non-payment of rent. The moratorium passed unanimously as part of the city’s emergency order. Here’s what you need to know.
Beverly Hills adopted a revised moratorium on eviction for non-payment of rent and it added several new provisions: a one-year back-rent repayment period; a prohibition on Ellis Act evictions; and a freeze on rent increases. This explainer will be updated to reflect the new ordinance once it is published by the city.
Over the course of an extraordinary 7-hour meeting (video) on March 16th city council agreed to order non-essential businesses to close, reduce services provided by business that remained open, put the brake on water utility shut-offs, imposed a temporary moratorium on residential and commercial tenant evictions when a tenant is “impacted by the COVID–19 crisis.” City council even condemned hoarding.
The state and local states of emergency declared in mid-March created the conditions that motivated city council to act. The urgency ordinance signed that day that makes clear that tenant health, safety and welfare were paramount considerations:
WHEREAS, as a result of the public health emergency and the precautions recommended by health authorities, many tenants in Beverly Hills have experienced or expect soon to experience sudden and unexpected income loss; and
WHEREAS the Governor of the State of California has stated that individuals exposed to COVID–19 may be temporarily unable to report to work due to illness caused by COVID–19 or quarantines related to COVID–19 and individuals directly affected by COVID–19 may experience potential loss of income, health care and medical coverage, and ability to pay for housing and basic needs, thereby placing increased demands on already strained regional and local health and safety resources, including shelters and food banks; and
WHEREAS, further economic impacts are anticipated, leaving tenants vulnerable to eviction….
During the period of local emergency declared in response to COVID–19, no landlord shall endeavor to evict a tenant in either of the following situations: (1) for nonpayment of rent if the tenant demonstrates that the tenant is unable to pay rent due to financial impacts related to COVID–1 9 or (2) for a no-fault eviction unless necessary for the health and safety of tenants, neighbors, or the landlord. — Urgency ordinance 20-O–2805 (1)(1)(a)
Let’s review the relevant provisions of the ordinance that would keep a renting household housed when it can demonstrate a COVID–19 related financial impact.
Ordinance section 1 subsection (1)(a) reads:
A landlord who knows that a tenant cannot pay some or all of the rent temporarily for the reasons set forth above shall not serve a notice pursuant to CCP 1161(2), file or prosecute an unlawful detainer action based on a 3-day pay or quit notice, or otherwise seek to evict for nonpayment of rent. A landlord knows of a tenant’s inability to pay rent within the meaning of this Ordinance if the tenant, within 30 days after the date that rent is due, notifies the landlord in writing of lost income and inability to pay full rent due to financial impacts related to COVID–19, and provides documentation to support the claim. — Ordinance 20-O–2805 (1)(1)(a)
However the moratorium is a last-line defense against eviction; it is not a break for tenants who cannot otherwise pay the rent. Back rent is not forgiven. The ordinance says:
Nothing in this Ordinance shall relieve the tenant of liability for the unpaid rent, which the landlord may seek after expiration of the local emergency and the tenant must pay within six months of the expiration of the local emergency. — Ordinance 20-O–2805 (1)(1)(a)
It bears repeating: this moratorium does not relieve the tenant of paying the rent. What it does do is afford a tenant who qualifies a 6-month breather in which she can catch up with the rent arrears. In that time the rent will add up without late fees.
However once the 6-month period expires a late fee will be recoverable on any rent that is past due:
Six months after the end of the emergency if the rent is unpaid, a landlord may charge or collect a late fee for rent that is delayed for the reasons stated in this Ordinance; or a landlord may seek rent that is delayed for the reasons stated in this Ordinance through the eviction or other appropriate legal process. — Ordinance 20-O–2805 (1)(1)(a)
“Any appropriate legal process” means that after the six-month window closes, the landlord may pursue a civil action, take it to small claims court (maximum $10,000) or file an unlawful detainer. The unlawful detainer is the tenant’s incentive to resolve the past-due “delayed” rent prior to the closure of the 6-month window.
The Tenant Must Act to Benefit
There are two requirements that a tenant must satisfy to gain protection under the moratorium and these are explicit in the Ordinance: she must act affirmatively by making a claim with the landlord; and she must document that claim in writing.
Affirmative action means that tenant who has suffered financial harm and cannot pay the rent must take action to implicate the moratorium by notifying the landlord that the rent can’t be paid due to COVID–19 circumstances. The Ordinance allows 30 days after the rent due date for action (and count those days accurately because exceeding the 30-day window could invalidate the claim).
Our advise: the 30-day window is the outer limit. Practically speaking, a tenant would want to discuss with the landlord her financial difficulty early, and at that time explain that circumstances related to COVID–19 have affected household income. (Generally speaking it is always advisable to approach the landlord as soon as possible to ask for forbearance as we discuss at greater length our explainer, Forbearance is Not a Standard Rental Agreement Clause.)
Document it in writing.
While it is always prudent to document every significant communication with the landlord in writing, here the Ordinance’s subsection (1)(a) makes it explicit: “…if the tenant, within 30 days after the date that rent is due, notifies the landlord in writing of lost income and inability to pay…” It is essential that the communication be documented.
Rule #1 here is to approach with good faith and know that the communication will later be produced in support of a claim. We can’t say it strongly enough: the moratorium may provide a protection but it should not be used for leverage to take advantage of the landlord!
The moratorium protects tenants from eviction when the rent cannot be paid due to “financial impacts related to COVID–19.” The Urgency Ordinance is not exhaustive but section 1 subsection (2)(b) does include five conditions that would support a tenant’s claim of hardship:
- Sick with COVID–19 or caring for a household or family member who is sick with COVID–19;
- Layoff, loss of hours, or other income reduction resulting from business closure or other economic or employer impacts of COVID–19 including for tenants who are salaried employees or self-employed;
- Compliance with a recommendation from a government health authority to stay home, self-quarantine, or avoid congregating with others during the state of emergency;
- Extraordinary out-of-pocket medical expenses; or,
- Child care needs arising from school closures related to COVID–19.
While city council deliberately made the moratorium “temporary” (taking effect with the local emergency on March 15th and ending whenever city council will say), council also constructed it broadly because we can’t anticipate the impact that COVID–19 measures will have. We highlighted the aspects of the qualifying factors that suggest broad applicability.
Tenant’s Recourse: Appeal to the Standing Committee of City Council
The moratorium clearly anticipates a voluntary resolution of tenant hardship. That implies some forbearance by the landlord and an obligation on the part of the tenant to make the landlord whole at the earliest opportunity. However there will be circumstances where a voluntary or amicable resolution is not possible. That’s where the appeal process kicks in:
If a dispute arises between the residential or commercial tenant, and the landlord regarding whether a financial impact exists or whether the financial impact is related to COVID–19, the residential or commercial tenant may appeal to the Standing Committee of the City Council appointed to hear disruptive tenant hearings in order to make a final determination of the dispute, until such time as the Rent Stabilization Commission is appointed in which case the Rent Stabilization Commission shall make a final determination of the dispute. The hearing procedure shall be established by the City Attorney. — Ordinance 20-O–2805 (1)(3)
Two things to note: A city council committee for now will hear a tenant’s appeal pursuant to the moratorium; and the burden of proof is on the tenant because she must demonstrate hardship related to COVID–19.
Standing committee of the city council.
City council discussed taking the Rent Stabilization Commission with hearing tenant appeals pursuant to the moratorium but commission members are not yet appointed. And it will take time to get that commission up to speed. In the meantime city council delegated that responsibility to itself — specifically a two-member standing committee appointed by the mayor.
The Standing Committee of the City Council was formed to hear landlord applications to terminate for cause tenants who engage in disruptive behavior. The burden of proof is on the landlord in that process and the application is heard by a two-member council committee. Current committee members appointed by Mayor John Mirisch are Mirisch himself and Vice-Mayor Lester Friedman. The committee has met only one time and members were very reluctant to evict a tenant.
Burden of proof.
The burden of proof is on the tenant to show financial impacts related to COVID–19 that make rent payment untenable. In this sense the process mirrors the ‘rent adjustments upon application’ provision of the rent stabilization ordinance (section 4–6–11) which allows a landlord a higher-than-allowed annual allowed rent increase if the landlord can demonstrate hardship.
The moratorium appeal process seems to be a hybrid of two existing city processes: the disruptive tenant process where a landlord can apply to the city to evict for-cause; and the rent adjustment appeals process where a landlord can ask for a higher-than-allowed annual rent increase. Both are part of the rent stabilization ordinance.
However the moratorium and rent-adjustment processes do differ. For the rent adjustment, the rent stabilization ordinance identifies a long list of expenses that can be used to determine whether a landlord needs an adjustment. And because the determination must assess any change to net income, which can be complicated, a hearing officer will decide.
For the moratorium appeal, though, the Standing Committee need only find that a tenant’s claim of a nexus between COVID-19 and her inability to pay full rent is plausible. There will likely be no application of complicated criteria to calculate income impacts. Rather it is likely to be a simple threshold test: Does the tenant’s claim of inability to pay find support in her documentation?
One final note: standing committee membership may change when Vice-Mayor Friedman assumes the office of Mayor in April.
No-Fault Eviction is Prohibited, At-Fault Proceed
The objective of the moratorium generally is to keep tenants housed and specifically it pertains to non-payment of rent when COVID–19 affects a tenant’s ability to pay. But the Ordinance also identifies second kind of eviction that would be prohibited under the moratorium: lawful terminations when the tenant is not at-fault.
No-Fault Eviction is Prohibited
Recall that Ordinance 20-O–2805 section (1) subsection (1)(a) reads:
During the period of local emergency declared in response to COVID–19, no landlord shall endeavor to evict a tenant in either of the following situations: (1) for nonpayment of rent…or (2) for a no-fault eviction unless necessary for the health and safety of tenants, neighbors, or the landlord.
The latter clause would prohibit no-fault terminations with a categorical exception for health and safety. Reasons for a lawful no-fault termination are identified on the rent stabilization website and include: use by landlords, termination under the Ellis Act (redevelopment or condo conversion for example), and major remodeling. Again, terminations for those reasons cannot proceed under this moratorium.
But the Ordinance goes further to prevent lawful terminations in three other instances when the tenant can show that COVID-19 has affected an ability to pay rent. Here we refer to subsection (1)(1)(c) of the Ordinance:
For purposes of this Ordinance, “no-fault eviction” refers to any eviction for which the notice to terminate tenancy is not based on alleged fault by the tenant, including but not limited to eviction notices served pursuant to Code of Civil Procedure sections 1161(1), 1161(5), or 1161c.
Because most of us don’t have the Code of Civil Procedures bookmarked let’s clarify: no-fault terminations in these instances would be prohibited under the moratorium but otherwise would have been allowed under the law:
- When the tenancy continues past the expiration of the term of the lease OR the tenant is an employee or agent of the landlord and that business arrangement has been terminated, which should apply to a building manager who would otherwise have to move out (§1161(1) unlawful detainer);
- When a tenant fails to vacate after notifying the landlord of an intent to vacate and the specified date has passed (§1161(5) failure to deliver possession of the premises);
- When the property is foreclosed and the successor interest notifies the occupants that tenancies are hereafter lawfully terminated (§1161c foreclosure on a residential property).
At-Fault Evictions Can Proceed
Protections against eviction is scoped narrowly: it does not protect any tenant from eviction when the tenant is at fault. At-fault reasons can include breach of the lease, maintenance of a nuisance, refusal to sign a lease on the same terms and unapproved subtenants. (Again refer to the rent stabilization website.)
In such cases the landlord may press ahead. Nothing precludes a tenant from mounting a defense either first through the rent stabilization office, or by availing of representation through the city’s housing rights legal services program, or ultimately fighting that action in court.
TO RECAP: The moratorium will keep tenants affected by COVID-19 housed by barring eviction whenever the tenant is not at fault (not withstanding the categorical exemption for health and safety). But it does not cover at-fault evictions with the single exception of non-payment of rent and only when the tenant can demonstrate an inability to pay related to COVID–19.
An Affirmative Defense Against Unlawful Detainer
If a landlord pursues an eviction in court for non-payment of rent when the city has found that the tenant has demonstrated some income impairment related to COVID-19, or when the landlord proceeds to evict for no-fault despite the moratorium’s prohibition, the tenant can take the city’s judgement to the courthouse as an affirmative defense.
Section 4. Violations. This Ordinance shall be punishable as set forth in Section 2-4- 111 and Chapter 3 of Title 1 of the Beverly Hills Municipal Code. In addition, this Ordinance grants a defense in the event that an unlawful detainer action is commenced in violation of this Ordinance.
However it is unknown how this moratorium will work in practice if a landlord proceeds to the courthouse. The only analogous situation that comes to mind is the ’disruptive tenant’ provision in our rent stabilization ordinance: it allows a landlord to apply to remove a tenant for creating a nuisance. If the city finds for the tenant and the landlord proceeds to court regardless, the city says the tenant can use the city’s judgement as an affirmative defense against eviction. But that has not yet been tested in the court. (The city has only heard one disruptive tenant application and denied it.)
The city has posted the Ordinance but has provided zero help to make it understandable to the layperson. Please get in touch if we have erred here, or if you have a question about the moratorium in Ordinance 20-O-2805 or how it may affect you.
Be advised: Renters Alliance is not a law firm. Nobody here even watches a TV show about a law firm. Our guidance is for entertainment purposes only!