Moratorium on Eviction for Non-Payment: What You Need to Know

Beverly Hills city council on March 31st revised the first moratorium on eviction for non-payment and no-fault termination to add two important protections: it now prohibits any no-fault eviction including under the state’s Ellis Act (and stops the clock on evictions underway); and it puts the freeze on rent increases for residential tenants effective April 1st. But the most significant protection is against eviction for non-payment related to COVID–19. Here’s what you need to know.

Note:This post has been updated to reflect changes made to the moratorium on eviction for non-payment policy at the city council meeting of March 31st. Those changes took effect on April 1st.

City council adopted a new moratorium urgency ordinance during another marathon COVID–19 meeting on March 31st. The ordinance took effect at 12:01 a.m. on April 1st. Revised COVID–19 emergency measures include several provisions that affect residential tenants:

  • Delaying the payment of all or some of the rent when a tenant can demonstrate a “substantial” decrease in income related to COVID–19 and when the tenant notifies the landlord within seven days after rent is due that the tenant cannot pay the full rent (the 7-day period may be extended to 30 days with the approval of the rent stabilization office).
  • A prohibition on all no-fault evictions, which includes an eviction for the landlord’s use of a unit, major remodeling or the changing of a building manager; as well as evictions pursuant to the state’s Ellis Act. For tenants already notified the clock is stopped on the process.
  • A moratorium on rent increases for the duration of the local emergency declaration.

Wow — that’s a lot to unpack! Here we look only at the moratorium on eviction for non-payment. That protection kicks-in only when a tenant can demonstrate a ‘substantial’ financial impact related to COVID-19, which may include a decrease in household income or other “extraordinary expenses.” Reasons for delaying the rent include sickness from COVID–19, caregiving for a sufferer, or loss of employment.

The moratorium applies to all residential tenants in Beverly Hills — including those in single-family homes and condominiums.

Purpose of the Moratorium

The state and cities throughout California have imposed moratoriums on eviction for non-payment of rent. Their purpose is to allow people to stay at home per public health orders even when the economy has been so significantly disrupted. Likewise our Beverly Hills moratorium protects residential tenants affected by COVID-19 when they cannot pay the rent. The key section of our local ordinance reads:

A landlord who receives notice 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 Code of Civil Procedure section 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. — Ordinance 20-O-2806 section 1(1a)

(Code of Civil Procedure §1161(2) merely codifies the process by which a landlord can begin eviction proceedings, starting with the 3-day notice.)

The moratorium is not rent forgiveness; rather it is only a delay in the repayment of rent. Relieving affected tenants of the timely payment of rent supports the stay-at-home public health order.

Qualifying for Forbearance

To qualify for the moratorium the tenant must be able to document a “substantial loss of income” or “extraordinary” expenses due to COVID–19. But the tenant must take affirmative steps:

A landlord receives notice of a tenant’s inability to pay rent within the meaning of this Ordinance if the tenant, within seven (7) days after the date that rent is due, notifies the landlord in writing, of lost income or extraordinary expenses related to COVID–19 and inability to pay full rent due to financial impacts related to COVID–19, and within thirty (30) days after the date the rent is due, provides written documentation to the landlord to support the claim, using the form provided by the City. — Ordinance 20-O-2806 section 1(1a)

The moratorium ordinance presumes good faith on the part of the tenant. The tenant need only attest to need and inform the landlord in timely fashion. Though the ordinance doesn’t say to, the city’s guidance to tenants (‘Things You Should Know…‘) says to inform the city also.

Step #1: Notify the landlord within seven days after the day rent is due.

The notice can be delivered by whatever form communication with the landlord customarily takes: email, text, or regular mail. The preliminary notice does not have to be in any specific format so long as it informs the landlord. The notification effectively puts a hold on the posting of a 3-day notice that would demand the payment of overdue rent.

Short of taking the next step to file a Moratorium Rent Reduction Form with the landlord and the city, it may be possible to come to an agreement on forbearance without the formality of the process. But an agreement must be documented in writing!

If the rent cannot be paid for any reason other than a substantial decrease in income related to COVID–19, then it is best to explain to the landlord the situation as early as possible and ask for an accommodation (which is different than forbearance under the moratorium).

Step #2: Notify the landlord and the city within 30 days of the rent due date.

Moratorium Rent Reduction Form illustrationSend the Moratorium Rent Reduction Form to the landlord within 30 days of the rent due date by regular mail (or the means customarily used to communicate with the landlord).

The form is straightforward: name, general reason for delaying rent and a description of attached documentation. The form is also filed with the city.

The form also includes an opportunity to specify an “amount of rent that can be paid each month” (p.2). While a tenant who can pay partial rent is encouraged to pay, that is not required. (“Each month” should not be interpreted as a promise to pay that amount every month during the emergency. This form can be revised as a tenant’s situation changes from month to month.) The tenant who cannot pay any rent should decline the partial payment option.

Example 1: The tenant can pay full rent in April but no rent in May. She would notify the landlord within 7 days after May 1st and then file the form by May 31st with a copy to the landlord and a copy to the city (with documentation). Example 2: The tenant makes a partial rent payment in April and May but by June cannot pay, she would notify the landlord by June 8th and re-file the Moratorium Rent Reduction Form with documentation that reflects her inability to pay.

Step #3: Attach the minimum documentation necessary to show need.

The documentation could show lost employment or reduced hours, “substantially” reduced income, extraordinary expenses, or some other evidence of financial impact. City council purposely did not define precisely what would constitute acceptable documentation. Instead councilmembers considered ‘financial impact’ broadly to allow tenants to decide what to produce to the landlord.

The ordinance suggests the kind of documentation that may be acceptable:

For purposes of this Ordinance, “financial impacts related to COVID- 19” include, but are not limited to, lost household income or extraordinary expenses as a result of any of the following: (1) being sick with COVID–19, or caring for a household or family member who is sick with COVID–19; (2) lay-off, loss of hours, or other substantial 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; (3) compliance with a recommendation from a government health authority to stay home, self-quarantine, or avoid congregating with others during the state of emergency; (4) extraordinary out-of-pocket medical expenses related to COVID–19; or (5) child care needs arising from school closures related to COVID–19. — Ordinance 20-O-2806 section 1(1b)

The Moratorium Rent Reduction Form specifies example documentation:

Supporting documentation can include, but is not limited to, a written communication (including a text or email) from a household member’s employer, proof that an employer is a closed non-essential business, recent pay stubs, or medical bills related to COVID–19. You may send photocopies, photos, or scans of documents.

It is always helpful to know what landlords think. The National Apartment Association (NAA) has posted COVID-19 Operational Best Practices that includes one helpful document titled, ‘Rent Collection Amid COVID-19.’ The document suggests its members conduct “individualized COVID-19 assessments” based on these factors:

  • Did the resident lose a job or have the resident’s working hours been reduced?
  • Can the resident provide any verification of employment status change? Does verification exist?
  • Does the reduction in income put the resident below the typical 1/3 rent to income ratio?
  • What other external factors related to COVID-19 social distancing contribute to the loss of income?
  • Does the resident have an on-time payment history?
  • Should you ask the resident to suggest a payment structure they believe they could meet?

The conditional nature of the last point is interesting. While NAA suggests to landlords to proactively contact tenants and establish expectations for documenting tenant need, the association cautions landlords to be aware that some localities have their own regulations to protect tenants from unnecessary requirements. (Remember when the Beverly Hills city attorney tried to impose onerous and intrusive requirements of tenants?)

Important: The ordinance does not mandate a means test. It is not necessary to show assets such as savings accounts, interests in real property or equities to demonstrate need. Disregard any landlord demand for that kind of documentation.

(We have seen landlords approach tenants with specific requirements such as pay stubs or an employer statement. Again that is for the tenant to decide; we fought back an effort to subject tenants to a financial X-RAY in order to qualify for forbearance.)

Step #4: The Landlord’s Response

The city envisions the tenant and landlord coming to a voluntary agreement on forbearance. Tenants do not necessarily have a high hurdle to surmount in order to demonstrate need, and it is in the landlord’s interest to work with the tenant by either accepting a  partial rent payment or agreeing to delay the payment of rent.

However the whole point of the moratorium and the city review of the tenant’s claim is that the landlord is not the last word. The city is the final decision-maker. From the ordinance:

If a landlord disagrees with the residential tenant’s assertion regarding: (1) whether a substantial financial impact exists; (2) whether the substantial financial impact is related to COVID–19; or (3) the amount of rent that the tenant will pay, then the landlord shall notify the tenant of the disagreement in writing within ten (10) days of receipt of the written documentation from the tenant. The residential tenant may file a written appeal to the City, on a form provided by the City, within ten (10) days of receipt of the landlord’s written determination and shall provide a copy of the appeal to the landlord. Ordinance 20-O-2806 section 1(2)

Step #5: Appeal to the city.

If the landlord disagrees on the tenant’s need for forbearance, the city has created a process whereby the tenant appeals to the city. The completed form will already have been provided to the city (along with documentation of need) in that 30 days. Upon notice from the tenant, the city will schedule an appeal hearing for a  “final determination” (which is subject to judicial review where a higher bar exists for overturning the local determination).

The tenant’s appeal will be heard by the new Rent Stabilization Commission. However the members were just appointed by city council. If the commission is not yet off the ground, then the appeal is heard by a standing two-member committee appointed by city council. (The city council standing committee is also charged with hearing disruptive tenant applications from landlords.)

An important consideration for the tenant is that documentation submitted to the commission is likely to become a public record, and the commission proceedings is public too.

Step 6: If tenant appeal is not successful…

In the event the 6-member Rent Stabilization Commission does not sustain the tenant’s appeal, the tenant will be responsible for the rent arrears. In the event of non-payment, the stay on the 3-day notice that was triggered by the tenant notice to the landlord would no longer be in place. Presumably the city will provide some guidance on exactly when the back rent would then be payable.

Or, Step #6: Tenant appeal is successful.

Qualified tenants are allowed one year to repay to the landlord any rent delayed pursuant to the moratorium — a repayment period that starts when city council declares an end to the local emergency. The important point: All of the delayed rent must be repaid to the landlord prior to the close of that 1-year repayment period. From the ordinance:

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 which the tenant must pay in full within one year of the expiration of the local emergency. — Ordinance 20-O-2806 section 1(1a)

Late fees are held in abeyance just like the rent, however if the tenant does not repay the rent owed before the expiration of the one-year repayment period, then late fees can be levied also. From the ordinance:

One year after the end of the emergency, unless if the rent is paid in full, 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-2806 section 1(1a)

The ordinance is silent on how repayment should (or could) take place. The tenant and landlord can agree to a repayment schedule, but approach a formal agreement with caution. It is not necessary; the ordinance says only that the rent must be repaid within the one-year period. A binding agreement for repayment would obligate the tenant and, in the event of nonperformance, it would hand the landlord a civil remedy that would not otherwise exist.

Also beware that back rent adds up, and that could mean a balloon payment towards the end of the 1-year period. Take advantage of the moratorium only if you must.

To Sum Up…

  • The tenant who delays the payment of rent due to a ‘substantial’ income reduction related to COVID–19 emergency measures must act affirmatively first by notifying the landlord within seven days of the rent due date.
  • The tenant is required to provide the landlord, and the city, with a completed Moratorium Rent Reduction Form and supporting documentation within 30 days of the rent due date. (Alternately, the tenant and landlord can come to an agreement on forbearance without the formality of the moratorium process provided that agreement is documented in writing.)
  • If the landlord does not agree that the tenant has demonstrated need, the tenant then appeals to the city and that appeal will be heard by the 6-member rent stabilization commission. Proceedings of the commission are public as is the documentation provided to the commission.
  • If the tenant’s appeal is sustained then the tenant is granted forbearance. If the tenant’s appeal is not granted by the commission, then the tenant must pay the rent arrears.

Find more information about the moratorium at the rent stabilization website. Please get in touch with Renters Alliance if you have contacted the city about the eviction moratorium. Renters Alliance always wants to know how tenants fare with the office!