Tenants Suffer as City Stays Mum on the Revised Moratorium Ordinance

Five days have elapsed since Beverly Hills enacted a revised moratorium on eviction for non-payment of rent. Yet we have not heard a word about it from the city: no update to the rent stabilization website, no email announcing it, and no guidance for tenants who cannot pay the rent due to COVID-19. Landlords will take advantage of that information vacuum and tenant uncertainty and anxiety will result. Here’s one example courtesy of landlord Elm Enterprises, LLC.

The purpose of the moratorium on eviction for the non-payment of rent is to relieve tenants of the obligation to pay full rent when the tenant has experienced a drop in household income due to COVID–19. Beverly Hills enacted the moratorium on March 16th. The city notified tenants about the first moratorium a few days after it took effect but provided no guidance until 10 days later.

City council enhanced the moratorium on March 31st by, among other things, extending the repayment period to one year. (Read the ordinance.) The revised moratorium took effect on April 1st. But the city has neither notified tenants nor landlords about the changes.

Predictably we are seeing some landlords take advantage of the information vacuum by pressuring tenants, those affected by COVID–19, and who may not know their rights, to pay the full rent. This is no secret; Los Angeles Times is reporting that landlords are “pushing tenants to agree to repayment plans that are far more onerous than what’s required. That is no surprise; indeed it could have been anticipated.

Into the Vacuum Flows Disinformation

If an informed tenant is an empowered tenant, then an uninformed tenant must be a disempowered tenant. Landlords can prey on tenant anxieties and uncertainty when we tenants are not cognizant of our rights. That’s what’s happened here: Beverly Hills enacted a policy then did not immediately to inform tenants. That has allowed less-scrupulous landlords to step in with misinformation, disadvantageous agreements, pressure tactics and more.

Some of those tactics include:

  • Misinforming tenants about  the moratorium;
  • Imposing onerous conditions in order to qualify a tenant for rent forbearance;
  • Refusing to agree to partial payments in order to pressure tenants to pay full rent; and,
  • Using 3-day notices to intimidate tenants into paying — even when the tenant has already informed the landlord of a COVID–19 impact to income.

We have seen one landlord, Elm Enterprises, LLC, use some variation of all of these tactics to pressure at least one tenant at 145 South Elm to pay up. This is not a luxury apartment building. Like many smaller rental properties it provides relatively-affordable housing. Some tenants there are unlikely to be able to pay rent if their employment has ended or they have experienced a reduction in working hours. That is because many renting households in Beverly Hills live paycheck-to-paycheck.

Half of renting households in the city are classified as ‘rent-burdened.’ As defined by the feds, rent-burdened is paying more than 30% of household income in rent. About one-quarter of city renting households pay half of all household income in rent. That is classified as ‘severely rent-burdened.’ These households are unable to withstand any loss of income.

State and local authorities have enacted moratoriums on eviction for non-payment of rent because any interruption from the COVID-19 crisis could put them on the street.

Case Study: Elm Enterprises, LLC

This landlord appears motivated to get its tenants to pay the rent even if they have been affected by COVID–19 and they are due protection under the Beverly Hills eviction moratorium. That posture may extend to tenants at the neighboring buildings, 137 and 141 Elm, also owned by Elm Enterprises. (We want to hear from tenants in any Elm Enterprises building. Get in touch!)

137-145 South Elm
137-145 South Elm: three properties waiting for redevelopment.

A tenant at 145 South Elm contacted Renters Alliance over the weekend to share her experience and we share it here with her permission. We look at two aspects of the Elm Enterprises strategy: erecting hurdles to qualify for forbearance and tenant intimidation.

Hurdles Suggest Forbearance is Out of Reach

One means by which landlords can discourage tenants from asking for forbearance on the rent is to make the process intimidating or onerous. This landlord did both in a letter to the tenant at 145 South Elm. We follow the letter with some observations.

145 South Elm Covid letter example redacted

Some observations…

Partial rent payment is not good enough. The 145 South Elm tenant informed the landlord she could not pay the full rent and offered to make a partial payment. “I can afford $500,” she told the landlord. But instead of working with the tenant the landlord pressed for the full rent. “She wants to know when the balance will be paid,” the tenant relayed to Renters Alliance. How to know when the rent will again be payable in this open-ended emergency and greatest disruption to the economy since the Great Depression?

Soon we again heard from the tenant. “Things with my landlord have gone from a [partial] payment of $500 to a threatening tone, and the assumption that I expect my rent to come out of my deposit,” the tenant told Renters Alliance. “Nothing of that nature was said or written.”

There is no need for a threatening tone. The eviction moratorium affords any tenant who can demonstrate a COVID-19 effect on income forbearance on the payment of rent. Isn’t partial payment  better than no payment? Actually the city’s revised moratorium contemplates partial rent payments as shown on the Moratorium Rent Reduction Form. (Unfortunately that form has not yet been provided to tenants or landlords.)

Onerous documentation to qualify for relief is misleading. This landlord’s letter says, “We will require [tenants] to justify any rent deferral” and goes on to “require” of the tenant an actual statement from her employer AND three months of bank statements “showing that your accounts are insufficient to pay the rent.”

Let’s correct the record: the city’s eviction moratorium does not cite as a qualifying condition that the tenant be able to prove that financial accounts hold “insufficient” funds to pay the rent. (We alerted readers as much in our news post on the revised moratorium.) Indeed the relevant moratorium language requires tenants to show only a “substantial” reduction in income related to COVID–19 to qualify for forbearance.

Moreover, the moratorium says nothing at all about bank statements. Instead the revised moratorium ordinance lets the tenant decide the appropriate documentation. Qualifying to delay the rent should not entail a financial X-RAY. But there is more in the Elm Enterprises letter not to like!

The Elm Enterprises letter requires the tenant to provide a statement from an employer attesting to a change in work arrangements. That includes specifying whether the tenant is receiving “partial pay.” There is no such condition for forbearance.

The letter suggests overly broad disclosure. For example in a situation where multiple occupants share the rent, this landlord is saying it will hold each roommate individually responsible for the full rent. And to that end the landlord may demand financial account statements from every ‘roommate’ in the unit if the named tenant(s) cannot pay.

But asking for disclosures from non-named tenants is problematic in at least two respects. First, a party who is not named on the lease is not responsible for any part of the rent (unless there is a subtenant agreement with the named tenant). Second, the landlord here is seeking information on any occupant whether or not they are on the lease.

While unauthorized tenants are not strictly legal, using the moratorium as a means to identify such occupants is not appropriate. Indeed if there are unauthorized occupants in any unit we suggest now is a good time to keep quiet: under the law a landlord can boot an unauthorized occupant with only three days notice. And if that occupant does not leave in timely fashion the landlord can then evict all tenants for cause. (For-cause eviction is not protected under the moratorium!)

The Elm Enterprises letter suggests stipulated payment arrangements and a signed repayment agreement:

…deferred rent must be paid no later than six months to 12 months after the emergency declaration is terminated. You may do this through lump sum or installment payments as agreed upon at the time. Once you provide the requested documents, we will consider the request and provide you with an agreement for your signature that will permit deferred rent during this emergency period.

But stipulated payment arrangements and a signed repayment agreement are not contemplated in the city’s moratorium!

First things first: the city’s eviction moratorium grants the qualifying tenants a 12-month repayment period, not six months. Second, the landlord cannot dictate the terms of repayment so long as the tenant qualifies. Nothing suggesting otherwise is in the ordinance. Process details may yet be ironed out, so we will wait and see. (In the meantime read the moratorium ordinance for the exact language.)

Most important, the landlord is not the final decision-maker. The city makes the landlord the first avenue for a voluntary forbearance agreement; failing that the landlord is not the last word. After a review of a tenant’s claim by the Rent Stabilization Commission, the city will render a final decision that will be binding on the landlord. (The decision could be appealed in the courts but there are no functioning courts!)

Intimidation by 3-Day Notice

Elm Enterprises used another strategy to pressure this tenant: the 3-day notice. One thing we do know abuot the eviction moratorium is that the landlord cannot serve a tenant with a 3-day notice between the time the tenant has informed the landlord of her inability to pay full rent and an agreement on forbearance.  Yet Elm Enterprises served this tenant with a 3-day notice to pay-or-quit.

What’s wrong with this picture? We follow the notice with some observations.

145 S Elm 3-day notice

Some observations…

The landlord’s interest to pressure the tenant is evidenced by immediate service of the 3-day notice. It was dated April 3rd — just two days after rent was due yet days after the tenant informed the landlord about her inability to pay. Again, that is against the law while the moratorium is in effect.

The landlord’s use of an attorney to issue the notice is more evidence of intimidation. An attorney is not needed because the Apartment Association provides landlords with notice forms for free.

Even more telling is the landlord’s choice of attorney: Dennis Block. Block is the famous eviction attorney who made headlines in December by urging California landlords to use no-just-cause eviction to oust tenants before a new state rent control law (AB 1482) could take effect. He’s a volume operator and a prolific advertiser (“The number one law firm specializing in tenant evictions!”) in industry publications like the Apartment Association’s own magazine, Apartment Age.

The date of the notice and the day of service were chosen to maximize the pressure. Landlords often serve 3-day notices on, or just before, a weekend because tenants are unable to access legal services as the days available to avoid the courthouse tick down. It is a proven strategy.

For example, the 3-day notice was dated Friday, April 3rd. That would lead many tenants to believe that the 3-day period expires on Monday (regardless of the fact that service of the notice occurred a day later on Saturday). That would suggest a Tuesday rent payment at the latest to avoid eviction.

Some tenants may mistakenly count the three days to believe that the 3-day period expires on Sunday. That would suggest a Monday morning rent payment (or else). Indeed landlords find great success with Friday notices because tenants are generally not aware of how to count those days!

So pervasive and effective was the tactic that state legislature had to pass a law last year that excludes  weekend days and court holidays from the day count; now only workdays count in that 3-day period. Under the law a 3-day notice posted on Friday gives a tenant until Thursday to respond (regardless of the date on the notice).

Mission Accomplished: The Tenant Buckled

Block’s effort to intimidate this tenant succeeded: she panicked and borrowed money from a neighbor that she now has to repay. But because the paid the rent to the landlord the landlord is made whole. This is contrary to the spirit and intent of the city’s moratorium. A tenant who cannot pay should not pay. But this tenant was intimidated into paying.

Moreover, serving the tenant with that 3-day notice after she informed the landlord of her inability to pay rent is contrary to the letter of the moratorium ordinance:

This Ordinance applies to nonpayment eviction notices, no-fault eviction notices, and unlawful detainer actions based on such notices, served or filed on or after the date on which a local emergency was proclaimed on March 15, 2020. — Ordinance (1)(1)(e)

Unfortunately the ordinance includes no specific sanction or penalty for less-scrupulous landlords who intimidate in this fashion — which is par for the course in Beverly Hills where landlords invariably get off easy for their bad behavior.

Our Takeaway

The irony is that the city shares the blame with the landlord. This tenant’s experience could have been avoided had the rent stabilization office simply notified tenants and landlords on April 1st (or immediately thereafter) that a revised ordinance was adopted. At the very least the rent stabilization office could could have posted the moratorium rent reduction form so tenants and landlords could gain some guidance about the process.

Instead the information vacuum allowed a landlord like Elm Enterprises, LLC to move in with misinformation and intimidation.

This we can predict for sure: in the absence of information from the city we will continue to see landlords pressure tenants to pay full rent by providing misleading information to tenants about the moratorium and imposing unwarranted qualifying conditions. Where is the rent stabilization office when we need it?