Local Moratorium vs. Tenant Act Which Rules Apply? [Updated]

The Tenant, Homeowner, and Small Landlord Relief and Stabilization Act of 2020 was signed by Governor Newsom at the end of August. Among other things, the legislation enacted the Tenant Act to establish a statewide framework for delaying rent due to COVID-19 financial hardship. It did so by preempting local moratoriums like ours. The Act also mandates a new process for delaying the rent and, more importantly, a hard deadline for repaying the back rent owed. What does it mean for Beverly Hills tenants?

Note: This post is updated to reflect recent communication with the city attorney and Bet Tzedek about AB 3088 the Tenant Act.

At the end of August, Sacramento enacted the ‘Tenant, Homeowner, and Small Landlord Relief and Stabilization Act of 2020’ just in time to stay ahead of an expected wave of unlawful detainer filings on or after September 1st 2020 as a result of tenants delaying the payment of rent.

The key provisions that affect tenants who delay the payment of rent are included in a section of the law known as the ‘COVID-19 Tenant Relief Act of 2020’ (hereafter referred to as ‘Tenant Act’). The Tenant Act:

  • Allows tenants to delay the payment of rent, regardless of the existence of a local moratorium, by simply affirming financial hardship as a result of COVID-19 without providing documentation (in most cases);
  • Establishes a new process for obtaining forbearance from the landlord that begins with a 15-day pay-or-quit notice from the landlord to which the tenant responds with a declaration of COVID-19 financial hardship on a form provided by the landlord;
  • Requires the tenant who delays rent due on or after September 1st to have made at least a minimum partial payment (by February 1st) of at least 25% of the total rent that is/was due from September through January;
  • Establishes March 1, 2021 as the moment the clock starts ticking on the repayment period for all delayed rent (with all rent arrears due in full no later than March 31 2020);
  • Preempts some provisions of local measures like the Beverly Hills moratorium on eviction for nonpayment by, for example, establishing a date-certain for rent repayment.

The Tenant Act also protects tenants from eviction solely for owing back rent:

  • Disallows eviction for nonpayment when rent is delayed due to economic hardship related to COVID-19 (the law prevents the landlord from filing an unlawful detainer simply to recover the back rent);
  • Allows the landlord to petition a court for a money judgement for back rent by converting back rent owed into consumer debt starting March 1, 2021 (a judgement which can also be obtained in small claims court);
  • Allows for-cause evictions to proceed when, for example, the tenant violates the rental agreement for a reason other than for nonpayment due to COVID-19 economic hardship.

Understanding the impact of the Tenant Act is complicated due to the preemption clause: localities have adopted a variety of policies related to the delay and repayment of rent and how the law applies depends on the specifics of the local measure. That’s why many cities have explained the law to tenants. For example what to do to delay the payment of rent; what to do if the landlord sends a 15-day notice; and when exactly the tenant will have to repay any rent delayed.

But not Beverly Hills. Instead the rent stabilization website advises residents who rent that the Tenant Act essentially does not apply to us:

Please be informed that Assembly Bill 3088, does not affect the ongoing eviction protections provided to residential tenants in the City of Beverly Hills. The requirement under AB 3088, that the tenant pay at least 25% of their total rent between September 1, 2020 and January 31, 2021 (either in installments or as a lump sum paid before January 31, 2021), does not apply to residential tenants residing in the City of Beverly Hills. The current City of Beverly Urgency Ordinance remains in effect and applies to residential tenants residing in the City of Beverly Hills.

That is barely 100 words of guidance and it leaves much out. Cities around us have posted extensive fact sheets, FAQs and even video explainers to make sense of the complicated issue of preemption and what it implies for tenants in those cities. Not Beverly Hills.

Tenant Act Preemption in Beverly Hills: Which Rules Apply?

When legislators sent the Tenant Act to the governor’s desk as part of a larger legislative package concerning COVID-19, it was clear that they wanted to establish a statewide process for delaying and repaying rent. The patchwork of local measures (like the Beverly Hills moratorium) ginned up in the early months of the pandemic was something of a legal and administrative headache.

The Tenant Act really reined-in those local measures and localities around Beverly Hills responded by amending their measures to internalize provisions of the Tenant Act. Beverly Hills did not.

The preemption question is important because tenants need to know the rules before they delay the payment of rent.

The key concern for COVID-19 affected tenants is protection from eviction. Both the local moratorium and the Tenant Act protect tenants from eviction if the tenant complies with the required process, so the preemption question is not pressing in this regard. But the process for obtaining protection differs. Unfortunately we have no description of guidance from the city on the matter.

A second key concern is the deadline for the repayment of delayed rent. It seems like a straightforward question: When is delayed rent due? And that begs a specific answer. Here, however, the preemption question does matter.

Our moratorium allows tenants 12 months after the end of the local emergency to repay delayed rent. The end of the local emergency is not yet on the horizon and that can offer a measure of comfort to those struggling to pay current rent much less pay back rent arrears.

The Tenant Act establishes a different deadline for the repayment of rent: March 1, 2021. All delayed rent must be repaid by the date or it converts to debt. Thereafter the landlord can obtain a money judgement for all rent owed. After that date the landlord can file a negative credit report and even refer the debt to a collection agency. Moreover, the Tenant Act allows the landlord to use the more expedient small claims court to obtain the judgement.

Here again the city has no advice for tenants. The 100 words of guidance does not mention a rent repayment deadline nor does it advise tenants about the legislature’s intent to allow landlords to move more swiftly to recover the rent arrears.

More problematic is that there is some disagreement on the deadline for the repayment of rent arrears. In response to a recent query about when back rent is ultimately due, rent stabilization office director Helen Morales confirmed to us that the moratorium’s terms apply. “Back rent is owed 12 months after the urgency ordinance is lifted [and] the urgency ordinance has not been lifted.”

But the legislature intended to impose a date-certain for rent repayment and explicitly identified March 1, 2021 in cases where a local measure did not identify a date-certain. The objective is to invalidate rolling deadlines like in our moratorium. So Renters Alliance reached out to the city attorney and he confirmed the deadline as March 1, 2021. That seems important yet that guidance is not provided to tenants.

The rent stabilization office refers the tenant with a question about the moratorium to the city’s housing rights legal services provider, Bet Tzedek. But lead attorney for Beverly Hills Michael Greene has identified yet another final rent repayment deadline: March 31, 2022. Presumably that’s what Bet Tzedek is advising Beverly Hills tenants.

Another concern is the 15-day notice to pay-or-quit served by the landlord pursuant to the Tenant Act. The notice is a required step in the process for delaying the rent (rather than an intimidation tactic by the landlord) but the unsuspecting tenant who receives one may be alarmed. In fact, the law requires the landlord to issue a notice for rent previously delayed as well as an additional notice for each time rent is thereafter delayed. The city provides no guidance to tenants here either.

A final consideration for tenants is that the Beverly Hills moratorium and the Tenant Act are not mutually exclusive. A tenant can delay the rent using the city’s forms and process and also respond to a 15-day notice served by the landlord in order to lock-in protection under the Tenant Act too. “That’s a belt-and-suspenders approach,” said our city attorney, and he volunteered he would personally do that. No such guidance has been offered by the rent stabilization office.

A tenant who would use both the city’s process to delay rent and respond to a 15-day notice should keep in mind the Tenant Act requires a minimum partial payment of 25% of total rent due from September through January if any rent is delayed. The 25% minimum payment is due February 1, 2021 (another important deadline not communicated to tenants).

There is a reason that other cities have made an effort to educate their residents about the Tenant Act: this convoluted legislation has implications for tenants who delay the payment of rent. Exhibit #1 is the rent-repayment deadline. Our officials can’t agree on it. That alone suggests the city should communicate with one voice the complicated issues raised by it. And yet we’re given only those 100 words.

Our Recommendation

We recommend to any tenant who will through January delay a substantial part of the rent to consider responding to a 15-day notice (if served) and to make a payment of at least 25% of rent owed during the September-to-January period by February 1st. That is prudent to lock-in the state law protections in addition to whatever protection our local moratorium offers. We don’t want to see a tenant rely on the city’s assurances that our local moratorium prevails only to find later that she would have been better advised to also comply with the Tenant Act’s requirements. City of Beverly Hills should have explained all of this to tenants but it did not.

The foregoing is not legal advice but rather friendly guidance from Renters Alliance. Please get in touch if your landlord has served a 15-day notice to pay or quit so that we can put you in touch with legal assistance.