Explainer 

How the COVID-19 Tenant Relief Act Affects You

Mark Elliot , , ,

Renters Alliance is hearing from tenants who have delayed paying rent and are now confused to receive a notice from the landlord about a new state law called the COVID–19 Tenant Relief Act (SB 91). Some have received a 15-day pay-or-quit notice and are wondering if they should have paid 25% of the rent due. Don’t be alarmed. For those who have delayed rent under the Beverly Hills moratorium those requirements may not apply. Let’s take a look at how the local and state moratorium differ.

Overview

The COVID–19 Tenant Relief Act protects tenants against eviction for the failure to pay full rent due to COVID–19. It was enacted in January and conforms in most respects to the process established by the Tenant Act (AB 3088) in August of 2020. Revised are the compliance dates so that the protection sunsets on June 30, 2021. The Act also established the State Rental Assistance Program to provide money to pay rent arrears to the landlord for qualifiying households.

The process of obtaining protection against eviction under COVID–19 Tenant Relief Act is substantially the same as before under AB 3088: if the tenant fails to pay full rent then the landlord sends a 15-day pay-or-quit notice along with a blank ‘declaration of financial distress’ form which the tenant completes and returns to the landlord. The Act establishes a statewide process for delaying and repaying rent. The notable aspect of the Act is that rent owed may be converted into COVID–19 rental debt by the landlord after August 31, 2021 however the tenant who owes rent now, or after that date, can’t be evicted for the debt.

Key point: Compliance with the COVID–19 Tenant Relief Act requirement (responding to the 15-day notice and return of the financial distress declaration) is necessary only if a tenant wants protection against eviction under the state law. Beverly Hills tenants who have delayed the payment of rent under our local moratorium, using the city’s form, are protected against eviction for nonpayment through August 2021. It is important to note that protection under the Act and the local moratorium is non-exclusive: a tenant can use the local moratorium to delay the payment of rent, or use the COVID–19 Tenant Relief Act to delay rent, or comply with the requirements of both processes in a ‘belt-and-suspenders’ approach.

Both COVID–19 Tenant Relief Act and the Beverly Hills local moratorium protect against eviction but in different ways. For example, rent delayed under the local moratorium must be repaid by August 31st, and, after that date, the landlord can move to evict for nonpayment (a new deadline). Let’s look at these processes in turn and then compare them.

Local Protection Under our Local Moratorium

A tenant who has delayed the payment of rent under the local moratorium, or who will delay the payment of rent as long as the local emergency is declared, will be protected against eviction for nonpayment until regular rent payments must begin again on July 1, 2021. All rental debt to the landlord must be repaid by August 31, 2021, after which time the landlord can demand the rent owed or move to evict the tenant.

The August 31st rent repayment deadline established by the COVID–19 Tenant Relief Act preempts the Beverly Hills local moratorium requirement that delayed rent be repaid one year following the lifting of the local emergency.

To delay rent using the local moratorium the tenant: 1) notifies the landlord with seven days after rent is due that not all rent will be paid; 2) affirms the need for forbearance due to COVID-related hardship on a form provided by the city within 30 days after rent is due; and 3) provides the landlord with documentation sufficient to support the claim of hardship. The amount of rent paid in any month can be any amount (even zero).

The tenant who delays the payment of full rent is protected from eviction under the local moratorium unless the landlord disagrees with either the basis of the hardship claim or disputes the amount of rent paid (which can be a partial payment or even zero dollars). If the landlord denies forbearance then the tenant can appeal the denial to the Rent Stabilization Commission. In an appeal the tenant’s hardship documentation becomes part of the public record and the appeal hearing is public too.

It is important to recognize that the local moratorium’s protection is triggered by the tenant when the tenant informs the landlord and subsequently files the city form with hardship documentation. The tenant can continue to delay rent until the local emergency is lifted, however state law requires all rent owed to be repaid by August 31st. (Yes, that is a contradiction not yet addressed by our city or the state.)

Statewide Protection Under the COVID–19 Tenant Relief

Under the COVID–19 Tenant Relief Act (SB 91) enacted in January, it is the landlord who drives the process once a tenant fails to pay full rent. Landlords must provide tenants with a required “notice from the state of California” about the Act and provide it by February 28th.

The landlord also notifies the tenant who has delayed paying the full rent to pay-or-quit within 15 days. The 15-day notice is an important procedural step but it is only the first step in the process. The 15-day notice should come with a blank declaration of ‘financial distress’ due to COVID–19. The tenant will declare financial distress using the blank declaration form and must return it to the landlord in a timely manner (15 days not counting weekends and holidays). Thereafter the tenant cannot be evicted for nonpayment of rent or for owing back rent delayed using the statewide process.

The statewide protection against eviction is available for rent owed going back to March of 2020. If a tenant has not attested to hardship under the local moratorium, or otherwise come to some agreement with the landlord, then the tenant may receive a 15-day notice for each month that rent is owed. If the notice is returned in a timely manner that owed rent becomes ‘rent debt’ to the landlord and is later recoverable as consumer debt.

Which is Better Protection: the Local Moratorium or the COVID–19 Tenant Relief Act?

There are differences between these process and repayment implications depending on whether one or both protections are invoked by the tenant. (It is the tenant’s choice.) In fact a tenant may obtain protection under both the local moratorium and the statewide process. So let’s look the key differences by comparing the protections on offer beginning with a summary of the key difference.

  • Local moratorium requires tenant notice to the landlord within 7 days after rent is due; and then within 30 days after rent is due the tenant must attest to the landlord that full rent can’t be paid due to financial hardship related to COVID–19. The claim must be supported with documentation which is provided to the landlord. Rent owed is due by August 31, 2021, after which time the landlord can either come to an agreement with the tenant on rent repayment, or else move to evict the tenant for nonpayment.
  • COVID–19 Tenant Relief Act requires the landlord to provide an informational notice about the Act to the tenant and also to provide a 15-day notice (plus blank declaration). The tenant signs and returns the declaration (without documentation in most cases). In addition there is a requirement that is not imposed by the local moratorium: on or before June 30, 2021 the tenant must make a partial payment to the landlord in an amount equal to 25% of the sum of all rental payments due from September 1, 2020 through June 2021. (Rent delayed earlier than September 1st is not subject to the partial payment.)

And perhaps the most important difference between the COVID–19 Tenant Relief Act and our local moratorium:

  • Rent delayed pursuant to the Beverly Hills moratorium can become grounds for eviction for nonpayment after the repayment deadline because our local moratorium makes no provision for the conversion of rental debt into consumer debt.
  • Rent delayed pursuant to the COVID–19 Tenant Relief Act can be converted into rental debt through court order at the landlord’s request and, once converted, the rental debt can be recovered like consumer debt in small claims or superior court.

On that basis the COVID–19 Tenant Relief Act may be more appealing to some tenants because the landlord can’t evict for nonpayment (as long as the tenant makes regular rent payments once the Act expires). However the prospect of consumer debt may be discouraging. It’s a personal choice.

As a practical matter, though, it is the tenant’s choice. To opt for the state protection exclusively one need not file the city’s form for rent forbearance and instead wait for the landlord to send a 15-day notice.

With that in mind let us directly compare some of the process differences between our local moratorium and the COVID–19 Tenant Relief Act.

  • Under the local moratorium the tenant initiates the forbearance process while under the state’s COVID–19 Tenant Relief Act process the landlord initiates the process with a 15-day notice to pay-or-quit.
  • Under the local moratorium the tenant demonstrates and documents COVID–19 related hardship (to the satisfaction of the landlord) while the state process, in most cases, requires the tenant only to attest to financial distress which the landlord cannot refuse.
  • Under the local moratorium, the payment of rent can be delayed each month that it comes due through the end of the local emergency while the state process requires full rent to be paid beginning August 1st.
  • Under the local moratorium there is no partial payment required while the state process requires at least 25% of the total rent due, from September through June, to be paid by June 30th.
  • Under the local moratorium all rent must be repaid by a date certain (August 31, 2021) while the state process pursuant to the COVID–19 Tenant Relief Act allows the landlord to convert rent owed to rental debt to be collected later.

Again that last point is perhaps the most important difference. The conversion of rent owed into rental debt is what protects the tenant from eviction so long as regular rent payments are resumed beginning July 1st.  In most cases, except for low-income households, the debt that is owed to the landlord can be sold to a collection agency, etc.

Which Process to Choose?

Choosing the appropriate process is a personal decision but it is the tenant’s choice. If the tenant chooses protection against eviction under the local moratorium, and the landlord does not dispute the need for rent forbearance, then there is no point for the landlord to initiate the statewide COVID–19 Tenant Relief Act process. So if the landlord does send a 15-day notice, the City of Beverly Hills assures us, a tenant will be protected under the local moratorium if the tenant does not respond.

Renters Alliance offers practical help to tenants but we cannot offer legal advice. If you have any concerns about whether and how to respond to a 15-day pay-or-quit notice we urge you to contact an attorney or get in touch with the city’s housing rights legal services provider Bet Tzedek at (323) 939–0506 extension 499 (the extension is important). You will leave a message; expect a return call in 24–48 hours.

Resources for Tenants

The COVID–19 Tenant Relief Act complicates matters for Beverly Hills tenants because the state moratorium complements some aspects of local protection against eviction for nonpayment but preempts one important aspect: the rent repayment deadline. Here are some additional resources that explain the Act and the preemption issue.

Forms for Reference

The state requires the landlord to provide tenants with an informational notice about the COVID–19 Tenant Relief Act even if the landlord is not intending to evict for nonpayment. When rent is delayed pursuant to the state moratorium, the landlord must also send a 15-day notice to demand the rent but which also informs the tenant of rights under the law. As the informational notice explains:

Before your landlord can seek to evict you for failing to make a payment that came due between March 1, 2020, and June 30, 2021, your landlord will be required to give you a 15-day notice that informs you of the amounts owed and includes a blank declaration form you can use to comply with this requirement.

For reference these are the relevant forms. If required they will be provided by the landlord.

COVID–19 Tenant Relief Act forms

Proof of income on file form

The declaration of financial distress does not require documentation of distress for households earning under 130% of area median income unless the landlord has proof of income on file that indicates earnings of more than 130% of area median income. If the landlord has that proof — for example from a rental application — then the landlord may send you this additional form:

Households that receive that form and earn above 130% of area median income must return it with documentation that supports the declaration of COVID–19-related financial distress. Again it is the responsibility of the landlord to provide any required forms to the tenant — including the blank declaration of financial distress.

Got a question about the COVID–19 Tenant Relief Act? We will try to help. Get in touch with Renters Alliance!