“California is open for business!” proclaimed our governor who is facing a recall. He’s talking “dream vacations” and $1.5 million lottery jackpots as he tosses pandemic restrictions to the dustbin. He wants to turn a depressing COVID–19 story into an uplifting tale of triumph but the messaging coming from his office seems like a trailer for a Hollywood blockbuster. Tenants in dire straits need more than a lottery and free queso from Chipotle. Yet Sacramento is silent about renewing COVID–19 tenant when they expire.
Update News reports indicate that the governor and the legislature may have found agreement to extend eviction protections to September 30th before they expire, and to expand the rent-relief program to cover 100% of rent owed. The key points: tenants and landlords who received partial reimbursement will get 100% reimbursement automatically; if the landlord refuses to participate in the rental assistance program the proposal would allow a check to be issued directly to the tenant; and when evictions resume on Oct. 1, tenants will have an opportunity to apply for rental assistance before a landlord evicts. Program details apply only to tenants who qualify for COVID-19 assistance. Stay tuned!
The push to turn the page on COVID seems desperate and even a little tone deaf as Newsom’s official and personal twitter accounts are ablaze with promotions for the state’s ‘Vax for the Win!’ lottery. “Governor @GavinNewsom will usher in CA’s full reopening and draw 10 lucky #VaxFTW winners to receive $1.5 million each for a total of $15 million.” That’s him next to the lottery wheel. That’s him holding a $1.5 million ceremonial check!
It all smacks of post-pandemic delirium.
Lotteries, let’s remember exclude most people by definition. How will this messaging play for tenants who stress about paying the full rent come July 1st? What about tenants who worry how they will repay rent arrears? Will Newsom’s rising tide of optimism (and tax receipts) lift all boats?
The governor wants to make that case. “California’s economy is coming roaring back,” Newsom said in a recent press release hailing a new state budget. “With the largest surplus in California history, we’re using this once-in-a-generation opportunity to create an economic recovery that will leave nobody behind.” Since when over the last five decades did a rising tide lift all boats in California?
What we do know is that tenant protections are ending soon and some households won’t rise with the tide. Yet Sacramento has not announced any successor legislation to AB 3088, SB 91 and AB 81 — the bills that enacted the state moratoriums. Come June 30th the tenant protections are history.
Some of the State Protections That Will Expire
Full payment of July rent. The state moratorium allowed tenants to pay partial rent or even no rent for some months. Unless that protection is extended yet again, starting on July 1st the full rent will be due — along with the rent arrears accumulated since September.
Paying the full rent may pose a challenge to tenants who have until now used the state process to delay payment. For households disadvantaged during the pandemic there will be a large jump (more or less 300%) from the partial payment to the amount of the full rent. Starting July 1st the moratorium will no longer protect tenants against eviction for paying less than the full rent.
Rent arrears. Under the current state law the rent arrears is payable starting July 1st. Thereafter the landlord can pursue the tenant for rent arrears. (However the tenant cannot be evicted for having delayed rent.) What will likely happen is that the landlord would probably go to court to obtain a judgment to treat the rent arrears as consumer debt. Then the tenant and landlord come to an agreement with the judgement as the landlord’s leverage.
We don’t know how this will work in practice but many tenants who delayed paying rent may be faced with a court judgement. Some will come to a less-than-voluntary agreement to vacate. Some tenants will feel the pain. For more about the state protections consult the city’s March update.
Note: It is important to distinguish between the state moratorium and the Beverly Hills moratorium on eviction for nonpayment. The latter required a tenant in the city who wants to delay the payment of rent to inform the landlord within 7 days that full rent could not be paid and then file a form with the landlord attesting to the need to delay payment. Rent delayed under the city moratorium comes due in full on August 31, 2022 or one year after the end of the local emergency, whichever is earlier. Have a look at our explainer: Local Moratorium vs. Tenant Act Which Rules Apply?
What About Rent Relief?
State COVID–19 relief is reportedly off to a slow start with just a fraction of the pot of money disbursed to tenants. So far, reports the LA Times, 63,363 applications have been submitted by tenants and landlords and 116,564 more applications are in the pipeline. That amounts to $428 million of the $1.4 billion in federal money to the state yet only $102 million has been approved.
“If the state and other governmental entities are slow to distribute rent relief, then evictions should not begin,” argues an opinion piece in the LA Times. “The emergency created by COVID–19 isn’t over.”
Still, many eligible tenants have not applied for relief because they wrongly believe there is a blanket moratorium on evictions or they feel their landlord will not grant the 20% forgiven rent, the executive director of the nonprofit Eviction Defense Network told the Times.
The application period has no defined end-date so tenants can still apply at the Housing is Key website.
Time is Short for Action
Clearly landlords are already getting impatient. We heard from the neighbors that the landlord has come calling. “What’s your plan?” the landlord asked. Landlords are also lobbying state legislators to let the state eviction moratorium expire on June 30th. We have no word from Sacramento about whether another rabbit will be pulled out of a hat at the last minute. (It has happened before!)
Time is of the essence. Rents are rising due to optimism about the economy and increased post-pandemic mobility, reports the LA Times. Increased demand and tighter supply can only suggest added pressure on vulnerable tenants to vacate. Property owners are also less likely to work with rent-controlled tenants to avoid eviction, an LA-area organizer told the Times. We are also hearing calls for the right to housing and also right-to-counsel to keep tenants housed. (Tenants who enter eviction proceedings without representation universally fare much worse when facing a landlord armed with an attorney.)
Of course the moratoriums are last-ditch efforts to address a rental affordability problem with deep structural roots that was only compounded by the economic damage wrought by the COVID–19 emergency measures. Not everybody suffered commensurately during the pandemic and not everyone will benefit in the recovery. A little more time with tenant protections in place seems like not too much to ask.