By Ari Chazanas, Founder and Chief Executive Officer, Lotus West Properties
During the Coronavirus Pandemic, we have been faced with numerous challenges. One of them is the eviction moratoriums, which is legal authorization for indebted commercial and residential renters to postpone their rent payments to landlords. Tenants may wish to extend the eviction moratorium and landlords wish that it may soon end.
At this time, we anticipate that the eviction moratoriums may be extended long before being repealed; With the original due date for the State of California’s eviction moratorium having expired on January 31st only to then be extended to June 30th, one might expect that this latest expiration date to again be extended by May or June. Many renters and landlords must now anticipate their next action steps with the latest expiration date on the horizon. The Coronavirus has certainly changed the landscape of evictions and rent collections. Even online unlawful detainer and other court hearings may become commonplace.
In this article, we discuss a few of the “key” trends to keep in mind when undertaking evictions and pursuing rent collection during the pandemic. Successful evictions today depend on timely adherence to new eviction and rent collection laws due arising out of the pandemic.
First, there is the date for extension or removal of the eviction. As soon as an eviction moratorium is lifted, a tenant has a few days, depending on the jurisdiction, to start paying rent. If you discussed payment arrangements during the outset of the moratorium, now is the time to review written or verbal agreements and discuss payment arrangements.
Under the State law, Assembly Bill 3088, there are two periods outlined, a protected period from March 1, 2020 to August 31, 2020 and a transition period from September 1, 2020 to January 31, 2021. If tenants did not pay rent during the protected period, barring precedence under a local jurisdiction’s eviction moratorium, the tenants may be served with three documents: (i) a copy of Tenant Relief Act, a Declaration of COVID-19 Related Financial Stress, (ii) a declaration to be signed and returned to you by the tenant in 15-days stating they have been impacted by COVID-19, and (iii) a 15-Day Notice. The collection of past due rent should exclude late fees. When the tenant receives these documents, an eviction cannot take place; however, you may recover unpaid rent in small claims court without limits on the claimed amount or in any civil court.
During the transition period, the three signed forms may be served to the tenant, and the tenants would have to pay 25% of their rent each month or in a lump sum by January 31, 2021 in order to be protected from being evicted. In addition, if a tenant’s household income is at least 130% of the median income in the county where the rental property is located, you must serve tenants with the High-Income Household Notice to inform them of their obligation to provide documentation supporting their claim of COVID-19 financial distress. As of the date of this writing, an extension of the transition period until June 30, 2021 was pending. Staying up to date with these new procedures and changes in the law will aid prevailing in eviction cases and improve rent collection.
On the other hand, If a landlord wants to proceed with a non-COVID-19 related eviction (e.g., due to breach of other lease term), the eviction rules and rent collection policies remain unchanged. For example, do not accept any payments in any amount past the due date from a tenant who is not impacted by COVID-19 so that you may begin the eviction process with a 3-day notice. Because non-payment of rent currently remains as one of the top reasons for evictions, the process for this cause of eviction is very detailed and complicated. If you miss one aspect of timing or do not provide the proper documentation, your eviction case could be dismissed, wasting both your time and energy.
Having a detailed timeline with actions steps will aid in rent collection and in pursuing an eviction. Other non-COVID-19 related reasons for eviction include breach of contract or end of lease. Some tenants take advantage of the eviction moratorium to encroach on a landlord’s boundaries; however, you do not need to wait until the eviction moratorium ends to start a breach of contract eviction.
An eviction moratorium protects tenants who may not be able to pay rent due to COVID-19 impacts; however, it does not protect tenants from other breaches of contract. The first step is to start a conversation with the tenant to warn about a possible eviction due to a violation of the lease. For example, the tenant may refuse to allow repairs, cause a disturbance, or refuse to have a functioning smoke or carbon monoxide detector as required by law. Make sure to collect evidence of communication with the problem tenant, obtain witness testimony if available, and/or, in the case of criminal acts like theft, video footage or a police report. In case the tenant provides an excuse or counter evidence, you should have sufficient evidence to prove your eviction case. Remember not to combine nonpayment of rent as additional reason in the eviction case for breach of contract because that strategy may backfire. Some “professional” tenants have vast experience in nonpayment of rent and bounce from landlord to landlord. So, it is up to you to stay one step ahead of these kinds of tenants once eviction moratorium is lifted.
If your eviction is successful, payment for rent can be obtained. Yet, collection is a tricky matter. On one hand, the tenant may have lost their job and cannot afford to pay any rent even if the judge orders garnishment of wages. On the other hand, the tenant may have other debt ahead of your rent debt, so you are one of many debt collectors standing in line. The most efficient way to deal with this situation is to sell or assign the debt to a collection agency and get over the loss. (Note: under the proposed, new State law extending the eviction moratorium, owners may be prohibited from selling or assigning rental debt until July 1, 2021.) Consider it an expensive lesson learned. Combined with the eviction moratorium, the coronavirus has impacted the rental industry. It is up to you to limit the eviction moratorium’s impact on your property and rental income.
Ari Chazanas is the Founder and Chief Executive Officer of Lotus West Properties. Lotus West Properties is a property management firm based in West Los Angeles and was recently voted the “Southland’s Best New Property Management Firm” by the Apartment Association of Greater Los Angeles. You can reach them at (323) 380-2783 or contact Byron at firstname.lastname@example.org.