Question 1: Can you explain the AB 3088 rules on when tenants can be forced to pay rent?
Answer 1: AB 3088, the Tenant, Homeowner, and Small Landlord Relief and Stabilization Act of 2020, by its express language appears to offer a relatively clear and complete set of rules regarding tenant rent payments and the landlord’s ability to compel those payments through the unlawful detainer process (which continues to begin with a notice to the tenant to pay rent or quit).

 

As most members know, prior to the flurry of state, federal and local laws in response to the developing pandemic, mostly beginning in mid-March, 2020, the landlord was entitled to compel a tenant, by service of a 3 Day Notice, to either pay the unpaid rent or vacate the premises, or face eviction through the unlawful detainer process. However, as of March, that right was severely curtailed. There has been a hodgepodge of laws and court rules that protected tenants from this powerful landlord tool.

AB 3088 outlines various periods of time beginning in March 2020 and ending January 2021, and breaks them down into two separate periods, each of which has its own rules regarding the tenant’s obligation to pay rent, and the landlord’s right to demand rent be paid or require the tenant to vacate. The months from March through August are designated as the “Protected Time Period” and the months from September through January 2021 as the “Transition Time Period.”

During the Protected Time Period, tenants may avoid paying any rent at all if, in response to a 15 Day Notice to Pay or Quit, which notice complies with the various requirements of AB 3088, the tenant returns a signed declaration to the landlord stating the tenant has been negatively impacted by the pandemic (the “Declaration of COVID-19-related financial distress”). If the tenant does return this declaration, the landlord may not pursue the rent through the unlawful detainer process. It is worth noting that there does not appear to be a provision allowing the landlord to challenge the tenant’s declaration. In other words, if the tenant is willing to state under penalty of perjury that the tenant has been impacted, that is a complete defense to an unlawful detainer for the unpaid rent. The rent then becomes what is now being called a consumer debt that can be pursued through methods other than the unlawful detainer, such as a small claims court case (and note that the $10,000 limit on small claims cases has been lifted for claims related to ‘Covid rent debt’, and there is no financial limit on such claims in small claims court).

During the period known as the Transition Time Period – September 1st through January 31st, 2021- the tenant is also entitled to receive a 15 day, rather than three day, notice to pay the rent or quit. Both the transition time and protected time period 15 day notices must conform to the requirements of AB 3088, in terms of language that must be included in the notices, and attachments that must be provided with the notice, primarily the “Declaration of COVID-19-related financial distress”.

However, the primary difference between the Protected Time Period and the Transition Time Period is that a tenant who returns the declaration for any month in the Transition Time Period is still obligated to pay at least 25% of the rent. However, the tenant is given until January 31st to make that payment. In other words, the landlord may serve a notice in September demanding the rent, in 15 days etc., and if the tenant returns the signed declaration, the tenant will have until January 31st to actually tender that 25% amount.

And note that if the landlord has evidence from the tenant’s application that the tenant is a “high-income tenant” (i.e., household income exceeds 130% of area median income as published by the Department of Housing and Community Development for the area in which the property is located), the landlord may send an additional notice requiring the tenant to provide further proof of income.

And, while it is not absolutely certain, it appears that AB 3088’s provisions on the tenant’s rights and duties as to rent payments during these defined periods may not be altered by local ordinances. “Notwithstanding any other law, a notice which …complies with the requirements of this chapter… need not include specific language required by any ordinance, resolution, regulation, or administrative action adopted by a city, county, or city and county.”

However, and for example, San Francisco seems to be advising residents otherwise. According to the information at sf.gov/sites/default/files/2020-09/Summary_v01_20200925_ENG%20a.pdf:

If you did not follow the AB-3088 procedures, you may find help in City Ordinance No. 93-20. The ordinance says that tenants cannot be evicted for nonpayment of rent due between March 16 – September 30, if the tenant was unable to pay due to COVID-19. If you are not entitled to protections under the CDC Order or AB-3088, you may still be able to rely on Ordinance No. 93-20. It is an additional defense to eviction for nonpayment and does not require the tenant affected by COVID-19 to provide notice and documentation to the landlord, or to pay 25% of the September rent by January 31, 2021, in order to prevent an eviction.

While it will almost certainly fall to an appellate level court to confirm that interpretation, I believe the quoted section of AB 3088 will prevail over challenges that local jurisdictions may impose other protections to tenants for nonpayment of rent cases.

 

Question 2: Should landlords serve the 15 Day Notice every month?  Would that be considered harassment?  Are there consequences for not serving it every month?  Your thoughts are much appreciated.
Answer 2: The owner may serve a 15 Day Notice for each month unpaid rent comes due after September 1 (a collective 15 Day Notice can be served for all prior months), or the owner can wait and serve a 15 Day Notice for multiple months, as long as each notice contains the appropriate info to the tenant and required attachments (Declaration of COVID-19-related financial distress, and Notice of COVID-19 Relief Act of 2020 if that has not already been done). It seems to be a personal choice, as someone observed that “If you can’t evict, what’s the point in serving over and over when you can do it all in the end?”  Some might consider it harassing to serve tenants every month if you have already received the declaration page from the tenant in response to the first 15 Day Notice.

One reason to serve the notice more often is if you think the tenant’s financial condition has or might improve.  And AB 3088 contemplates the tenant receiving successive notices, and the Notice required to be served during the Transition Time Period states:

If you provide the declaration form to your landlord as described above AND, on or before January 31, 2021, you pay an amount that equals at least 25 percent of each rental payment that came due or will come due during the period between September 1, 2020, and January 31, 2021, that you were unable to pay as a result of decreased income or increased expenses due to COVID-19, your landlord cannot evict you. Your landlord may require you to submit a new declaration form for each rental payment that you do not pay that comes due between September 1, 2020, and January 31, 2021.

For example, if you provided a declaration form to your landlord regarding your decreased income or increased expenses due to COVID-19 that prevented you from making your rental payment in September and October of 2020, your landlord could not evict you if, on or before January 31, 2021, you made a payment equal to 25 percent of September’s and October’s rental payment (i.e., half a month’s rent). If you were unable to pay any of the rental payments that came due between September 1, 2020, and January 31, 2021, and you provided your landlord with the declarations in response to each 15-day notice your landlord sent to you during that time period, your landlord could not evict you if, on or before January 31, 2021, you paid your landlord an amount equal to 25 percent of all the rental payments due from September through January (i.e., one and a quarter month’s rent).

But yes, a notice in early January for all the preceding months may make the most sense.

 

Question 3: I know this is for residential property, but I have one commercial unit. Do I need to supply my commercial tenant with the same documentation as I do my residential tenants if I want to be able to recoup missed payments due to COVID-19? Thank you so much for all your help!
Answer 3: The notice requirements, and rent payment protections etc., of AB 3088 do not apply to commercial tenants. However, since it does not address commercial tenancies, local jurisdictions are more likely to be able to institute relief measures for commercial tenants, so you need to review your local city and county rules as they might apply to commercial tenants.

 

Question 4: The tenant has moved out, but owes money from the protected period of March-August. Should the owner still serve the 15-day notice in compliance with AB 3088 if he wants the option to sue the tenant? The tenant can’t be evicted and the owner can’t properly serve with post and mail option? Please advise. Thank you!
Answer 4: There is probably no need to serve the Notice of COVID-19 Relief Act of 2020 if the tenant has moved out, but, as is sometimes the case, it probably can’t hurt. A review of AB 3088 as to that specific situation does not indicate failing to serve that Notice would prevent any small claims case for back rent before March 2021 if the tenant has already moved out. However, I suppose such an argument could be made, as the statute states a ‘landlord shall provide, in at least 12-point font, the Notice of COVID-19 Relief Act of 2020 to tenants who, as of September 1, 2020, have not paid one or more rental payments that came due during the protected time period…’

Thus, to be ‘safe,’ it is probably the wiser course to serve the notice even where the tenant has vacated.  And the landlord may serve the Notice by regular mail.

 

Question 5:    We were working with our tenant to get her to catch up on rent payment in March. Since the Covid situation, there has been $0 rents collected. We have made plans to sell in the future but the Covid situation accelerated these plans. When (now or some time frame) can we legally start the sales process and ask the tenant to vacate?
Answer 5: Generally speaking, all homes in California are covered either by local ‘rent and eviction control’ laws, or by the state eviction protection law passed last year (AB 1482). Single Family Dwellings (SFD) are exempt if the tenant has been provided the required notice and the house is not owned by an entity (corporation or LLC).

However, there may be additional restrictions in the local ordinances, which require ‘just cause’ to terminate a tenancy, including those in SFDs, and sale of the house is generally not such a ‘just cause’. Of course, you are always free to list and sell the house with the tenant in possession, but the consensus is that the sale value will likely be less.

There is the option of negotiating with the tenant for a ‘buyout,’ though you likely need a specific legal opinion on how best to proceed, and doing so in compliance with the various applicable laws. Violation of local or state eviction control laws can bring significant legal liability to the owner.

 

Question 6: I am in contract to buy an 8-unit apartment building in San Jose. Since the building is in Burbank, an unincorporated island within San Jose, it is not under the San Jose rent control. The rent for the units in this building is well below market rent. I’d like to increase the rent after we close on the deal. Is there any rent increase moratorium right now for Santa Clara County? Thank you in advance for your advice.
Answer 6: Research does not reveal a rent increase restriction for Santa Clara county that is pandemic related, though the overall States Of Emergency (SOE) issued by Governor Newsom related to the pandemic and various wildfires limit rent increases to no more than 10% generally (with some exceptions) and the state rent control law would do the same if no SOE were in place. If your purchase is contingent on your ability to impose increases beyond those limits, you should get a personal legal opinion before you close.

 

Question 7: We served a 3-day notice and filed an unlawful detainer in April for rent that included February and March 2020. Do we need to start all over again to exclude March or can we continue our application as it is?

Answer 7: Per the new state law (AB 3088), you almost certainly have to start over.

(New) Civil Code 1179.03 states: (2) Any case based solely on a notice that demands payment of COVID-19 rental debt may be dismissed if the notice does not meet the requirements of this section, regardless of when the notice was issued.

COVID-19 rental debt” means unpaid rent or any other unpaid financial obligation of a tenant under the tenancy that came due during the covered time period.

(a) “Covered time period” means the time period between March 1, 2020, and January 31, 2021.

So, yes, that unlawful detainer seeking March rent, if based on a notice that did not comply with AB 3088, will be dismissed.

 

Richard Beckman, of Beckman Feller & Chang P.C., has been practicing landlord-tenant law for over 26 years, primarily in rent-controlled jurisdictions such as San Francisco, Oakland and Berkeley. He represents clients in a broad range of real estate-related disputes, including partition of co-ownership interests, purchase contract disputes, insurance coverage analysis and land use. Mr. Beckman also specializes in all aspects of landlord-tenant issues, representing landlords and tenants in residential and commercial matters. He can be reached at 510-548-7474; email rbeckman@bfc-legal.com or by visiting the website www.bfc-legal.com.