Question 1:   Any updates on the state rental assistance program that you described in last month’s article?
Answer 1: SB 91– christened the Tenant Relief Act – included, in addition to its provisions extending through June the eviction protections to tenants in rent default, a “State Rental Assistance Program”, which seeks to allocate federal pandemic relief funds to tenants who qualify, with the goal being to offer landlords of such tenants the opportunity to be paid 80% of the accrued unpaid rent during the covered period from April 1st, 2020 through March 31st 2021, on the condition that the landlord waives any remaining balance. 

As discussed in last month’s article, landlords who refuse to accept this opportunity, if it is made available, can face some consequences in any effort to collect such unpaid rent from the tenant, either through a collection action, or an unlawful detainer action. 

SB 91 also establishes required elements for the state rental assistance program. Though not comprehensive, the list below highlights some of the key program parameters: 

  • The rental assistance program will provide eligible landlords with immediate relief through the payment of 80% of their tenants’ rental arrears accumulated between April 1, 2020 and March 31, 2021. Landlords, in turn, agree to accept this payment as payment in full of any unpaid rent for that period. 
  • In cases where a landlord chooses not to participate, an eligible tenant may apply to the program for 25% of their rental arrears, which will be paid to the landlord. The program also allows for prospective payments of 25% of monthly rent for the months of April, May, and June. 
  • Establishes a requirement for funds to be administered in at least three rounds, prioritizing: (1) Below 50% AMI or unemployed for 90 days; 2) Below 80% AMI and in a community disproportionately impacted by Covid-19; 3) Below 80% AMI and not addressed by rounds one and two.

 

SB 91 provided the website http://housingiskey.com as the location for applications and administration of the rental assistance. However, that site remains a work in progress. It involves a complex web of interagency efforts between the state entity targeted with implementing the goals of SB 91, and multiple city and County agencies which have the option of receiving funds directly and administering those funds to tenants and landlords in their jurisdictions. While the state law indicated a March 15 operational goal, it remains to be seen whether that goal will be met. But anyone can check the website frequently to stay informed of its progress.

 

Question 2:  We had a tenant make some unauthorized repairs, because they said they didn’t want to bother us. They sent us an invoice for plumbing work for $750.00.  We are not able to verify the company that they used. They would like the amount deducted from their rent. Can we refuse?

Answer 2: Generally, the tenant is not permitted to unilaterally decide to undertake repairs and then charge the landlord for the expense. There is a provision under Civil Code Section 1942 in which, if the tenant provides the landlord with notice of a needed repair, and the landlord does not take reasonably prompt action, the tenant can have the repairs done and deduct the amount from the rent. Specifically,  Civil Code section 1942 provides that a tenant may only ‘repair and deduct’ where all the following requirements are met:

  1. The tenant has provided reasonable notice to the landlord or landlord’s agent of an intent to repair and deduct – a thirty-day notice is presumed to be reasonable;
  2. The amount of the repair is less than one month’s rent;
  3. The tenant has not done more than two deductions in twelve months;
  4. The repair issue renders the premises untenantable; and
  5. The tenant was not responsible for the condition.  

And, should the tenant meet the above requirements, you do want to confirm that the work was done, and that it was done according to code, and, if required, by a licensed plumber. If the answer to any of those questions is uncertain, then you need to work with the tenant to get the facts. If the tenant won’t cooperate, I suspect you would not be ordered by a Small Claims judge to reimburse the tenant.

 

Question 3:  I recently purchased a triplex in Santa Clara, CA. The building is in need of significant work. What is the procedure to vacate the units?
Answer 3:  Generally, you need to review any rental agreements with the tenants to see if they are for a term longer than month-to-month, which may affect your ability to relocate the tenants, either temporarily or permanently while you do renovations. Then, you would need to check the local city or county ordinances for any rent or eviction control restrictions, (i.e., ‘just cause’ grounds to terminate a tenancy.)  If there are none in that particular location, then you are probably covered by the state version, AB 1482, which limits your ability to move the tenants, unless you have a ‘just cause’ ground to do so. Substantial improvements are included as a ‘just cause.’ Then, you need to check to see if there are any temporary eviction restrictions based on the COVID-19 legislation that have passed at the state, county and city levels. After you do those reviews, you will be able to determine whether you can in fact require the tenants to move for your renovations, and whether you will be required to offer them the right to return once the work is completed. 

 

Question 4: Did a court recently rule the CDC eviction moratorium was unconstitutional?  

Answer 4:  Yes. In late February, US District Judge John Barker, who was appointed by then-President Donald Trump to the court in the Eastern District of Texas, stopped short of issuing a preliminary injunction, but said he expected the US Centers for Disease Control and Prevention to respect his ruling and withdraw the moratorium. “The federal government cannot say that it has ever before invoked its power over interstate commerce to impose a residential eviction moratorium. It did not do so during the deadly Spanish Flu pandemic. Nor did it invoke such a power during the exigencies of the Great Depression. The federal government has not claimed such a power at any point during our Nation’s history until last year,” Barker wrote. Although the Covid-19 pandemic persists, he said, “so does the Constitution.”

Initially, the CDC order was set to expire at the end of December, but it was extended through January by a provision in the second stimulus package. One of President Joe Biden’s first acts in office was to seek to extend the moratorium again, until the end of March. Under the order, rent is not canceled or forgiven and landlords can evict tenants after the moratorium ends if they are not able to pay the back rent. In some jurisdictions, existing tenant protections might be greater than what is offered in the CDC’s moratorium. Realistically, given the likelihood that California’s protections exceed (so preempt) that provided by the CDC order, the Order’s pending expiration, and now this recent court order invalidating the Order, it is of limited impact on California landlords and tenants. 

 

Question 5: We are considering removing one of our units in the City of Oakland from the rental market. There are two units on one plot of land but they do have separate addresses and they are detached single-family dwellings. Is this still allowed if we want to move one of our children in? Or, can we apply the Ellis Act to this specific unit?

Answer 5: You can ‘Ellis Act’ a single-family home, but if there is more than one unit on the same parcel, they all have to be removed at the same time. While such actions remain allowed by the current Alameda and Oakland eviction moratorium, ‘owner move in’ (or relative move ins) are currently prohibited by both Alameda County and the city of Oakland until the pandemic state of emergency is lifted. Waiting for those restrictions to end, which they will eventually, and then asserting the right to ‘owner occupy,’ by serving the tenants in one unit with a notice of termination of tenancy so your child can become the principal resident, would achieve your goal, without requiring the removal of the other home from the rental market. Of course, you should have your plan reviewed by qualified counsel, so you understand all of the issues associated with such an effort, and the cost in relocation benefits to the current tenants and, possibly, anticipated legal fees should the tenant contest your effort. 

 

Question 6: My father passed away recently and I have taken over managing his numerous properties. I have several tenancy issues for our property management.

1) Pets… Many current tenants have pets. We of course believe they continue to keep the pets they currently have. The question is, since we are what we consider to be the “new” management, we wish to discontinue allowing “new” tenants from having pets. We believe this is OK? No new (one year) rental agreements have been done since we took over the properties and therefore everyone is on a month to month. When we have everyone do new agreements, we will do month-to-month and wish to include a clause stating that no new pets/animals can be allowed after their current pets/animals pass away or given away/sold. Is this OK? Do we also need to give them a 30/60/90-day notice of change of agreement, even though there is no current agreement?

2) A similar issue also is with smoking. Can we with new agreements require all the current tenants that we want no smoking in our properties.

 

Answer 6: You are legally permitted to have ‘no pet’ and ‘no smoking’ clauses in rental agreements that you enter into with new tenants, whether those new rental agreements are for a term (e.g., one year) or month to month. Removing existing services from existing tenants is a much trickier question, and really requires an analysis of the specific situation, primarily whether the tenant is subject to local rent and eviction control laws, which often prohibit removing services from tenants even in exchange for a rent reduction. However, absent such local restrictions, a 30 day notice to change the terms of the tenancy to forbid smoking in the unit or common areas would likely be enforceable, as would a notice advising tenants that any existing pet will be permitted as before, but no new pets will be permitted. 

 

Question 7: My Modesto tenant’s lease is up August 1st. (His rent payment has been sporadic.) Can I give him notice and not renew lease to move my son’s family into house? Not sure how COVID rules apply to this situation now.
Answer 7: As long as your lease includes the required notice to the tenants that the single-family home is exempt from the statewide eviction and rent control law, sometimes known as AB 1482, you will not be subject to the ‘just cause’ requirements of that state law. However, even if you were, terminating a tenancy for the owner’s child would be a permitted ‘just cause’ under the state law, if your lease allows it. Per AB 1482 “For leases entered into on or after July 1, 2020, [relative move in rights] shall apply only if the tenant agrees, in writing, to the termination, or if a provision of the lease allows the owner to terminate the lease if the owner, or their spouse, domestic partner, children, grandchildren, parents, or grandparents, unilaterally decides to occupy the residential real property.

And the above also assume you are not covered by a stricter local city or county just case law, or a current eviction moratorium based on the COVID19 pandemic laws that have been passed by many city and counties. You would need to check that before you serve your 30 or 60-day notice of termination of tenancy. However, if there are no local restrictions, the state ‘COVID law’ (AB 3088 and its successor SB 91) allow the owner to take such actions.  However, your reference to the tenant’s rent payment raises a potential red flag, as SB 91 specifically prohibits terminating a tenancy “for the purpose of retaliating against the lessee because the lessee has a COVID-19 rental debt.” A violation of this provision subjects the owner to various claims by the tenant.

 

Question 8: Presently, all the lease agreements in this property are between the Property Management Company (Agent) and the tenant. The owners recently created an LLC for this property with the State of CA, pending recording with the County.  Beginning January 1, 2021, the tenants have been making payments to the LLC. Should the lease agreements now reflect the LLC and the tenants OR should this change take place after the LLC (new ownership on this property) has been filed with the County?
Answer 8: I don’t think the owner’s creation of an LLC would affect the relationship that was in place with the tenants and the property management company. The only thing that likely would need to change based on that development would be the agreement between the LLC (now the owner of the property), and the property management company, to reflect the ‘new’ ownership of the property being managed, and the ‘new’ client of the management company.

 

Question 9:  I have a tenant who asked for COVID relief forms under SB 91. January rent was late. He said that he needed to transfer money to his account and would pay January, then February on time. He did not pay February, but rather, asked for the forms. When I questioned his prior commitment, he said that his job was “potentially doing cuts” and his “expenses had gone up due to COVID-related family issues”. Are potential cuts to income and spending money elsewhere justification for not paying rent?

Answer 9: If the tenant returns the ‘COVID declaration’ under penalty of perjury, he is attesting to one or more of the following events, any of which permits the tenant to assert the rent forbearance provisions of SB 91:

I am currently unable to pay my rent or other financial obligations under the lease in full because of one or more of the following:

  1. Loss of income caused by the COVID-19 pandemic.
  2. Increased out-of-pocket expenses directly related to performing essential work during the 

    COVID-19 pandemic.

  1. Increased expenses directly related to health impacts of the COVID-19 pandemic.
  2. Childcare responsibilities or responsibilities to care for an elderly, disabled, or sick family 

    member directly related to the COVID-19 pandemic that limit my ability to earn income.

  1. Increased costs for childcare or attending to an elderly, disabled, or sick family member 

   directly related to the COVID-19 pandemic.

  1. Other circumstances related to the COVID-19 pandemic that have reduced my income or  

    increased my expenses.

So, as you can see, it is probably easy to pass the declaration test, and there’s really no mechanism for challenging the tenant’s basis for returning the declaration.

 

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 [email protected] or by visiting the website www.bfc-legal.com.