As you should be aware by now, Sacramento politicians have crafted a new law in an attempt to balance the needs of cash-strapped tenants and landlords. We have several reservations with the public policy, but it is the reality we have to deal with.

At this risk of oversimplifying SB 91, landlords can recoup up to 80% of COVID-related rent debt accrued by qualifying tenants if the remaining 20% of back rent is forgiven.

The prospect of recovering many months of rent debt through the statewide assistance program may be more preferable to getting mired into an overburdened and delayed court system. There are some things we know, and certain things we do not know about how funds will be doled out and how this whole process will unfold. The Department of Housing and Community Development will be responsible for dispersing the assistance. Eligibility will be determined on the median income for the region where the tenant resides, and you can find these numbers at https://www.hcd.ca.gov/grants-funding/income-limits/state-and-federal-income-limits/docs/income-limits-2020.pdf. While we do not have an exact protocol to apply for assistance, we fully expect forms and additional guidance to be forthcoming by March.

Can landlords Apply for Tenants?

It is true that landlords can apply for assistance on behalf of tenants in arrears, but tenants have to be on the same page.

In order to capitalize on rental assistance funds, certain information must be submitted. And it cannot be gleaned without the cooperation of tenants. To the extent that the application requires income and household information, participation in the program is a two-way street.

We see no clear path to tapping into the pool of funds without communication and free-flowing exchange of information. It is important for landlords to know that now is the time to engage tenants in a fluid dialog and communicate a win-win situation where both parties come out ahead. Landlord gets back rent and a portion of the tenant’s rent is forgiven. Ideal situation, right?

All Tenants Will Not Comply

We are not so naive to believe that all tenants will be on board. 

We believe that there will, unfortunately, be a throng of tenants who do not comply with the provisions of SB 91 for a variety of reasons, if only to deprive the landlord of cash when grievances between the renter and landlord have been festering for a while. If this bitterness stems from allegations of substandard conditions, the landlord may not be entitled to recoup any money at all. Aided by no shortage of free legal representation, tenants can argue that no money is owed because the landlord failed to provide a habitable dwelling.

We also expect some undocumented tenants to be reluctant to sign any paperwork. In pre-COVID times, it was illegal for landlords to use the immigration status of tenants as leverage and SB 91 puts an exclamation point on this. The law is blind to immigration status and SB 91 expresses new ire on landlords who use this to intimidate renters.

Still other tenants will avoid any contact with the landlord because they have something to hide in the rental unit and will go through elaborate means to disguise it.

Perhaps some tenants have moved out of state and cannot be reached, and this presents an altogether different set of challenges to determine if the rental unit has been abandoned and if so, there are protocols to follow.  (See https://bornstein.law/handling-runaway-tenants-who-flee-because-of-covid/)

If Tenants Don’t Respond

Some clients, frankly, cannot have a productive conversation with renters. It’s a toxic relationship. If tenants do not respond to landlord entreaties or are defiant, Bornstein Law can be interjected into the relationship. We prefer to stay out of the picture, but if there are tenants who are problematic, we can make a friendly reminder of rent due and inform tenants of the new law.

Sometimes, the correspondence of an attorney will incite tenants to act when the landlord or property manager cannot get through to them. When all else fails, we can send notices or otherwise escalate the action, but our strong preference is to untangle the knot.

 

As the founding attorney of Bornstein Law, Daniel is a well-respected authority in landlord-tenant disputes and property management issues. With over 23 years of experience in handling real estate and civil litigation throughout the Bay Area, he also manages rental properties, is instrumental in completing real estate transactions and is renowned for his educational seminars.  For more information, visit www.bornsteinlaw.com, call 415-409-7611 or Email: [email protected].