As the COVID-19 pandemic continues, the economic impact on individuals, small businesses and non-profit corporations has become more severe. On March 16, in an effort to support those affected financially, California Gov. Gavin Newsom issued Executive Order N-28-20, which lifted any state law restrictions that would impede city and county governments from enacting moratoriums on evictions of residential and commercial tenants.1In the weeks that followed, city and county governments across the state followed suit and adopted moratoriums on evictions. Tenants should refer to the eviction moratorium ordinance issued by their local government for the exact requirements and procedures applicable in their jurisdiction. Although not identical, the moratoriums enacted by the local governments follow the same basic structure and provide similar protections to tenants.

What are the basics of these eviction moratoriums?

Residential or Commercial Tenants

First, we generally have seen that the local eviction moratoriums apply to both residential and commercial tenants. However, be aware that some cities have, to date, only provided protections for residential tenants. More and more local governments are expanding their eviction moratoriums to cover commercial tenants that were not initially protected.

Types of Prohibited Evictions

These moratoriums are not blanket prohibitions on all evictions. They specifically disallow eviction for nonpayment of rent if the tenant demonstrates that the inability to pay is due to financial impacts related to COVID-19. In some jurisdictions, tenants can still be evicted if the nonpayment of rent was solely due to reasons unrelated to COVID-19. The moratoriums also do not apply to preexisting past due rent owed by tenants before the COVID-19 emergency.

Some jurisdictions have emphasized the importance of keeping people in their homes at this time and have broadened the protections for residential tenants. For example, the city of Los Angeles additionally prohibits "no-fault evictions," evictions based on the presence of unauthorized occupants, pets or nuisance related to COVID-19, and evictions for the purpose of removing residential units from the rental market under the Ellis Act.2 "No-fault eviction" refers to any eviction for which the eviction notice is not based on alleged fault by the tenant (i.e., evictions outside the resident's control).

Financial Impacts Related to COVID-19

Under the majority of these eviction moratoriums, residential and commercial tenants seeking relief must demonstrate financial impacts relating to COVID-19. Each city or county will determine what circumstances are included in the definition of such financial impacts.

For residential tenants, covered financial impacts typically include, but are not limited to, loss of income due to (1) lay-off, loss of hours or other income reduction resulting from business closure or other economic or employer impacts of COVID-19, (2) health care expenses related to being sick with COVID-19 or caring for a household or family member who is sick with COVID-19, (3) child care expenses arising from school closures related to COVID-19, and (4) compliance with a recommendation from a government health authority to stay home, self-quarantine or avoid congregating with others during the COVID-19 emergency.

For commercial tenants, covered financial impacts typically include, but are not limited to, loss of business income due to (1) reduction in or closure of hours of operation, increase in costs and labor, delays or interruptions or any other economic impacts of COVID-19 or government-ordered emergency measures, (2) health care expenses related to being sick with COVID-19 or caring for a household or family member who is sick with COVID-19, (3) child care expenses arising from school closures related to COVID-19, and (4) compliance with a recommendation from a government health authority to stay home, self-quarantine or avoid congregating with others during the COVID-19 emergency.

Actions Required of the Tenant

Some, but not all, jurisdictions require tenants to take additional actions to be afforded the protections of the applicable eviction moratorium. Typically, a tenant will need to provide to their landlord (1) written notification of tenant's COVID-19 related inability to pay rent, and (2) documentation that supports their claim. The deadline for providing notification to the landlord varies by jurisdiction. Some eviction moratoriums require this notification before rent is due, while others require this notification within seven days or within 30 days after rent is due. Examples of documentation that tenants can provide to support their claim includes, but is not limited to, termination notices, payroll checks, pay stubs, bank statements, medical bills and signed letters or statements from an employer or supervisor explaining the tenant's changed financial circumstances.

Tenant Duty to Pay Missed Rent

The eviction moratoriums protect tenants that are unable to pay rent during the COVID-19 emergency but do not relieve tenants of the need to pay the missed rental payments at a later time. Each moratorium typically gives tenants a period of time following the expiration of the emergency declaration to pay the past due rent owed to the landlord. Typically, the repayment period is three, four or six months from the expiration of the emergency declaration. Some jurisdictions have implemented longer repayment periods. Commercial tenants, if protected by the applicable moratorium, are often given a shorter period of time to pay the past due rent. For example, the city of Los Angeles provides residential tenants with a 12-month repayment period and commercial tenants with a three-month repayment period.3

Prohibition on Late Fees and Interest

The majority of the eviction moratoriums prohibit the landlord from charging or collecting a late fee or interest on the past due rent not paid by tenants pursuant to the moratorium protections. However, some eviction moratoriums do not explicitly prohibit such late fees or interest.

What should I do as a tenant?

Residential and commercial tenants should take the following steps to ensure protection under the various eviction moratoriums enacted by the local governments of California:

  1. Determine whether your jurisdiction has enacted a moratorium and whether that moratorium covers residential and/or commercial tenants. If your jurisdiction has not enacted an eviction moratorium, the state has adopted a backstop for residential tenants.4
  2. As soon as possible, notify your landlord in writing of your inability to pay rent due to financial impacts related to COVID-19, whether or not your jurisdiction requires such notification to the landlord. Many jurisdictions have provided a template letter for tenants to use to notify their landlord. Keep a copy of the written notification for your records.
    1. However, be mindful of the implications of this communication beyond the scope of the eviction moratorium. Some leases consider tenant's communication of an inability to pay rent to be a default. In these cases, while the landlord will be prohibited from evicting the tenant during the moratorium, it is possible that the tenant will be in default under the lease documents and will face potential consequences later in time. The eviction moratoriums are currently silent or unclear as to how to treat tenant defaults that result from tenants' COVID-19 claims.
  3. Collect any and all documentation that may serve as a record of your financial impacts related to COVID-19. Provide such documentation to the landlord if required by your jurisdiction's eviction moratorium. Keep copies of such documentation for your records.
  4. Understand that you will be responsible for the rent not paid on time. All rent not paid will be due by the end of the repayment period set by your jurisdiction. Maintain communication with your landlord and consider agreeing to a repayment schedule. Any repayment schedule agreed to by both parties or any abatement of rent offered by landlord should be documented as an amendment to your lease. Remember, in many jurisdictions, the landlord cannot charge late fees or interest on the past due rent.
  5. During the protected period of nonpayment of rent, ensure that your landlord is still fulfilling its obligations under the lease, such as maintaining the property, providing access to tenants and providing essential services, such as utilities and HVAC.
  6. If you own a small business, consider applying for a low-interest loan under the United States Small Business Administration's Economic Injury Disaster Loan Program or Paycheck Protection Program.5 6

What happens at the end of the repayment period?

If a tenant is unable to pay all past due rent before the end of the repayment period or pursuant to a repayment plan amendment to the lease as agreed by landlord, the landlord will likely initiate the eviction process. On April 6, the Judicial Council of California adopted emergency rules regarding evictions of both residential and commercial tenants that all California courts must follow.7 Effectively, these emergency rules suspend all eviction proceedings in California until 90 days after the expiration of the California state of emergency declaration. If a jurisdiction's repayment period expires before the end of this 90-day period, a landlord in that jurisdiction will still be prohibited from evicting tenants even if those tenants have not paid all past due rent. At the conclusion of this 90-day period, the landlord can initiate the eviction process.

Cities, counties and the state will likely extend and modify the eviction moratoriums and relevant court rules as the COVID-19 emergency continues. The government response to this crisis is fluid and will be fine-tuned as the public health and economic projections become more clear. These eviction moratoriums will provide temporary relief to residential and commercial tenants in California, yet tenants must do their best to prepare for the eventual financial obligation of paying the past due rent.

Footnotes

1 California Executive Order N-28-20.

2 Los Angeles Ordinance No. 186585.

3 Id.

4 California Executive Order N-37-20.

5 Coronavirus (COVID-19): Small Business Guidance & Loan Resources, U.S. SBA.

6 CARES Act Summary – Small Business, Akin Gump, dated March 26, 2020.

7 Judicial Council of California, Emergency Rules, April 6, 2020.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.