California is continuing to explore legislation which would significantly alter the residential landlord tenant relationship as a result of the COVID-19 pandemic. Currently, AB-1436 is working its way through the California legislature. AB-1436, if passed in its present state, would impose significant restrictions on landlords in evicting their tenants and provide unprecedented protections for tenants. AB-1436 seeks to address defaults in residential lease agreements which occurred during any declared state of emergency, and for a period of 90 days thereafter, related to the COVID-19 pandemic (“State of Emergency”). Specifically, AB-1436 seeks to add Cal. Civ. Code § 1947.01-1947.03 and Cal. Code Civ. Proc. § 1161.6 to existing law.
The proposed additions to California law would:
- Prevent a landlord from applying a security deposit and/or monthly rental payment to an obligation which became due during the State of Emergency unless the payment or security deposit is designated by the tenant, in writing, to be in satisfaction of such an obligation. This protection cannot be waived by the tenant. This means that, absent a conforming written agreement, should a tenant, who had not been previously paying rent, pays rent, that payment must be applied to the rent then currently due and not for past due rent not paid as a result of COVID-19.
- Declare that if a tenant failed to pay rent during the State of Emergency, that tenant shall not be considered to be in default, and no action to recover the unpaid rent may be pursued until 15 months after the state of emergency has been lifted. This effectively provides tenants with at least 15 months to repay the rent not paid during the State of Emergency. A landlord and tenant may agree, per a written agreement, for these unpaid amounts to be paid so long as the amount to be paid does not exceed the actual amount of the debt, does not include attorneys’ fees, costs, late fees, penalties, or interest. That written agreement must not be conditioned on the tenant vacating the premises, it must advise the tenant of the rights created under this new law should it be implemented, and where applicable, a translation of the written agreement must be provided.
- Require that any debt owing by the tenant as a result of a default during the State of Emergency must be offset by any amount of payments, mortgage forbearance, mortgage forgiveness, or property tax reduction obtained from any governmental agency by the landlord designed to offset, replace, or compensate the landlord for any loss of rental income or which was provided as financial assistance so as to avoid foreclosure on the property.
- Prevent landlords from being able to charge late fees for rent not paid during the State of Emergency.
- Prohibit landlords from harassing, threatening, or intimidating tenants in order to obtain payment or an agreement to pay any portion of unpaid rent or to vacate the property because of a tenant’s failure to pay rent.
- Prohibit any entity which evaluates potential tenants for housing from considering a default in rent which accrued during the State of Emergency as a negative factor in evaluating that potential tenant.
- Declare that any tenant who defaulted in payment of rent during the State of Emergency is not unlawfully possessing that real property. This would effectively bar eviction actions for nonpayment of rent which occurred during the State of Emergency.
- Bar landlords from terminating tenancies in retaliation for a default in rent which occurred during the State of Emergency.
- Reduce any monetary judgment obtained against a tenant by a landlord for nonpayment of rent arising from a default during the State of Emergency by any amount the landlord received from any governmental entity which amounted to financial relief related to the property.
- Prohibit landlords, despite what the lease says, from recovering fees assessed against a tenant for late payment of rent which was due, but not timely paid, during the State of Emergency in any subsequent judgment.
The California legislature is set to revisit AB-1436 in July of 2020. However, if this proposed bill ultimately becomes California law, it will have a significant impact on landlord-tenant litigation, at least in the short term. This is of course aside from any moratorium which currently exists, may be extended, or may be implemented by the state, county, or local governments related to eviction actions.