After weeks of negotiation to end 2020, Governor Gavin Newsom will sign Senate Bill (SB) 91 and extend California’s eviction moratorium through June 30th, 2021. The financial implications of this extension are more significant than any from the previous year.
Landlords can choose whether or not to participate in the rental relief program brought about by the bill. Complying owners will receive 80% of any rent owed from April 1, 2020 to March 31, 2021 by COVID-impacted tenants. In exchange, owners must forgive the remaining 20% entirely. It’s the most support landlord’s have received since the pandemic started, but still may not be enough for mom-and-pop owners to cover expenses after not receiving rent for nearly a year.
If landlords choose to opt-out, it creates much more uncertainty. Low-income tenants can still apply to receive 25% of their rent owed from the state to meet the threshold set by AB 3088. Said tenants cannot make more than 130% of their county’s median income OR $100,000, depending on the county. This number rises with larger households.
An opt-out opens the door to collect unpaid rent recoverable as consumer debt in small claims court once SB 91 is lifted. Whether it’s more or less than 80% of what is owed is unknown. It could provide the opportunity for owners to go after more of what they deserve, but also induces more waiting and relies on the unpredictability of a judge’s ruling.
Other provisions of the law include:
- Owners cannot use a tenant’s security deposit to cover their rental debt
- Late fees cannot be enforced to a tenant who has submitted a declaration of financial distress
- Landlords cannot discriminate in renting to a tenant with prior COVID-19 rental debt
- Landlords must send a notice about changes in the law to any tenant who owes COVID rent by February 28th
- Landlords must show proof of a “good-faith” effort to secure rental assistance for their burdened tenants before attempting to collect any coronavirus-rent owed
California legislature will use the $2.6 billion dollars in federal stimulus from the last COVID rent relief package to accommodate pandemic-burdened owners throughout the state. $1.5 billion will go to the state directly, while the remaining $1.1 billion will go to counties and cities with at least 200,000 residents. Counties will distribute said funds at their own discretion, similar to the CARES Act. It remains to be seen whether this total is enough, and what percentage of landlords will accept the aid. The State Rental Assistance Program will start accepting applications in mid-March.
Check out this FOX KTVU 2 news article for statements from California senators and other housing officials regarding SB 91 and the continuation of the eviction moratorium.