What Now for Landlords, Tenants, and Eviction Protections?

Santa Barbara City Attorney Tries to Clarify Implications of New State Law for Nonpayment of Rent

City Attorney Ariel Calonne | Credit: Paul Wellman (file)

In a report released this Friday, Santa Barbara City Attorney Ariel Calonne made a yeoman’s effort to clarify the ever-shifting legal terrain on which Santa Barbara city landlords and tenants now find themselves with regard to evictions for nonpayment of rent because of COVID-inflicted economic hardships.

Can tenants be evicted? And if so, under what circumstances? If Calonne’s exertions failed to provide easily digestible answers, it’s probably because they are impossible to craft.

A few weeks ago, California Governor Gavin Newsom signed into law Assembly Bill 3088, known as the Tenant, Homeowner, and Small Landlord Relief and Stabilization Act of 2020. That new urgency measure will leave attorneys for both landlords and tenants squinting hard at the fine print and no doubt muttering imprecations against the state legislature for giving birth to what’s a highly imperfect stop-gap fix for what appears to be a perilously prolonged problem: how to keep millions of Californians from getting kicked out of their homes for failure to pay rent because of COVID.

The other big question is, How does the new state bill — sponsored by Assemblymember Monique Limón — mesh with the City of Santa Barbara’s Temporary Eviction Moratorium Ordinance, passed and extended this past year by the City Council? The easy answer to that one is simultaneously not at all and somewhat.

The city’s eviction ban expires on September 30. Although the new state bill technically went into effect August 31, its first real trigger point doesn’t kick in until September 30. That’s when landlords are required to notify their tenants of the provisions of the new law. But even so, some provisions of the city’s eviction protection — lapsed as it may be — will be carried forward under the state bill. That opens the door to considerable confusion.

Calonne’s report explains the implications of the new law in hopes of getting landlords and tenants to communicate with one another about their intentions and to do so soon. He acknowledged that the provisions of the new law — coupled with the obligations of the city’s expired ordinance — are confusing.

“I’m not looking for perfection,” Calonne said. “I’m looking for a good-faith effort on both sides to make this work.”

Let’s start simple.

Tenants who did not pay all or some of their rent between March and August 2020 could not be evicted for nonpayment of rent under the city’s moratorium; under the new state law, they still cannot be evicted for having failed to pay that rent.

But they will have to provide the landlord with a written declaration of financial hardship because of COVID. Tenants that already provided their landlords such notice are advised they need to do so again. Under provisions of the new state law, tenants making more than $100,000 a year are required to provide documentation of their hardship and its relations to COVID.

Now let’s get a bit more complicated.

The rules change significantly from September 2020 to January 31, 2021. During this period, tenants are required to pay at least 25 percent of their rent. But they can wait until January 31 to make that payment without fear of eviction.

For tenants who wait, they would be required to pay the total amount due — the equivalent of a month and a quarter’s worth of rent — on January 31. Failure to make that payment would open them up to eviction action. Under the new law, landlords must now give tenants 15 days’ notice — expanded from three days’ notice — to pay or get out.

One more wrinkle: Remember the unpaid rent from March to the end of August 2020? Under the city’s moratorium ordinance, tenants must begin paying that back — in 12 monthly installments — as of February 2, 2021. That new state law incorporates this requirement as well. Failure to do so by the tenants would also be grounds for eviction.

Assemblymember Limón and State Senator Hannah-Beth Jackson both had a major hand in drafting the new state law. Neither were happy with the compromise achieved. Both could charitably be said to have held their noses and pinched hard while voting for the end product. Both had sought some mortgage forbearance from the banks for smaller landlords, colloquially known as “mom-and-pops.” This would have shielded these landlords from the immediate threat of foreclosure if they came up short.

Calonne said he was impressed by how hard Jackson and Limón worked to find some mortgage relief for the smaller landlords. “They left no stone unturned; they were not at all insensitive to the needs of the landlords,” he said.

However, lending institutions bitterly fought this approach for a host of reasons, but their ace-in-the-hole was federal preemption. Translated, federal law preempts state governments from intruding or interfering in mortgage terms and conditions on federally insured mortgage loans. And nearly 80 percent of all mortgage loans issued in California are federally insured. To date, the federal government has not pursued any mortgage-relief legislation on behalf of small landlords.

The clock is clearly ticking. And quite loudly. The federal stimulus package that had provided $600 a week in supplemental unemployment insurance expired at the end of July. Efforts to negotiate a new stimulus deal between the Republican-controlled Senate, the Democrat-controlled House, and the Trump White House have gone nowhere fast with all sides, predictably, blaming the others for the failure. With November’s election right around the corner, none of the camps are eager to give their opponent what could be construed as a victory.

The Democrats originally wanted a $3 trillion package, to which the Republicans said no, insisting that $1 trillion was their upper limit. The Democrats then dropped their demand down to $2 trillion, to which the Republicans again said no and countered with an offer even lower than their first: $660 billion. Some of that would go to pay school vouchers, an issue that’s anathema to Democrats, and the proposal was dead on arrival.

In the meantime, a bipartisan group of 50 junior Congressmembers known as the Problem Solvers Caucus — 25 Democrats and 25 Republicans — has submitted a compromise stimulus plan of $1.5 trillion that would effectively cut the baby in half. Santa Barbara’s Congressmember Salud Carbajal is a member of that caucus. While the effort has been hailed by those desperately seeking evidence that compromise remains possible in Washington, D.C., it has found little favor with leadership of either party, who regard the proposal as an nuisance and an irritant.

In the last few days, President Donald Trump — largely absent from the negotiations — departed from the Republican bargaining posture and indicated he was willing to support a larger bottom line.

Without some steady infusion of cash, it’s only a matter of time before more and more tenants will fall further and further behind on their rents. Even if they manage to scrounge up enough money to avoid eviction, it’s questionable just how many will be able to make good on months of missed rent. Estimates vary on the number of renters in jeopardy, but it’s reckoned in the tens of millions.

Calonne noted that cities and counties are likewise adversely affected by the failure of the Democrats and Republicans to find common ground on a new stimulus bill. One of the big bones of contention has been the extent to which cities, counties, and states would get federal bailout funds. Republicans have opposed such relief; Democrats have insisted on it. Without federal relief, local governments will likely find themselves forced to make draconian cuts in the next budget cycle.

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