Updated: Jan 27
We don't usually do state stuff, but housing is VERY local. Short-term relief for renters and small landlords struggling to make payments due to the pandemic is on the way.
Late Monday night, the Governor signed compromise legislation on rent relief for people financially struggling due to the COVID-19 pandemic. Assembly Bill (AB) 3088. The Tenant, Homeowner, and Small Landlord Relief and Stabilization Act of 2020 passed the legislature before the September 1 deadline with a 2/3 vote margin. With the Governor's signature the law became effective immediately.
So how will this new bill protect you?
AB 3088 sets up a legal process for renters to be able to declare a financial hardship due to the pandemic and avoid eviction until February 1, 2021. Any missed rent payments between March 2020 and August 31, 2020 cannot be used as a basis to evict a tenant if they fill out paperwork claiming a COVID-19 financial hardship. After that period, a tenant is responsible for at least 25% of their rent between September 1, 2020 and January 31, 2021. If they can't cover that, they may be subject to eviction but only beginning February 1, 2021. For renters that get this protection, you'll still be on the hook for missed rent payments. Landlords will be able to sue in small claims court for missed payments starting March 2021, but won't be able to use that as a basis for eviction provided you meet the 25% threshold.
Despite these protections, renters can still be evicted for other violations of the lease, beyond missing rent payments so be careful of other requirements of your lease.
The bill also makes banks offer some foreclosure protection for small landlords that own residential properties with no more than four units. These protections include a requirement that banks offer landlords options to avoid foreclosure and if they deny an application for modification they must provide an explanation in writing.
The bill provides a lot less for homeowners struggling to pay their mortgage. Previous federal relief under the CARES Act provides easy access to forbearance for homeowners with federally-backed mortgages, but not those with privately-backed mortgages. This bill doesn't fix this difference, but for homeowners denied a forbearance the bill does require banks to provide a reason for the denial in writing. Thankfully, most mortgages in California are federally-backed (about 70-80%) so check-in with your mortgager to find out what relief is available.
AB 3088's author Assemblymember David Chiu has acknowledged that the bill is not a long-term solution, but it provides some certainty through the end of the year and gives the federal government more time to act on other relief options as well.