As previously reported on the Unfamiliar Terrain blog, San Francisco Mayor London Breed declared a moratorium on evictions of small and medium-sized businesses (those having worldwide receipts of $25 million or less) impacted by COVID-19 for non-payment of rent. By supplemental declaration on April 1, Mayor Breed ordered that the moratorium also applies to non-replenishment of security deposits. The April 1 supplemental declaration is the eighth of ten supplemental declarations (as of April 21, 2020) to the Mayor’s Proclamation of Local Emergency.

Although this supplement to the Mayor’s Proclamation discourages landlords from deducting delinquent rent from existing security deposits during the moratorium, landlords are not prohibited from doing so. Landlords may not, however, require small and medium-sized business tenants to increase their security deposits during the moratorium or evict such tenants based on failure to replenish security deposits, if such failure is caused by the financial impacts of COVID-19. Instead, landlords and tenants must follow the same notice and cure process for replenishment of security deposits as required for non-payment of rent pursuant to the original order for a commercial eviction moratorium. Landlords are barred from evicting such tenants due to failure to replenish security deposits until 6 months after the moratorium expires (currently scheduled to expire on May 17).

The Coblentz Real Estate team and authors of our real estate and land use blog, Unfamiliar Terrain, will continue to monitor these developments. Visit our COVID-19 Business Resource Center for additional information, or contact Real Estate attorneys Barbara Milanovich at bmilanovich@coblentzlaw.com or Caitlin Connell at cconnell@coblentzlaw.com.

We last reported on the Unfamiliar Terrain blog that California Governor Gavin Newsom banned the enforcement of residential evictions against qualified California tenants who fail to pay rent. Less than two weeks later, on April 6, the California Judicial Council substantially expanded statewide tenant protections and eliminated the qualifications for protection. With the Council’s action, residential and commercial tenant eviction lawsuits cannot be initiated during the state of emergency and for 90 days after, regardless of the cause and regardless of the financial condition of the tenant. Eviction actions already in process will be postponed by at least 60 days. The only exceptions are evictions that are necessary for the public health or safety.

Governor Newsom’s March 27 Executive Order N-38-20 granted authority to the Council and its Chairperson to issue emergency orders or statewide rules to maintain the safe and orderly operation of the courts in response to the COVID-19 pandemic. The Council’s sweeping action relies on the March 27 Executive Order, amending the California Rules of Court to address overwhelmed caseloads and calendars during the COVID-19 pandemic. The Council’s amended rules relating to eviction lawsuits and foreclosure actions are summarized below.

Residential and Commercial Eviction Lawsuits Postponed

For the period of the state of emergency and for 90 days thereafter:

1. State courts are prohibited from issuing an unlawful detainer summons, which is the document required to initiate an eviction lawsuit, unless the court finds the action necessary to protect the health and safety of the public. This rule temporarily prevents any new eviction actions, other than for the public health and safety exception.
2. State courts may not enter a default or default judgment against a defendant for failure to appear, unless the court finds action necessary to protect public health and safety and the defendant has not appeared in the action within the time provided by law.
3. If a defendant has appeared in an eviction action, trial dates must be set at least 60 days after a request for trial is made (instead of the statutory 20 days), unless the court finds that an earlier trial date is necessary to protect the health and safety of the public.
4. Any eviction trial date already set as of April 6, 2020 must be continued at least 60 days from the initial trial date.

As it is very unlikely that the state of emergency will be lifted before April 30, no new eviction lawsuits may be initiated statewide through, at a minimum, July (other than for the public health and safety exception). The rules do not provide guidance on what might qualify under the public health and safety exception.

The Council’s rules result in broader limitations on eviction actions than earlier State orders and most local ordinances. Where a local ordinance provides greater or additional protections to tenants, those protections will continue to be available.

Judicial Foreclosure Actions Stayed

The Council’s emergency rules also provide that all actions for judicial foreclosure are stayed during the state of emergency and for 90 days after, unless the court finds that action is required to further the public health and safety. The statute of limitations for filing foreclosure actions is tolled for the same period of time.

The Coblentz Real Estate team and authors of our real estate and land use blog, Unfamiliar Terrain, will continue to monitor these developments. Visit our COVID-19 Business Resource Center for additional information, or contact Real Estate attorneys Tay Via at tvia@coblentzlaw.com or Caitlin Connell at cconnell@coblentzlaw.com.

As we previously reported, in the past two weeks, the federal government, the state of California, and many local governments have taken action to provide tenant and homeowner protections in response to the COVID-19 pandemic.

Federal Homeowner Protections

On March 18, President Trump announced a suspension of foreclosures and evictions by the Department of Housing and Urban Development through April 30. The moratorium will apply only to homeowners with mortgages insured by the Federal Housing Administration.  Also on March 18, the Federal Housing Finance Agency directed Fannie Mae and Freddie Mac to suspend foreclosures and evictions for at least 60 days.

California Homeowner Protections

At the state level, on March 25, California Governor Gavin Newsom announced that Wells Fargo, US Bank, Citigroup, JP Morgan Chase, and almost 200 state-chartered banks and credit unions will provide mortgage relief to California property owners.  Newsom announced during a news conference that they “have all agreed to 90 day waiver of payments for those that have been impacted by COVID-19.” The waivers will apply to single-family homes and properties with 1-4 units. Californians struggling with the COVID-19 crisis may be eligible for relief upon contacting their financial institution.

California State and Local Tenant Protections

On March 27, Governor Newsom issued Executive Order N-37-20 banning the enforcement of evictions statewide against qualified California residential tenants who fail to pay rent between the date of the Order and May 31, 2020. To qualify, residential tenants must give notice to the landlord of inability to pay all or part of their rent as a result of COVID-19 within seven days after the rent is due. The tenant would then have 60 days (instead of the statutory 5 days) to respond to an eviction lawsuit, and law enforcement would be prohibited from enforcing an eviction against such tenant while the Order is in effect. Tenants would remain obligated to repay full rent in a timely manner after the moratorium is lifted.

The March 27 Order builds on Governor Newsom’s prior Executive Order N-28-20, which authorizes local governments to pass their own stricter bans on residential or commercial evictions. The prior Order also makes it unlawful through May 31 to evict a residential tenant and subsequently rent or offer to rent to another person at a rental price greater than the evicted tenant could be charged.

Under the authority granted by Executive Order N-28-20, a number of local governments have passed broader eviction moratoriums, including moratoriums that aim to protect commercial tenants. The statewide eviction moratorium does not override stricter measures that local governments have already enacted or may enact going forward.

Locally, San Francisco Mayor London Breed issued a 30-day moratorium on residential and commercial evictions related to financial impacts caused by the COVID-19 pandemic that is more expansive than the statewide moratorium. Residential tenants will have up to six months after the end of the emergency declaration period to pay the total of their missed rent. The moratorium on commercial tenants is limited to small and medium-sized businesses (those with worldwide gross receipts in 2019 of $25 million or less). Landlords must provide such business tenants at least one month to cure a failure to pay rent. If the business tenant provides documentation of a financial difficulty related to COVID-19, the cure period is automatically extended for successive periods of one month, up to a total of six months. During the applicable cure period, landlords must negotiate a payment plan in good faith. Landlords may proceed with eviction after a tenant fails to pay all outstanding rent within the applicable cure period.

Legislation passed by other Cities and Counties in California is summarized in the chart to the left. The chart is a summary only, and legislation must be consulted for details. It is illustrative as the situation is fluid and other jurisdictions may have enacted, considered, or are in the process of considering legislation. In some cases the local restrictions are more stringent that the Governor’s Order, and in those cases the more restrictive local provisions apply. A common thread through the various jurisdictions is that tenants are not relieved of their duty to (eventually) pay rent. Click on the image to the left to view the full chart.

The situation and responses continue to evolve quickly, and other local jurisdictions are considering similar controls. The Governor’s Office may also provide further guidance on these issues. The Coblentz Real Estate team and authors of Unfamiliar Terrain will continue to monitor these developments.

 

In recent days, the federal government, the state of California, and many local governments have taken action to provide tenant and homeowner protections in response to the COVID-19 pandemic.

On March 18, President Trump announced a suspension of foreclosures and evictions by the Department of Housing and Urban Development through April 30. The moratorium will apply only to homeowners with mortgages insured by the Federal Housing Administration.

Also on March 18, the Federal Housing Finance Agency directed Fannie Mae and Freddie Mac to suspend foreclosures and evictions for at least 60 days.

At the state level, on March 16, 2020, California Governor Gavin Newsom issued Executive Order N-28-20 prohibiting rent hike evictions, authorizing local governments to implement further protections against evictions, delaying foreclosures by mortgage lenders, and monitoring customer service protections delivered by utility providers. Unless extended, the protections under the order are in effect until May 31, 2020 and are intended to address the challenges for many Californians to pay rent, mortgages, and utility bills as a result of the COVID-19 pandemic. A summary of protections included in the order is as follows:

• It is unlawful to evict any residential tenant through May 31, 2020 (as may be extended) and subsequently rent or offer to rent to another person at a rental price greater than the evicted tenant could be charged. Landlords may continue an eviction process that was lawfully initiated prior to March 4, 2020.
• Local governments may impose substantive limitations on residential or commercial evictions through May 31, 2020 (as may be extended) where the basis of the eviction is nonpayment of rent or a foreclosure, and the tenant or homeowner can demonstrate economic hardship caused by the COVID-19 pandemic.
• Public housing authorities are requested to extend deadlines for housing assistance recipients and applicants to deliver documents.
• Home and commercial mortgage lenders are requested to immediately place a moratorium on foreclosures and evictions that arise out of economic hardship caused by the COVID-19 pandemic.
• The California Public Utilities Commission (CPUC) is requested to monitor and report the customer service protections provided by utility providers for electric, gas, water, internet, landline telephone, cell phone service, and other critical utilities, in response to COVID-19.

The order contemplates that a quarantine or similar public health measure could also prohibit an eviction if it compels an individual to remain physically present in a particular residential property.

The order does not relieve a tenant from its obligation to pay rent, nor does it restrict a landlord’s ability to recover rent.

On March 17, 2020, the CPUC confirmed that, retroactive to March 4, 2020, utility companies under CPUC’s jurisdiction (including PG&E, AT&T and Comcast) will not be allowed to suspend service for customers who cannot pay their bills during the COVID-19 state of emergency.

Cities in California that have moved to impose temporary moratoriums on evictions include San Francisco, Oakland, San Jose, Los Angeles, Santa Monica, San Diego, Santa Barbara, South Pasadena, and Suisun.

• On March 13, San Francisco Mayor London Breed issued a 30-day moratorium on residential evictions related to financial impacts caused by the COVID-19 pandemic. Tenants will have up to six months after the end of the emergency declaration period to pay the total of their missed rent. Guidance for tenants and landlords, including tenant obligations to provide notice of inability to pay rent, can be viewed here.
• On March 14, Santa Monica issued a temporary moratorium on evictions for non-payment of rent by residential tenants financially impacted by COVID-19 during the period of local emergency. A landlord also cannot pursue a no-fault eviction during the period of local emergency unless necessary for the health and safety of tenants, neighbors, or the landlord. On March 18, Santa Monica added a moratorium on commercial tenant evictions through April 30, 2020.
• On March 15, Los Angeles Mayor Eric Garcetti issued a moratorium on residential evictions through March 31, 2020 where the tenant can demonstrate economic hardship caused by the COVID-19 pandemic. Tenants will have up to six months following the expiration of the local emergency period to repay any back due rent. The Mayor is considering a halt to commercial evictions as well.
• A proposed ordinance for a residential eviction moratorium in Oakland will be considered at the Oakland City Council’s next meeting on April 7.
• San Jose City Council is moving forward with a temporary ban on COVID-19-related residential evictions, which is expected to receive final approval in the next week. Council members will consider adding small businesses under commercial leases to the moratorium.
• San Diego city leaders voted on March 17 to draft an emergency ordinance aimed at preventing residential rental evictions triggered by the COVID-19 pandemic.
• Santa Barbara City Council will vote on a draft ordinance pausing evictions on March 24, 2020. It is undetermined whether the pause will extend to both residential and commercial evictions, or one or the other.
• On March 18, South Pasadena considered a resolution that would establish special protections for residential and commercial tenants and property owners.
• Suisun City Council is poised to pass a resolution that would prohibit any new residential or commercial evictions due to financial impacts caused by the COVID-19 pandemic.

The situation and responses are evolving quickly, and other local jurisdictions are considering similar controls. The Governor’s Office may also provide additional guidance on this issue. We will continue to monitor these developments.

 

SB 50, Senator Scott Wiener’s bill to boost housing production near transit and job centers, has been defeated. The bill fell three votes short on Wednesday, and Wiener was unsuccessful in his reconsideration request today.

The bill was stalled in the Senate last May when the Chair of the Appropriations Committee deferred action on the bill until 2020. On January 24, Senate President Pro Tempore Toni Atkins moved it to the Rules Committee, which she chairs, and Senator Wiener introduced amendments designed to address certain concerns regarding local control and potential impacts on low-income residents. The amendments included a “local flexibility plan” that would allow local agencies to create alternative housing plans that are designed to produce the same number of units as SB 50 compliance would. The amendments also added a neighborhood preference for 40% of new low, very low and extremely low income units developed under SB 50.

Both Governor Newsom and Senator Atkins have indicated that regardless of the fate of SB 50, some form of legislation to increase housing production will be passed this year.

The Housing Crisis Act of 2019 (Senate Bill No. 330; Senator Skinner) goes into effect on January 1, 2020 and expires on January 1, 2025. It aims to address the statewide housing crisis by limiting the number of public hearings for new housing developments and reducing the timeline for permit review, placing limits on permit processing, limiting fees and exactions, and making it more difficult for local jurisdictions to deny or modify housing projects. To summarize, the Act:

1. Provides more certainty for housing developers by prohibiting local agencies from:

• Requiring compliance with an ordinance, policy or standard adopted after a “preliminary application” is submitted, except under limited circumstances, such as where compliance is necessary to avoid or substantially lessen an otherwise significant impact under the California Environmental Quality Act (CEQA).
• Imposing or enforcing design standards established on or after January 1, 2020, unless they qualify as objective (as defined in the Act).
• Imposing new or increased development impact fees, unless an automatic annual adjustment based on an independently published cost index referenced in the legislation establishing the fee.

2. Prohibits caps, moratoriums and density reductions by disallowing agencies from:

• Reducing permitted housing density to below that allowed on January 1, 2018.
• Imposing moratoriums (or similar restrictions) on new housing development unless the Department of Housing and Community Development agrees that it is necessary to protect against an imminent public health and safety threat.
• Limiting the total number of housing units in a local jurisdiction, unless approved by the voters prior to 2005 for a “predominantly agricultural county.”

3. Shortens the approval process

• No more than five public hearings may be held on a housing project (if it complies with applicable objective general plan and zoning standards) and the overall timeframe for review and approval (or disapproval) under the Permit Streamlining Act is reduced.

The Act adds and amends various California Government Code sections, including the Permit Streamlining Act (Cal. Gov’t Code Section 65920 et. seq.) and the Housing Accountability Act (Cal. Gov’t Code Section 65589.5 et. seq.). It applies to “housing developments,” which include mixed-use projects with two-thirds or more of the square footage dedicated to residential use. Protection is limited under the Act. The vesting protections lapse if construction is not commenced within two and a half years from the date of final project approval (which period would be stayed during litigation) and/or the residential square footage or number of units is increased by 20 percent or more after the preliminary application is submitted, exclusive of any increase resulting from a density bonus. See the full text of the Act for additional provisions not summarized here (e.g., relocation assistance requirements).