Analysis of AB3088, the New Temporary State-Wide COVID-19 Eviction Law

By Michael Simkin, Esq.

The Covid-19 pandemic continues, and the government has implemented new stopgap laws affecting payment of rent. The current primary laws affecting residential tenancies are the CDC Agency Order Published September 4, 2020 and California’s AB3088 enacted August 31, 2020 aka The California Tenant, Homeowner, and Small Landlord Relief and Stabilization Act.  Commercial evictions for non-payment of rent may still be limited through Governor Newsom’s September 23, 2020 Executive Order extending the timeframe for the Covid-19 protections through March 31, 2021. The Governor’s Order can be used by local governments to forestall non-payment of rent evictions for commercial tenants suffering adverse financial impacts due to Covid-19.  Further, the new statutes limit local government’s ability to create additional relief for residential tenancies.  AB3088 also requires residential rent repayment to begin by March 1, 2021.

Similar changes to prevent eviction due to the adverse financial impact of Covid-19, were implemented protecting mobile-home tenants through Civil Code § 798.56, and Civil Code § 2924.15 was amended to help homeowners with their first mortgage on properties of 4 or less units so long as the mortgage was current on February 1, 2020.  AB3088 is intended to pre-empt local Covid-19 residential rent moratoria ordinances.  Code of Civil Procedure § 1179.05 limits local government restrictions if they conflict with the new state law unless those ordinances were enacted before August 19, 2020 or attempt to extend the repayment period for any deferred rent.

Commercial Evictions for non-payment of rent due to Covid-19 may still be limited through Governor Newsom’s Executive Orders. AB3088 is exclusively for housing or residential tenants, not commercial tenancies.   Local governments obtain their authority implementing Covid-19 related commercial eviction protections through Governor Newsom’s March 4, 2020 Covid-19 emergency Order, extended September 23, 2020 as Executive Order N-80-20.

Consequently, local orders such as the City of Los Angeles’ May 6, 2020 eviction moratorium still applies to most commercial tenants unable to pay rent due to the Covid-19 pandemic. Similar protections exist in several counties, such as Alameda, Oakland, San Francisco, Santa Clara, San Diego. These counties will likely continue to extend their protections as to commercial evictions.    

Federal Law: September 4, 2020 the CDC Issued: Temporary Halt in Residential Evictions for non-payment of rent to Prevent the Further Spread of COVID-19

• CDC Agency Order Published in the Federal Register / Vol. 85, No. 173 / September 4, 2020 effectively stops all residential evictions through December 31, 2020 if the requisite declaration is provided to the landlord. The CDC Order does not require the reason for the eviction be loss of income due to Covid-19.  The tenant only needs to state that if evicted, the tenant will likely become homeless, or move into a homeless shelter, or will need to move into a new residence shared by other people who live in close quarters because of no other available housing options. The CDC Order allows evictions for non-rent reasons.  The Order specifically states that “Nothing in this Order precludes evictions based on a tenant, lessee, or resident: (1) Engaging in criminal activity while on the premises; (2) threatening the health or safety of other residents;  (3) damaging or posing an immediate and significant risk of damage to property; (4) violating any applicable building code, health ordinance, or similar regulation relating to health and safety; or (5) violating any other contractual obligation, other than the timely payment of rent or similar housing-related payment (including non-payment or late payment of fees, penalties, or interest).” 
• The CDC Agency Order Trumps state and local unless another federal blocks its enforcement or local laws provide greater tenant protection. A residential tenant only needs to provide a declaration to the landlord complying with the CDC Order. Other than the declaration, backup documentation is not required under the Agency Order.   
• However, as to non-payment of rent defaults, tenants must provide declarations stating under penalty of perjury they used best efforts to obtain government assistance for rent, expect to earn no more than $99,000 in 2020 (or no more than $198,000 if filing a joint tax return), or was not required to report any income in 2019 to the IRS, or received an Economic Impact Payment and had a substantial loss of household income. This Agency Order may not apply to illegal immigrants or others without Social Security numbers, high earners who might have lost their job, and seniors who live with their children and are claimed as dependents, among others.  Click here to see the CDC provided sample declaration.

California Tenant, Small Landlord and Homeowner Protections: (AB3088 protections September 2020 to February 1, 2021) 

AB3088 was enacted and quickly passed because residential evictions were set to begin September 2, 2020.  On June 30, 2020 Governor Newsom extended Executive Order N-28-20 extending prior protections including evictions for non-payment of rent through September 30, 2020 by signing Executive Order N-71-20. However, on August 13, 2020, the judicial branch, acting through the  Judicial Council, voted to end its statewide moratorium on eviction filings effective September 1, 2020. If the Judicial Council’s emergency rule prohibiting the filing of evictions for non-payment of rent were to sunset before a legislative solution, then eviction proceedings would be allowed to commence September 2, 2020, except in cities and counties that enacted their own moratoriums.  The result was AB3088 signed by the governor August 31, 2020 providing a state-wide solution through AB3088.  Click here for a fact sheet summarizing The California Tenant, Homeowner, and Small Landlord Relief and Stabilization Act.  AB3088 sunsets February 1, 2025 (Code of Civil Procedure § 1179.07)

Non-payment of Rent Evictions may begin after October 5, 2020, as allowed by Code of Civil Procedure § 1179.01, et seq.  (Landlord’s Must Serve Notice of the New Law, Tenant pays 25% of Rent paid through January 31, 2021, Tenant provides proper Declarations as to an inability to pay rent due to Covid-19, and the 25% rent payment rule is not automatic.)

• While the Judicial Council allowed evictions to be filed after September 1, 2020, Code of Civil Procedure § 1179.01.5 prevents the filing of evictions for non-payment of rent or other monetary sums until after October 5, 2020. This includes cases for non-payment of pre-March 1, 2020 rent. After October 5, 2020, Code of Civil Procedure §1179.03.5 controls allowing new residential unlawful detainer actions to be filed for pre-March 1, 2020 breaches.
• New Judicial Council forms and modified notices to pay rent or quit, pro-forma declaration with instructions must be provided to comply with these new laws.  E.g. forms complying with the 15 days’ notice period, high income tenant language, Covid-19 income declaration, etc. must be served. Marin County publishes a chart summarizing the new process for non-payment of rent evictions.
• Code of Civil Procedure § 1179.04 requires that on or before September 30, 2020, a landlord shall provide notice, in at least 12-point font, to tenants who have not paid one or more rental payments that came due between March 1, 2020 and August 31, 2020 during the current protected time period of September 1, 2020 through January 31, 2021, notice of their “Covid-19 rights”.
  • The statutory notice is for rent that comes due before January 31, 2021.  The notice for the residential tenant must state that he or she will not be evicted due to failure to pay rent, provided that the tenant delivers to the landlord a declaration setting forth the reason for the COVID-19-related financial distress, signed under penalty of perjury, and the tenant pays at least 25% of the rent. The notice must also include an unsigned copy of the form declaration to be returned by the tenant. The declaration must be provided to the landlord within 15 days of when rent is due, absent a showing of good cause by the tenant for failing to do so.
• Code of Civil Procedure § 1179.03 requires that each non-payment of rent notice be modified to comply with the new statement of rights. This, along with the new Code of Civil Procedure §1161(2) (effective until February 1, 2021), provide a tenant with fifteen (not the prior three) days to respond to a non-payment of rent notice. The tenant has the choice to pay the rent during the 15 days and/or provide the declaration to support payment of 25% of the cumulative rent then due.
  • Code of Civil Procedure §1161(2) sets forth several procedures which must be followed, including that the 15-day period does not include Saturdays, Sundays, or judicial holidays.
• Code of Civil Procedure § 1179.03 and Code of Civil Procedure § 1179.03.5  Non-payment of rent evictions are only allowed for unpaid rent after September 1, 2020 if (1) the landlord provides the requisite notice stating the tenant’s rights under these new laws, (2) the obligation for qualifying tenants to  pay at least 25% of the cumulative rent AFTER September 1, 2020, (3) the tenant provides the requisite declaration regarding inability to pay due to Covid-19 and (4) the law concerning paying only 25% of the rent.    
• Code of Civil Procedure § 1179.04 Continues the prohibition on Residential Non-payment of Rent Evictions for Rent Due Between March 1, 2020 and August 31, 2020 if Failure to Pay is Caused by Covid-19 Issues. 
  • Residential Landlords still cannot evict for non-payment of rent or other monetary charges that came due between March 1, 2020 and August 31, 2020 if the resident provided the landlord with a declaration stating their finances have been negatively affected by the Covid-19 pandemic. (Note: High income is not relevant to rent due between March 1, 2020 and August 31, 2020.)
• Code of Civil Procedure § 1179.03 and Code of Civil Procedure § 1179.03.5  Allow The Tenant to Only Pay 25% of the Rent due between September 1, 2020 and January 31, 2021 if the inability to pay is due to financial hardship due to Covid-19. 
  • The new law requires tenants to pay at least 25% of their cumulative rent between September 1, 2020 and January 31, 2021 or the tenant can be evicted. For tenants to take advantage of this provision, tenants must ALSO provide a declaration stating an inability to pay more than 25% of the rent due to a negative impact upon their income due to Covid-19.
  • Code of Civil Procedure § 1179.03 permits the landlord to require a new declaration within 15 days of service of the non-payment of rent notice even if the factual basis for the inability to pay the entire rent has not changed. Landlords must make sure their notices to pay rent or quit complies with this new statute.
  • Code of Civil Procedure § 1179.04. (High Income Tenants Are Required to also Document their Inability to Pay at least 25% of the Rent Due to a Negative Financial Impact Due to Covid-19 or lose the ability to only pay 25% of the rent to avoid eviction. The law is not everyone only needs to pay 25% of the rent; a declaration of inability to pay is required AND if the tenant is also “high income” then proof of the inability to pay due to an adverse Covid-19 financial impact must be provided.
• A “High Income” Tenant Must Provide Documentary Proof of an Adverse Covid-19 Financial Impact or Cannot Use the 25% Rent Payment Exception.  This provision in Code of Civil Procedure § 1179.02.5 will be the eviction battle ground.  If your tenant’s rental application or other evidence, indicates they make over $100,000 per year, then require your tenant to provide proof of an inability to pay the rent due to loss of income or increased expenses due to Covid-19. 
  • The landlord must have some prior evidence that the tenant is high income before proceeding with the eviction based upon the tenant being of “high income” and must provide documentation of an adverse financial impact due to Covid-19.  Remember, tenants who are not “high income” do not need to provide this documentation or proof of actual Covid-19 related financial loss.
    • “High-income tenant” – is defined as a tenant with income over $100,000 per year and “with an annual household income of 130 percent of the median income” as published by the Department of Housing and Community Development for that county
    • Code of Civil Procedure § 1179.02.5 does NOT allow the landlord to demand documentary proof of “high income” status from the tenant. However, the landlord can use other evidence of high income, e.g. an application to rent, to prove to the court that the “high income” eviction rules should apply.
• Civil Code §1946.2, Civil Code §1947.12, 1947.13 are also modified to limit “just cause” evictions for non-monetary breaches to those evictions necessary to comply with health and safety laws. 
  • AB3088 extends “just cause” protections effective January 1, 2020 in Civil Code § 1946.2, and related sections, to all residents until February 1, 2021. Eviction for demolition or “substantial rehabilitation” are limited to circumstances necessary to comply with health and safety laws.
  • Rent Re-Payment After January 31, 2021 is Exclusively Governed by AB3088 and May be Filed in Small Claims Court after March 1, 2021
  • AB3088 does not create a rent re-payment plan. It only provides that the deferred rent (for March 1, 2020 through January 31, 2021) must be paid after February 1, 2021 and local laws cannot create new or conflicting re-payment plans. Expect new state laws to be enacted on this issue before January 31, 2021.
  • Code of Civil Procedure § 1179.05 requires rent payback to begin on or before March 1, 2021 and to be paid within a year (March 31, 2022).
  • If a local eviction moratorium provides for repayment to begin after March 1, 2021, or ties repayment to the end of the state of emergency or local emergency, that repayment period is required to start on or before March 1, 2021 and end by March 31, 2022.
• Code of Civil Procedure § 1179.05(c) allows deferred rental increases may be able to eventually be passed on tenants. The one-year limitation provided in subdivision (2) of Section 1161 is tolled during any time period that a landlord is or was prohibited due to the COVID-19 pandemic from serving a notice that demands payment of COVID-19 rental debt pursuant to subdivision (e) of Section 798.56 of the Civil Code or paragraph (2) of Section 1161. Presumably, this includes deferred lawful rent increases such as allowed by rent control.
• Code of Civil Procedure §116.223 Small Claims Court Jurisdictional Limits are increased from March 1, 2021 to February 1, 2025) to allow lawsuits for all unpaid “Covid-19 deferred” rent.
  • Prior small claims court jurisdictional limits, e.g. $2,500/5,000/$10,000 do not apply nor is there a limit on the number of small claims cases that can be filed by a party. 
    • All unpaid rent and other charges due between March 1, 2020 and January 31, 2021 can be collected through small claims court.    Covid-19 rent cases may not be filed before March 1, 2021.

• Code of Civil Procedure § 116.223(4)(b)(1) states “Notwithstanding paragraph (1) of subdivision (a) Section 116.220, Section 116.221, or any other law, the small claims court has jurisdiction in any action for recovery of COVID-19 rental debt, as defined in Section 1179.02, and any defenses thereto, regardless of the amount demanded.” [emphasis added]
• Small Claims Court Problems: Small Claims prohibits jury trials and stays judgments on appeal and counter-claims. This presents venue issues for both landlords and tenants.
• Code of Civil Procedure §116.223 (a)(4) gives the landlord the “option” to use small claims courts.  However, Code of Civil Procedure §116.223 (4)(b)(1) may force a tenant to waive their rights to jury trial in Covid-19 rent matters.  Does this conflict with Code of Civil Procedure § 592 and a tenant’s right to jury trial?  Probably not, see  Couchman v. Sup.Ct. (El Dorado Investors) (1988) 45 Cal.3d 1167, 1173.
  • The tenant could try to transfer the matter by using Code of Civil Procedure § 116.390 to file an affirmative tenant counter-claim (as opposed to a defense) to transfer the matter out of small claims court.  However, the court may entertain a motion to determine that the counter-claim is really a defense to the Covid-19 claim and keep the case in small claims.
  • The automatic stay on appeal of Code of Civil Procedure § 116.810 will  be frustrating landlords given the tens of thousands of cases to be filed, and possibly years before the small claims appeal is heard.
• Code of Civil Procedure § 1161.2.5 is added concerning the “sealing of court records” to allow access to civil case records for actions seeking recovery of Covid-19 rental debt. This will to make it easier for assignment of the unpaid Covid-19 rent to debt collectors to sue tenants.  
• Civil Code 789.4, Civil Code §3273.16 and Code of Civil Procedure § 1179.06  Penalties can be imposed for violations and any waivers of the protections of the AB3088 Act are void. The new law is considered public policy and cannot be waived by contract. Landlords who fail to comply with the provisions of the Tenant Relief Act are subject to fines and penalties of $1,000 to $2,500. 
• Civil Code §1942.5 is modified to include tenants asserting rights under the new Covid-19 rules as presumed retaliatory.

In addition to these new laws, practitioners need to be cognizant that some sheriff’s and county courts still limit unlawful detainer actions or issuance of writs of possession.  For example, the Alameda County Superior Court extended its stay on evictions through December 31, 2020.  Alameda Court Restricts Issuance of Eviction Orders 

Covid-19 has presents new challenges and provides new opportunities. Government imposed regulations will never satisfy everyone or bring the perfect solution. It is up to each person to honor their obligations and be respectful of others. 

“Desperate times call for desperate measures. That’s a saying, or a bit of advice, or a catchphrase, or a string of words used to confuse people less intelligent than you. In any case, it means: Life is tough, so you’d better fight hard-or something like that.” 

― Obert Skye, Leven Thumps and the Whispered Secret