By Ari Chazanas, Founder and CEO, Lotus West Properties
During the coronavirus pandemic, we faced many challenges. One of them is the Moratorium on Evictions, which is the legal authority for indebted commercial and residential tenants to defer their rent payments to landlords. Tenants may wish to extend the moratorium on evictions and landlords will wish it ended soon.
At present, we anticipate that the moratoriums on evictions could be extended long before they are repealed; The original deadline for the California state deportation moratorium which expired on January 31st to then be extended until June 30e, we can expect this latest expiration date to be extended again by May or June. Many tenants and landlords now have to anticipate their next action steps with the latest expiration date on the horizon. The Coronavirus has certainly changed the landscape of evictions and rent collection. Even illegal online detention and other court hearings can become commonplace.
In this article, we discuss some of the ‘key’ trends to keep in mind when evicting and collecting rent during the pandemic. Successful evictions today depend on timely compliance with new laws on eviction and the collection of rents due to the pandemic.
First, there is the date of the extension or removal of the eviction. As soon as an eviction moratorium is lifted, a tenant has a few days, depending on the jurisdiction, to start paying rent. If you discussed payment terms at the start of the moratorium, now is the time to review written or verbal agreements and discuss payment terms.
Under state law, Assembly Bill 3088, there are two described periods, a protected period from March 1, 2020 to August 31, 2020 and a transition period from September 1, 2020 to January 31. 2021. If tenants have not paid rent during the protected period, except for precedence under a local jurisdiction’s eviction moratorium, tenants may be served with three documents: (i) a copy of the Tenant Relief Act , a declaration of financial stress related to COVID-19, (ii) a declaration to be signed and returned to you by the tenant within 15 days indicating that he has been affected by COVID-19, and (iii) a notice of 15 days. Collection of overdue rent should exclude late fees. When the tenant receives these documents, an eviction cannot take place; however, you can recover the unpaid rent in small claims court with no limit on the amount claimed or in any civil court.
During the transition period, all three signed forms can be served on the tenant, and tenants are expected to pay 25% of their rent each month or in a lump sum by January 31, 2021 in order to be protected from eviction. Additionally, if a tenant’s household income is at least 130% of the median income for the county where the rental property is located, you must serve tenants with the high income household notice to inform them of their obligation. to provide supporting documents in support of their request. of the financial distress of COVID-19. As of this writing, an extension of the transition period to June 30, 2021 is pending. Keeping abreast of these new procedures and changes in the law will help prevail in eviction cases and improve rental collection.
On the other hand, if a landlord wishes to proceed with an eviction unrelated to COVID-19 (for example, due to a breach of another lease term), eviction rules and collection policies rents remain unchanged. For example, do not accept any payment of an amount after the due date from a tenant who is not affected by COVID-19 so that you can begin the eviction process with 3 days notice. Since non-payment of rent remains one of the main reasons for evictions today, the process for this eviction case is very detailed and complicated. If you miss any aspect of the moment or fail to provide the proper documentation, your eviction case could be dismissed, wasting your time and energy.
Having a detailed timeline with the action steps will make it easier to collect rent and pursue an eviction. Other eviction reasons unrelated to COVID-19 include breach of contract or end of lease. Some tenants take advantage of the eviction moratorium to encroach on a landlord’s boundaries; however, you do not need to wait until the end of the eviction moratorium to start an eviction for breach of contract.
A moratorium on evictions protects tenants who may not be able to pay rent due to the impacts of COVID-19; however, it does not protect tenants from other breaches of contract. The first step is to strike up a conversation with the tenant to warn them of a possible eviction due to a breach of the lease. For example, the tenant may refuse to authorize repairs, cause a disruption, or refuse to operate a smoke or carbon monoxide detector as required by law. Be sure to collect evidence of communication with the problematic tenant, obtain testimony if available, and / or, in the case of criminal acts like theft, video footage or a police report. In the event that the tenant provides an excuse or rebuttal evidence, you must have sufficient evidence to prove your case of eviction. Remember not to combine non-payment of rent as an additional reason for eviction for breach of contract, as this strategy can backfire. Some “professional” tenants have extensive experience with non-payment of rent and bouncing back and forth from landlord to landlord. So it’s up to you to stay ahead of these types of tenants once the moratorium on evictions is lifted.
If your eviction is successful, payment of the rent can be obtained. Still, collecting is a tricky one. On the one hand, the tenant may have lost their job and cannot afford to pay rent even if the judge orders wage garnishment. On the other hand, the tenant may have other debts before your rent debt, so you are one of the many debt collectors standing in line. The most effective way to deal with this situation is to sell or assign the debt to a collection agency and get over the loss. (Note: Under proposed new state law extending the moratorium on eviction, landlords may be prohibited from selling or assigning rental debt until July 1, 2021.) Look at this as an expensive lesson. Combined with the moratorium on evictions, the coronavirus has had an impact on the rental industry. It is your responsibility to limit the impact of the eviction moratorium on your property and your rental income.
Ari Chazanas is the founder and CEO of Lotus West Properties. Lotus West Properties is a West Los Angeles-based property management company and was recently named “Southland’s Best New Property Management Company” by the Apartment Association of Greater Los Angeles. You can reach them at (323) 380-2783 or contact Byron at [email protected].