We recently wrote about the numerous moratoriums implemented by varying levels of government, including both federal and state agencies. The situation has continued to evolve, and governments are responding. Mostly recently, on June 28, 2021, California Governor Gavin Newsom signed legislation, AB 832, extending the state’s eviction moratorium through September 30, 2021 and providing debt relief for “Californians that have suffered economic hardship due to the pandemic.”
AB 832, which bills itself as the “largest and most comprehensive” COVID rental protection and rent relief program, “will significantly increase cash assistance to low-income tenants and small landlords under the state’s $5.2 billion rent relief program.”
Understanding AB 832
First, it’s important to know that AB 832 is primarily an extension of SB91. In a typical market, not paying rent means a tenant is “at fault” and can be evicted, but under AB 832, as under the previous moratorium, neglecting to pay rent due to COVID-19 challenges does not put a tenant at fault, and thus makes it nearly impossible for landlords to evict them unless they are also breaking other rules of their lease. Specifically, in order to avoid eviction, tenants are only required to pay 25% of missed rent by September 30, 2021. However, if they fail to pay that 25%, they can still be evicted. An important caveat is that the landlord cannot evict them unless the landlord has also applied for rental assistance. It behooves landlords, therefore, to apply for rental assistance before taking any legal action toward eviction.
Additionally, HousingIsKey.com will continue to serve as the place for both eligible landlords and tenants to pursue rental assistance. This is especially important information for landlords, who now have until the end of July to give tenants notice about where they can turn for rent assistance.
A new feature of AB 832 is that landlords can apply to have the state of California cover a full 100% of back rent that they missed out on due to COVID-19 from April 2020 up until now as well as 100% of rent they will be unable to collect in the coming months due to the pandemic. This number is up from 80% reimbursement for missed rent, which will be a boon to landlords and which will reduce the demand for using small claims courts to sue for missed rent.
Another new feature of AB 832 allows a tenant to apply for back rent even after they move. The tenant would then pay that rent to their previous landlord. This way, everyone is more likely to get the assistance they need even as their personal situations evolve and as they pursue new housing arrangements.
Additional Assistance Programs Extended
While governments are offering renters assistance via eviction moratoriums, homeowners who are struggling due to COVID-19 are also receiving additional aid. The Biden Administration has renewed the national foreclosure moratorium, extending it to the end of July. It may feel like the extensions keep on coming, but it’s worth noting that the administration has announced that this latest extension will be the last.
The CDC explained the rationale behind the recent extensions; the role of housing in containing the pandemic is important: “Keeping people in their homes and out of crowded or congregate settings — like homeless shelters — by preventing evictions is a key step in helping to stop the spread of COVID-19.” In addition to the federal moves, the administration is encouraging states to also find ways to support landlords and tenants in finding rental assistance and solutions other than eviction that meet their respective needs.
California lawmakers supported the CDC decision and their decision to extend the moratorium.
“Removing eviction protections now, while billions of rent relief dollars are still available, would be a disaster and exacerbate our homelessness crisis,” said Assemblymember David Chiu, D-San Francisco. “This proposal avoids a massive eviction cliff, allowing us to keep tenants in their homes and get landlords the financial support they need.”
However, not everyone responded positively to the extensions.
Tom Bannon, chief executive officer of the California Apartment Association, commented:
“We are disappointed that the CDC extended a nationwide eviction moratorium through July, and the State of California has extended an eviction moratorium through September. Both the federal and state eviction moratoriums would not be necessary if state and local governments were disbursing rental assistance funds to tenants and housing providers in an expedited manner.
It is frustrating that the State of California and numerous local governments have not quickly disbursed funds to those in need, especially to mom-and-pop rental housing providers who have not seen any rent payments yet. They are still required to pay the mortgage, insurance, taxes, maintenance, and other expenses.”
There is no doubt that the pandemic has placed significant financial strain on small business, renters, and housing providers. As we move deeper into summer, thousands of Californians will be watching anxiously to see whether the rental assistance they need comes through quickly.
California’s Housing Crisis
The protections for renters and homeowners in California fit into a larger and uncomfortable situation: a deepening housing crisis. Governor Newsom explained that “low-income Californians, tenants and small landlords alike” will specifically continue to need assistance in a state with a shortage of affordable housing, and he’s right; in the last year, the median price of a home is up 39% in California. The combination of high demand, low supply, COVID-19, and shortages of lumber has posed a serious challenge to the state.
Even before the pandemic, the California Budget and Policy Center reported that half of the renters in the state paid more than 30% of their income into their rent. As unemployment soared, that percentage has only gone up. Hopefully, the new bill strikes a balance that protects landlords and makes sure renters and homeowners are not facing eviction or temporary homelessness. In the meantime, California is doing what it can to promote construction of more affordable housing.
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