Source: https://sfaganlaw.com/coronavirus-rent-payments-and-governor-newsomes-executive-order-n-28-20/
Timestamp: 2020-08-15 01:07:29
Document Index: 692434581

Matched Legal Cases: ['§396', '§396', '§396', '§396', '§396', '§396', '§396', 'art 2']

Coronavirus, Rent Payments, and GOVERNOR NEWSOM'S Executive Order N-28-20 - Law Offices of Stuart E. Fagan
You may have recently heard that California Governor Gavin Newsom issued an executive order concerning evictions and foreclosures. But what exactly did it say with respect to evictions? (We’ll leave foreclosures for another day.) Let’s address the main issues.
The first item in the executive order states: “The time limitation set forth in Penal Code section 396, subdivision (f), concerning protections against residential eviction, is hereby waived.” (Cal. Penal Code section 396 will be discussed in depth below.)
What good is the first item of the order? It only seems to extend the time before a landlord can raise rents after evicting a prior tenant. The first order continues, “Those protections shall be in effect through May 31, 2020.” Put simply, this provides a disincentive for landlords to think about evicting tenants and raising rents. That practice is prohibited by the Governor’s executive order until May 31, 2020 (with possible extensions).
The second item of the order basically says that local government is allowed–but not required–to limit when a landlord cannot evict a tenant. Basically, the Governor is passing the ball to local government to let them make the unpopular decision (unpopular, that is, from the landlords’ perspective) to stop evictions. This way, the Governor can tell all the big donors, “Hey, I didn’t forbid you from evicting delinquent tenants; the local government did.”
All kidding aside, if the local government takes no action to delay evictions, then evictions can proceed as normal. This likely will come as a surprise to most California tenants.
But even if the local government decides to implement limitations on evictions, it is very limited in the kind of evictions that it can limit. For the executive order only permits local governments to limit evictions when two conditions are met: 1) the basis for the eviction is nonpayment of rent, which is basically caused by a substantial decrease in a household’s income; and 2) the decrease in household income was caused by the COVID-19 pandemic AND it is documented. Thus the only evictions that a local government could choose to stop would be those where the tenant was unable to pay rent because the tenant’s rent was substantially reduced as a direct result of the COVID-19 pandemic and there was documentation to support the claim.
While there will be many people who actually will fit the bill, it does not mean that the tenant who was already out of work, and thus unable to pay the rent, gets to just stay in place until the pandemic passes. That tenant can be rightly evicted, even if the local government gets around to implementing limitations on evictions. So, too, may the tenant who lost a part-time job be evicted if the tenant did not have a substantial decrease in household income. (Do you think that some lawyers and judges are going to have a fun time figuring out what that means?)
The Governor’s order expressly states that the only evictions that the local government can stop are the ones talked about above. So, the local government CANNOT ban all evictions at this time.
Next, the Governor’s order is very clear: “Nothing in this Order shall relieve a tenant of the obligation to pay rent, nor restrict a landlord’s ability to recover rent due.” What does this mean? First, even if the local government limits evictions, this is not a get-out-of-paying-rent-free card. Tenants who have not had a substantial decrease in their household income still have to pay rent. The Governor’s order is meant to protect certain people who have been substantially impacted by the coronavirus, and no one else. Next, as we have discussed, the executive order is not meant to restrict a landlord from being able to collect rent that is due. In other words, if a tenant did not lose a job and thus can pay rent, but chooses not to, then the landlord can seek to collect that rent, and even evict that tenant. In the end, the Governor’s executive order protects some tenants, but not all.
Cal. Penal Code §396
Rent Increases During a State of Emergency:
In the State of California, during a state of emergency, it is illegal for a landlord to increase a tenant’s rent by more than ten percent, except for in limited situations, for the first 30 days following the proclamation. Cal. Penal Code §396(f). That’s right, it’s a crime. It is perfectly fine, however, for a landlord during that 30-day period of the state of emergency to increase an existing tenant’s rent by up to ten percent. So, if a landlord increased the tenant’s rate from $1,000/month to $1,100/month, then that ten percent increase would not be unlawful under Cal. Penal Code §396(f). 31 days after the proclamation or declaration, all bets are off, and the rules go back to normal. Thus if two months after the state of emergency is declared a landlord increases the tenants rent from $1,000/month to $1,200, then such a rent increase would not violate Cal. Penal Code §396(f). It doesn’t mean that the rental increase wouldn’t violate any other law (e.g., perhaps a local rent control ordinance), but it would not violate Cal. Penal Code §396(f).
Evictions (During a State of Emergency) for the Purpose of Selling the Rental Property:
It is also illegal for a landlord to start an eviction during a state of emergency and rent or offer to rent to another person at a rental price greater than the evicted tenant could be charged. In other words, a landlord cannot evict a tenant who is paying $1,000 a month for rent, and then turn around and immediately rent the same place to another tenant for $1,200 a month, for that is a greater amount than the landlord could have been charged. Remember, it would be okay for a landlord to raise a tenant’s rent by up to ten percent.
Note, this does not mean that a landlord is forbidden from evicting a tenant who does not pay rent. It simply means that the landlord cannot evict a tenant for the purpose of immediately getting a new, higher-paying tenant. Cal. Penal Code §396(f). But 31 days after the proclamation or declaration of the state of emergency, all bets are off, and the rules go back to normal.
When might a situation arise where a landlord is trying to evict a tenant who is not late on rent? It might occur where a tenant is on a month-to-month tenancy. (Many tenants are on month-to-month tenancies without even realizing it, for if a term lease expires, then, in most cases, it automatically becomes a month-to-month tenancy if a new term lease is not signed.) The landlord could give the tenant the required notice to terminate the tenancy (30 or 60 days, depending on how long the tenant has been renting). If the tenant does not timely move out after receiving the notice to terminate the tenancy, then the landlord normally has the right to start the eviction process. But that is not true during a state of emergency, if the reason the landlord is terminating the tenancy is to get a new tenant to pay a rent that is more than ten percent higher than the old tenant’s rent.
If during a state of emergency, however, a landlord is terminating the tenancy because, for example, the landlord wants to put the house up for sale, then that is perfectly fine. That is not illegal. Of course, if the landlord says one thing and does another, then the landlord may be guilty of a crime, if the landlord raises the rent on the new tenant by more than ten percent within the 30 days following the proclamation or declaration of the state of emergency.
Let’s imagine a landlord who truly wants to sell the rental property. The landlord evicts the tenant. But then the landlord realizes two months later that the market has tanked, then there is nothing illegal about a landlord putting the house up for rent in excess of ten percent greater than the last tenant’s rent. By way of example, if the evicted tenant were paying $1,000/month for rent, and the landlord was now offering that same place for rent at $1,500/month, then there would be nothing illegal about that because it was more than 30 days following the proclamation or declaration of the state of emergency.
A landlord who was in the process of evicting a tenant when the state of emergency was declared is allowed to finish up the eviction and set the new rental rate. In that situation, the landlord is not limited to raising the rent by only ten percent. Cal. Penal Code §396(f).
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