On August 31, 2020 California Governor Gavin Newsom signed the “COVID-19 Tenant Relief Act of 2020” and the “COVID-19 Small Landlord and Homeowner Relief Act of 2020” (herein, together, the “Act”), which became effective immediately. The Act makes a number of changes to State law relating to landlord-tenant (including mobile homes) and mortgage foreclosure provisions that may be of interest to our Real Estate Board Roundtable participants. This includes limits on rent increases and entry of judgments and new notice requirements. 

Some of the Act’s key points are listed below:

• Its stated purposes are not to relieve tenants, homeowners or landlords of their financial obligations, but to “forestall massive social and public health harm by preventing unpaid rental debt from serving as a cause of action for eviction or foreclosure during this historic and unforeseeable period and from unduly burdening the recovery through negative credit reporting”.

• The Act preempts other local laws.

• Certain mortgagor protections that previously applied only to owner-occupied single family residences are expanded for tenant-occupied properties containing four or fewer units, until January 1, 2023.

• New language is now required to be included in three-day notices, and a special notice regarding limitations on rent increases must be provided to tenants.

• Landlords may require supporting documentation of hardship from high-income tenants. COVID-19 financial distress includes certain types of loss of income, increased out of pocket expenses, and childcare and other caregiving responsibilities. 

• Actions for collection of COVID-19 rental debt may be brought in small claims courts until February 1, 2025, even if the amount exceeds the previously applicable jurisdictional limit of $5,000.

• Landlords who violate the Act are subject to monetary penalties.

• Effective February 1, 2021, landlords will be prohibited from evicting tenants who have lawfully occupied their units for 12 months, except for “just cause”, as defined and relocation assistance payments are required in certain cases.

• REITS, corporations and LLCs that own single family residences that can be conveyed separately are subject to the Act’s limits whereas some other owners can be exempt. 

• The Act imposes limits on the permissible amounts of residential rent increases.

• A variety of provisions apply to mortgage servicers relating to denial of forbearance, with applicability dependent upon, among other things, whether borrowers have received CARES Act relief.