Due to the emergency shelter in place orders issued in California and in Alameda County the on 3/27/20 the Oakland City Council passed an ordinance that applies new rules to residential leases and charges that can be issued to tenants; restricts the filing of unlawful detainer actions (eviction); and severely limits a landlords right to evict even for non-payment of rent. There are also new notice requirements for most tenant communications during this period or arising from payments during this period that a landlord should be especially certain to comply with.
State and Local Eviction Moratorium
The Oakland eviction moratorium disallows any evictions until the May 31, 2020 “except to protect the health and safety of other occupants on the property”. Additionally, even after May 31 an eviction will not be processed as the California Judicial Council has effectively suspended all eviction actions until 90 days after the California Covid-19 state of emergency ends. As a result the timeline for actually effecting an eviction will be even longer than the current Oakland ordinance.
Nonpayment of Rent May Not Allow for Eviction At Any Time
Section 7 of Oakland’s ordinance disallows any eviction if the nonpayment of rent during the period of the “Local Emergency” is due to any of the following arising from the Covid-19 / Coronavirus Pandemic: (i) “substantial reduction in household income”; (ii) “substantial increase in expenses”. The ordinance includes a list of reasons that would disallow an eviction for nonpayment during this period: loss of employment, reduction in work hours, unable to work due to childcare requirements, being sick with Covid-19, caring for a household or family member who was sick with Covid-19, complying with a recommendation to quarantine issued by a government agency, increased cost of medical expenses.
The rent will still be due to the landlord it just cannot be the basis for an eviction even after the moratorium ends. For example, if a tenant is furloughed or lost hours and stops payment of $2,500 / mo. rent for two months the tenant would owe the landlord $5,000. However, the debt cannot be the basis for eviction and if the tenant continues to pay rent after the Local Emergency ends they will be able to remain in possession of the property. The landlord would, instead of filing an unlawful detainer, file suit with respect to the amount due.
Issues of Proof
It should be noted that the Section 7 protections disallowing eviction for nonpayment due to the Covid-19 pandemic are a defense. This means that the landlord may file an unlawful detainer action once the moratorium ends and the tenant will have to prove that the reason for their nonpayment was one of the allowed reasons.
Rent Increase and Late Fees
Section 4 and 5 of the Oakland Ordinance relate to late fees and rent increases. No late fee can be imposed where the reason for it relates to loss of income or increased expense or inability to pay due to Covid-19 / Coronavirus. The same reasons discussed above would apply in this case. Similarly, no increase in rent over the current CPI Rent Adjustment (at 3.5% for this period) is void, for example, rent banking increases, capital expense and tax pass throughs, increased service fees. Note, however, that this does not limit the fees to only those arising under the CPI Rent Adjustment just that such expenses cannot be assessed at a greater amount than 3.5%. If such costs are in excess of 3.5% it may be better to wait until this section of the ordinance lapses.
Tenant Relations
One of our fundamental rules for liability reduction is to strive for good relations based on empathy and understanding. There is often a view that landlords are large businesses with deep pockets that are able to weather the burden of non-payment by tenants. The local government seems to share this idea as they have done little to assist landlords by applying the same rights to mortgage payment issues.
Although some some landlords are quite large and have fairly deep pockets rental housing is a fairly thin margin business and extended disruptions in payments can and will impair landlords ability to service mortgages and property costs. Many of our clients are smaller landlords with the little margin available or that rely on rental payments as a sole source of income. Balancing the needs of the landlord for debt service and income streams against a tenant’s inability to pay rent is difficult, however, it can be made easier for both parties:
- Instead of immediately disputing a rental payment it may be better to write to the tenant and explain your situation and to request that they provide proof that they meet the requirements in order to avoid a costly legal action. This can save both sides money in attorneys fees and risk as a loss by a landlord on an unlawful detainer defense may give rise to fee shifting clauses or, at a minimum, require paying attorneys fees for an unsuccessful trial.
- Again with fee shifting there may be an incentive to file a standard claim for amounts due even if they cannot give rise to eviction and then to assess the tenant with the attorneys fees. We would again recommend a discussion, alternative payment arrangements, or some other workout of the debt prior to filing an action. Even if a judgment is desired it may be better to request a confession of judgment that would significantly reduce the costs for all sides and result in the same outcome. The reason for this is that attorneys fee shifting may be limited by reasonableness, not issued by the court or reduced, and that even if successful a tenant that has no money will not be able to cover such fees and the landlord will be out of pocket on significant additional expense even after being successful in court.
BrightWork Law
If you are dealing with residential landlord / tenant issues we would be happy to assist at Brightwork Law. Our goal is to provide legal assistance that is efficient as possible with the best economic outcomes for clients. In order to support our community particularly the smaller landlords and businesses we are providing extremely discounted services for small landlords (<$100,000 in gross revenue) and small business commercial tenants (<$300,000 in gross revenue).