MORATORIUMS ON EVICTIONS
What are the restrictions on Residential Evictions in California?
Through Executive Orders issued on March 16 and 27, 2020, California has created a statewide moratorium on residential evictions for renters who cannot pay their rent because of Covid-19 related economic hardships. The eviction moratorium is in effect from March 27 through May 31, 2020. The Executive Orders also grant local governments the power to limit the evictions of residential and commercial tenants in their cities.
The California eviction moratorium mainly applies to residential premises. The City of Los Angeles has additional moratoriums on evictions for both residential and commercial properties, as detailed further below.
The specific ban on evictions across California is as follows:
Did Judicial authorities amend laws in California to halt evictions?
Following the Governor’s executive orders, California judicial authorities amended state laws pertaining to evictions and foreclosures. The amendments listed below will remain in effect for 90 days after the Governor declares the state of emergency is lifted or until these laws are amended or repealed.
These amendments to the eviction laws are in addition to the provisions of the Executive Orders detailed above.
Does the Price Gouging law, Penal Code section 396, restrict residential evictions during and after Covid-19 in California?
California Penal Code section 396 makes it unlawful to evict any tenant of residential housing and rent or offer the premises to another person for a rental price greater than what the evicted tenant could be charged (i.e., 10% increase discussed above.) This restriction applies to the time period during an emergency and for 30 days or any other extended mandated time period thereafter. However, evictions that were legally commenced prior to the state of emergency may be continued as well as evictions of a tenant for any other law purpose. Penal Code section 396 existed prior to the Covid-19 emergency, but the Executive Orders extended its enforcement until May 31, 2020.
Details on eviction moratoriums during Covid-19 under California’s price gouging law, and the civil and criminal penalties for violating section 396, are explained in our prior fact sheet available here.
Is there a pending bill limiting the eviction of commercial tenants in California?
There is a proposed bill in the California legislature that would prohibit landlords from evicting tenants in commercial properties, including businesses and non-profit organizations, during a state of emergency. A violation of this proposed law would be a misdemeanor, an unlawful business practice, and an act of unfair competition. The bill has not yet passed. This fact sheet will be updated if the bill becomes law.
What are the prohibitions on residential evictions in the City of Los Angeles?
On March 31, 2020, the City of Los Angeles temporarily prohibited evictions of residential and commercial tenants for failure to pay rent due to Covid-19. On May 12, 2020, the LA City Council extended the eviction moratorium below for 12 months after the Covid-19 emergency is declared over.
These restrictions on evictions by the City of LA are in addition to the restrictions set out by the state of California in the Executive Order and by the California Judicial authorities detailed above.
What are the prohibitions on Commercial Evictions in the City of Los Angeles?
These restrictions commercial evictions by the City of LA are in addition to the restrictions set out by the California Judicial authorities detailed above.
What are the prohibitions on the removal of Rent Controlled Units from the housing market?
No owner may remove occupied residential real property from the rental market under the Ellis Act during the pendency of the Local Emergency Period. Further, tenancies may not be terminated under the Ellis Act until 60 days after the expiration of the Local Emergency Period.
The Ellis Act is a California state law that allows landlords to evict all tenants in rent-controlled units if they are planning to “change the use of the building” or “go out of business” by removing all of the units in the building from the rental market.
What are the Prohibitions on Evictions in the County of Los Angeles?
There is a temporary moratorium on evictions for nonpayment of rent by residential or commercial tenants impacted by Covid-19 in the County of LA, per its Executive Order, as follows:
Commencing March 4, 2020, through May 31, 2020, no residential or commercial property owner (Landlord) shall evict a residential or commercial tenant (Tenant) in the Unincorporated County for: (1) nonpayment of rent, late charges, or any other fees accrued if the tenant demonstrates an inability to pay rent and/or related charges due to financial impacts related to COVID-19, the state of emergency regarding COVID-19, or following government-recommended COVID-19 precautions, and the tenant has provided notice to the landlord within seven (7) days after the date that rent was due, unless extenuating circumstances exist, that the tenant is unable to pay; or (2) reasons amounting to a no-fault eviction under the County Code, unless necessary for health and safety reasons.
These provisions apply to nonpayment eviction notices, no-fault eviction notices, and unlawful detainer actions based on such notices served or filed on or after March 4, 2020.
Tenants shall have six (6) months following the termination of these provisions by the County of LA to pay the landlord any amounts due and owing pursuant to the paragraph above. Tenants and Landlords are encouraged to agree to a payment plan during this six-month period, but nothing in these provisions shall be construed to prevent a Tenant from paying a Landlord any amount due incrementally during this six-month period.
These restrictions on evictions by the County of LA are in addition to the restrictions set out by the state of California in the Executive Order and by the California Judicial authorities detailed above.
Are there bans on Evictions and Rent Freezes in the other Southern California Cities?
Several cities, including Anaheim, Long Beach, Pasadena, Riverside, San Diego, Santa Ana, and Santa Monica, have issued ordinances supporting moratoriums on evictions for nonpayment of rent due to Covid-19. These ordinances also prohibit landlords from charging or collecting late fees for missed rent payments during the emergency period.
The City of Glendale has issued a rent freeze from March 24 through April 30, 2020. The rent freeze applies to all rental units in homes, townhouses, condominiums, and rental units that received a Certificate of Occupancy on or after February 1, 1995.
MORATORIUM ON RENT INCREASES
Does the Price Gouging law, Penal Code section 396, restrict rent increases during and after Covid-19 in California?
The rental price advertised, offered, or charged for housing to any existing or prospective tenant in California may not be increased by more than 10% during an emergency and for 30 days thereafter, or for any further authorized time period. This provision applies to rental housing with an initial lease term of no longer than one year and includes mobile home parks and campgrounds.
An increase in rental prices beyond 10% is permitted if the landlord can prove the increase was due to the costs for repairs or additions beyond normal maintenance that were amortized over the rental term or the increase was contractually agreed to by the tenant before the emergency. Penal Code section 396 existed before the Covid-19 emergency, but the Executive Orders extended its enforcement until May 31, 2020.
Restrictions on rent increases during Covid-19 under California’s price gouging law, and the civil and criminal penalties for violating section 396, are detailed in our prior fact sheet available here.
Are there restrictions on rent increases in the City of Los Angeles?
The Mayor and city council temporarily prohibited rent increases on occupied rental units that are subject to the Los Angeles City Rent Stabilization Ordinance (RSO). No rent increase that became effective on or after March 30, 2020, is allowed unless approved by HCIDLA. Rent increases cannot be imposed until one year after the Covid-19 emergency declaration period is lifted. Rent increases are not retroactive and do not accumulate during the one year period.
Rental units in the City of LA may be subject to the City’s Rent Stabilization Ordinance (RSO), if the property was built on or before October 1, 1978. Units constructed after July 15, 2007, that replace demolished RSO rental units may also be covered under the RSO. The RSO regulates rent increases and evictions.
MORATORIUM ON FORECLOSURES & MORTGAGE PAYMENT FORBEARANCE
In the Executive Orders, the California Department of Business Oversight and the Business, Consumer Services, and Housing Agency were tasked with working with financial institutions to find tools to provide residents with relief from residential foreclosures. Financial institutions holding home or commercial mortgages including banks, credit unions, government-sponsored enterprises, and institutional investors, were requested to implement immediate moratoriums on foreclosures and related evictions when they arose out of Covid-19 causes such as a substantial decrease in the household or business income, substantial out-of-pocket medical expenses caused by Covid-19, or by any local/state/federal government response to Covid-19.
Is there a moratorium on recording Foreclosures and an extension of time to make mortgage payments in California?
Based on the Executive Orders, the Governor obtained informal agreements from Citigroup, JPMorgan Chase, U.S. Bank, Wells Fargo, and nearly 200 state-chartered banks, credit unions, permitting a 90-day informal moratorium on recording foreclosures and/or grace period to make mortgage payments for Californians economically impacted by Covid-19. Under the proposal, Californians struggling with the Covid-19 crisis may be eligible for the following relief upon contacting their financial institution:
Is there a suspension of Judicial Foreclosures in California?
The Executive Orders issued by the Governor permitted local governments to suspend judicial foreclosures of mortgaged properties for homeowners affected by Covid-19 through May 31, 2020. To comply with the Executive Order, the California Judicial authorities amended the laws pertaining to mortgage foreclosures as follows:
MORATORIUMS ON EVICTIONS AND FORECLOSURES BY THE FEDERAL GOVERNMENT UNDER THE CARES ACT
Does the CARES Act impose a moratorium on Evictions?
Yes, the CARES Act imposes a 120 moratorium on evictions in properties with a federally backed mortgage loan or a federally backed multifamily mortgage loan. During the 120-day period beginning on March 27, 2020, the lessor of such dwellings may not:
Does the CARES Act impose a moratorium on Mortgage Foreclosures?
Except for vacant or abandoned property, a servicer of a federally backed mortgage loan may not initiate any judicial or non-judicial foreclosure process, move for a foreclosure judgment or order of sale, or execute a foreclosure-related eviction or foreclosure sale for not less than the 60-day period beginning on March 27, 2020.
What are the provisions for Loan Forbearance on federally backed loans under the CARES Act?
Starting from March 27, 2020, and until the termination of the state of emergency by the President or December 31, 2020, whichever comes sooner, a borrower with a federally backed mortgage loan (Fannie May, Freddie Mac, FHA, VA, Dept. of Agriculture) experiencing financial hardship due, directly or indirectly, to the Covid–19 emergency may request a forbearance on the federally backed mortgage loan, regardless of delinquency status, by
(a) submitting a request to the borrower’s servicer, and (b) affirming that the borrower is experiencing a financial hardship during the Covid–19 emergency.
Upon a request by a borrower, such forbearance shall be granted for up to 180 days, and shall be extended for an additional period of up to 180 days at the request of the borrower, provided that, at the borrower’s request, either the initial or extended period of forbearance may be shortened.
During a period of forbearance, no fees, penalties, or interest beyond the amounts scheduled or calculated as if the borrower made all contractual payments on time and in full under the terms of the mortgage contract, shall accrue on the borrower’s account.
What are the provisions for Loan Forbearance for Multifamily Properties with federally backed loans under the CARES Act?
A multifamily borrower with a federally backed multifamily mortgage loan experiencing financial hardship due, directly or indirectly, to the Covid–19 emergency may request a forbearance on loan payments if the borrower was current on its payments as of February 1, 2020. Such a borrower may submit an oral or written request for forbearance to the borrower’s servicer, affirming that the multifamily borrower is experiencing a financial hardship during the Covid–19 emergency.
Based on documented financial hardship, the lender may provide the forbearance for up to 30 days; and extend the forbearance for up to 2 additional 30 day periods upon the request of the borrower provided that, the borrower’s request for an extension is made during the covered period, and, at least 15 days prior to the end of the prior forbearance period. A multifamily borrower shall have the option to discontinue the forbearance at any time.
A multifamily borrower that receives a forbearance under this section may not, for the duration of the forbearance:
Monisha Coelho represents clients – from startups to multinational corporations – resolve business and real estate disputes in state and federal court litigation. She has particular expertise handling a wide range of real estate issues involving landlords, traditional and hard money lenders, and developers. She is licensed to practice law in India and advises clients on cross-border US-India business transactions and litigation.
DISCLAIMER: The information contained herein is intended for informational purposes only and should not be construed as professional counsel or legal advice. Seek legal counsel for advice with respect to any legal matter. The information in this document may not reflect the most current developments as the subject matter is extremely fluid and may change daily. The content and interpretation of the issues addressed herein are subject to change.