Legislation signed last week by Gov. Gavin Newsom extends the state’s landmark eviction moratorium for an additional five months, protecting renters while also providing aid for landlords.
The passage of SB 91 will see the eviction moratorium extended through June 30, 2021, which was originally established last year under Assembly Bill 3088 and would have expired at the end of January.
“Once again, California is leading the way by enacting the strongest eviction protections in the nation, which will provide relief for millions of Californians dealing with financial difficulties as a result of COVID-19,” Newsom said. “This law not only provides greatly needed support for tenants, but also provides relief to small property owners in need of assistance to pay for mortgages, thanks to $2.6 billion in federal stimulus funding.”
The legislation, signed Jan. 29, pauses evictions for tenants who declare under penalty of perjury an inability to pay all or part of the rent due to a COVID-related reason. Tenants are still responsible for paying unpaid amounts to property owners, but those unpaid amounts cannot be the basis for an eviction, even after the moratorium ends.
Job loss due to COVID has severely impacted renters. In June of 2020, just three months after the pandemic caused statewide stay-at-home orders, the University of California, Berkeley’s Terner Center for Housing Innovation estimated that nearly one million renter households throughout the state experienced some form of job loss.
SB 91 also establishes the State Rental Assistance Program to allocate the $2.6 billion in federal rental assistance California will receive. The program will target aid to income-qualified tenants most at-risk with unpaid back rent.
In Turlock, Reliable Property Management owner Becky Arellano said she’s seen a “trickle down effect” as tenants are unable to afford their monthly rent and landlords subsequently struggle with the mortgage.
“It’s been tough for both sides — the property owners and the tenants,” Arellano said. “While we are compassionate about people not being able to pay their rent because they don’t have a job or whatever the circumstances are, there are still mortgages on these properties.”
Assistance will also be extended to property owners who agree to waive 20% of unpaid rent. By agreeing to this waiver, property owners will become eligible for 80% in rent reimbursements for amounts owed between April 1, 2020 and March 31, 2021.
Arellano encouraged tenants to let their landlords know if they cannot pay rent. Her company has worked with renters to fill out paperwork for assistance, she said, and routinely checks in with tenants to see if they’re able to pay smaller portions of their rent. When the moratorium is eventually lifted, she expects some homes to go into foreclosure as a result of unpaid back rent despite mortgage companies working with property owners as well.
“I would encourage people to call their property management or landlord and try to work something out,” Arellano said. “People need to reach out to their landlords and their mortgage companies and see what they have to offer so they're not facing that foreclosure when this ends.”
Approximately $150 million of the federal funds will be reserved for tenants in counties with populations of 200,000 or less and the additional funds will be available to counties with populations larger than 200,000. The state will directly administer $1.5 billion through contracted entities, and local governments can either join forces with the state or administer their own programs. The State Rental Assistance Program will begin accepting applications from property owners and tenants in March.
Arellano said she’s seen the greatest impact on renters of residential properties rather than commercial properties thanks to aid received by tenants so far. Just two of close to 500 properties that Reliable Property Management works with have not been able to pay their rent through money earned or assistance, she said.
“I think it’s hit the rental market harder because there have been more COVID relief packages for businesses,” she said. “I think we still need one more big jolt into the economy.”