Governor Gavin Newsom and state lawmakers on Monday averted a housing crisis by passing laws that extend eviction protection by five months for California renters struggling financially due to the COVID-19 pandemic got to.
Newsom signed the bill shortly before midnight, hours after it was passed by two-thirds of both houses of state legislature on Monday, the last day of this year's session.
"COVID-19 has affected everyone in California – but some carry a lot more than others, especially renters who are struggling to stitch monthly rent and they deserve eviction protection," Newsom said in a statement announcing the signing . "This new law protects tenants from eviction for non-payment of rent and helps keep homeowners away from foreclosure due to the economic hardship caused by this terrible pandemic."
The bill takes effect immediately as the previous protection expires at midnight on Tuesday.
"So we must act today to create new safeguards that will guide us through the next few months to prevent a wave of mass evictions in the middle of a public health emergency with no clear end in sight," said Senator Anna Caballero (D. -Salinas) on Monday during the floor debate on AB 3088.
Renters will not be evicted until January 31st as long as they pay at least 25% of their rent and file a statement with their landlord stating that they are due to the pandemic and associated store closings that have brought millions of people to their knees , unemployed Californians suffer from financial difficulties.
"Our goal was to protect tenants from being evicted and to encourage banks to get them involved and make sure they don't foreclose properties," said Caballero, co-author of the bill.
The new law, which comes into effect immediately, disappointed many tenant attorneys who fear that tenants will still be unable to pay rent by February 1st and will still have to pay the rent that has not been paid in the past few months, and the landlord can go to court for small claims collection.
Brian Augusta, of the California Rural Legal Assistance Foundation, said he supported the bill to prevent evictions this week, but renters needed further protection.
"We don't see this bill as a solution and we still have a lot to do," he told senators at a public hearing on Saturday.
The legislation was drafted as a compromise after groups representing landlords warned that previous bills that allowed for one to three years of complete rent waivers left many property owners, including small rental investors, with no income to pay their mortgages, putting property at risk would be exposed to foreclosure.
The ultimate solution would be for the federal government to provide financial assistance to tenants to use to pay their rent, said Debra Carlton, executive vice president of California Apartment Assn., Which represents landlords.
"If the rent continues to go unpaid, homeowners will either face foreclosures or, if they can, sell or convert their properties," Carlton told lawmakers during the weekend hearing. “That can mean renters end up losing their homes, and these smaller properties have historically been affordable housing. Losing these units will worsen California's housing shortage. "
Newsom agreed that more financial aid is needed from Washington.
"We need a real, state commitment to significant new funding to help struggling tenants and homeowners in California and across the country," said the governor.
In March, Newsom attempted to slow the spread of the deadly virus by telling Californians to stay home and not gather in public places. Many companies have been forced to close their doors or limit operations.
As a result, 11 million people have applied for unemployment insurance since March.
In late March, Newsom issued an ordinance temporarily banning all tenant evictions. The State Judiciary Council later imposed a moratorium on courts processing evictions, extending it to September 1 that month. Tenant groups warned the state of a tidal wave of evictions if additional measures are not taken.
"This is a temporary stopgap," said MP David Chiu (D-San Francisco), an author of the bill, to colleagues on Monday.
The legislative draft AB 3088, approved by the legislature on Monday, prevents landlords from evacuating tenants from March to September 1st for non-payment of the rent this year. The ban applies from September 1 to January 31, 2021 for tenants who pay at least 25% of their rent and submit a declaration of financial hardship.
Renters earning more than $ 100,000 or more than 130% of area median income would be required to provide additional documentation to demonstrate their financial hardship.
After January 31, tenants could no longer be evicted due to non-payment of the full rent for the previous months. However, tenants can be evicted if they fail to pay rent for February and beyond.
The unpaid rent – both the amount owed since March and the portion unpaid in the next five months – would be treated as a consumer debt that can only be reclaimed by a landlord through a small claims court.
In cities and counties that have introduced strong tenant protection, these ordinances would remain in place until they expire. After that, state law would apply, officials said.
The measure was rejected by Ron Kingston, who represented five residential groups, including Apartment Assn. from Orange County, the Apartment Assn. of California, Southern Cities, and the East Bay Rental Housing Assn.
Kingston said it was unreasonable to allow tenants to pay only a quarter of their rent for the next five months.
"Twenty-five percent is not nearly enough income for owners to pay for repairs and maintenance," Kingston said.
He also said renters should provide more evidence of financial hardship than signing a statement, criticizing a provision authorizing cities and counties not to allow repayment of rent backs until March 2022.
"It's just too long," said Kingston. “It's going to be a massive burden. Bankruptcy or foreclosure can or will be the result. It will create financial difficulties. "
The Senate approved the bill, two Republicans voted against, three voted for, and the others abstained.
Senator Hannah-Beth Jackson (D-Santa Barbara) backed the bill despite angry criticism of the banking industry for failing to agree to stricter requirements for them to allow forbearance of mortgage payments for weak property owners.
The bill gives lenders ample leeway to turn down applications for leniency on mortgage payments from many property owners, said Jackson, chairman of the Senate Judiciary Committee.
"It doesn't offer anything substantial to borrowers," Jackson said. "The banks and the mortgageeers are not doing anything, and I can't tell you how disappointed I am that they weren't ready to do anything."
Republican Senator Andreas Borgeas of Modesto noted that the federal law regulating banks restricts the state's capabilities.
"California cannot tell the banks what to expect from the banks," said Borgeas.
He said he voted "reluctantly" for the bill but warned that he would not support efforts to extend it after January 31.
Bakersfield Republican Senate Chairman Shannon Grove abstained, predicting the eviction restrictions would be challenged in court. Grove said she was concerned that property owners might be able to fix roofs and make other necessary repairs if the rent doesn't come in.
"These things cost money every month that landlords and these small landlords continue to pay for," Grove said.
Democrats also said they preferred stronger evictions, but noted that time was running out for action.
"This is an incomplete solution to an unprecedented crisis," said Senator Bill Monning (D-Carmel), calling it a "stopgap".