Over the last two weeks, both the City of Los Angeles and the State of California have taken a number of emergency actions affecting commercial and residential landlords and tenants. They are summarized below:
On March 15, 2020, the Mayor issued an Emergency Order declaring a temporary moratorium on evictions for nonpayment of rent for residential tenants who are “able to show an inability to pay rent due to circumstances related to the COVID-19 pandemic.” Under that Order, tenants are still obligated to pay rent, however they cannot be evicted due to their inability to pay rent due to COVID-19 during that period. The Order states that the protections in the Order may be used as an affirmative defense in an unlawful detainer action. Tenants have up to six months following the expiration of the emergency period to repay the back rent due. On March 30, 2020, the City Council extended the repayment period from 6 to 12 months. The Emergency Order is to remain in effect during the “emergency period.”
On March 16, 2020, the Governor issued Executive Order N-28-20, granting local governments the authority to impose limitations on residential and commercial evictions based on nonpayment of rent “arising out of a substantial decrease in household or business income … or substantial out-of-pocket medical expenses” caused by COVID-19 and that “is documented.” That Order is effective through May 31, 2020 and may be extended.
On March 17, 2020, the Mayor issued an Emergency Order extending the temporary eviction moratorium to commercial tenancies. Thus, no commercial tenants may be evicted during the emergency period “if the tenant is able to show an inability to pay rent due to circumstances related to the COVID-19 pandemic.” Tenants will have up to three months following the expiration of the emergency period to pay back the rent. The Order states that protections in the Order may be used as an affirmative defense in an unlawful detainer action.
On March 23, 2020, the Mayor issued an Emergency Order extending the temporary moratoriums on residential and commercial evictions to no-fault evictions (i.e. where the reason for the eviction is not based on any alleged fault of the tenant), and a member of the household is ill, in isolation, or under quarantine. The Mayor also extended his previous March 15 and March 17 Orders regarding evictions through April 19, 2020.
On March 30, 2020, the Mayor issued an Emergency Order providing that property owners may not increase rents on occupied rental units subject to the Los Angeles Rent Stabilization Ordinance (“RSO”) beginning on the date of the Order and continuing through 60 days after the expiration of the local emergency period.
The Los Angeles Housing and Community Investment Department (“HCIDLA”) has created an HCIDLA Administrative Review process to implement the Mayor’s Orders with respect to residential tenancies covered by the Los Angeles Rent Stabilization Ordinance (the “RSO”). Residential tenants who receive a notice to pay rent or quit and believe they have a COVID-19-related defense may initiate the review process with HCIDLA. Where HCIDLA determines the tenant has a valid COVID-19-related defense under the Orders, HCIDLA will communicate that to landlord and provide information to the tenant that can be used to support the affirmative defense in an unlawful detainer action, including referrals to legal assistance.
Practical Implications
Notwithstanding the Los Angeles and California Emergency Orders, landlords may still serve three-day notices and even file eviction actions. Where the eviction is for non-payment of rent, tenants facing eviction may raise as an affirmative defense that the inability to pay rent has resulted from circumstances related to COVID-19. Tenants may establish the affirmative defense by providing documentation that they have lost substantial income. Examples of documentation may include a letter from the tenant’s employer citing COVID-19 as a reason for reduced work hours or termination, employer paycheck stubs, or bank statements, or evidence of out-of-pocket healthcare costs.
As a practical matter, there are reasons that landlords may choose to forbear from instituting evictions where the tenant may have a COVID-19-related affirmative defense. For example, service of the three-day notice and/or the UD complaint may jeopardize the safety of those serving those documents and violate safe-at-home or shelter-in-place orders. In addition, residential tenants may initiate the HCIDLA Administrative Review process as against the landlord.
As of March 31, 2020, the LA County Board of Supervisors is exploring options for County-wide action as regards residential tenants (which would include cities), including a ban on evictions and rent-freeze, however no action has yet been taken.
UPDATE #1
On March 31, 2020 the Mayor signed and approved a Tenant Protection Ordinance adopted by the City Council which also rescinds and replaces the Mayor’s prior Emergency Orders. The Ordinance adds a new article to the Los Angeles Municipal Code. It incorporates and builds on the Mayor’s Emergency Orders of March 15, 17 and 23, 2020 and provides:
No Owner shall evict a residential tenant for non-payment of rent during the Local Emergency Period if the tenant is unable to pay rent due to circumstances related to the COVID-19 pandemic. These circumstances include loss of income due to a COVID-19 related workplace closure, child care expenditures due to school closures, health-care expenses related to being ill with COVID-19 or caring for a member of the tenant’s household or family who is ill with COVID-19, or reasonable expenditures that stem from government-ordered emergency measures. Tenants shall have up to 12 months following the expiration of the Local Emergency Period to repay any past due rent. Tenants may use the protections afforded in this section as an affirmative defense in an unlawful detainer action. Nothing in this article eliminates any obligation to pay lawfully charged rent. However, the tenant and Owner may, prior to the expiration of the Local Emergency Period or within 90 days of the first missed rent payment, whichever comes first, mutually agree to a plan for repayment of unpaid rent selected from options promulgated by the Housing and Community Investment Department for that purpose.
UPDATE #2
On April 6, 2020, the Judicial Council for the State of California, which is essentially the rule and policy making body for the California court system, issued Emergency Rules which include significant changes to the management of the courts, including remote telephone appearances and emergency bail, among other matters. The Emergency Rules also include the following changes to procedure relating to Unlawful Detainers, i.e. eviction actions:
(b) Issuance of summons
A court may not issue a summons on a complaint for unlawful detainer unless the court finds, in its discretion and on the record, that the action is necessary to protect public health and safety.
(c) Entry of default
A court may not enter a default or a default judgment for restitution in an unlawful detainer action for failure of defendant to appear unless the court finds both of the following:
(1) The action is necessary to protect public health and safety; and
(2) The defendant has not appeared in the action within the time provided by law, including by any applicable executive order.
…
(e) Sunset of rule
This rule will remain in effect until 90 days after the Governor declares that the state of emergency related to the COVID-19 pandemic is lifted, or until amended or repealed by the Judicial Council.
Essentially, what this means is that, while parties can technically continue to file new Unlawful Detainer actions, the Courts are not issuing summons and landlords accordingly cannot “serve” the tenant and thereby begin commencement of a case and landlords cannot obtain an eviction even where the tenant fails to appear and would ordinarily lead to a default, excepting circumstances where necessary to protect public health and safety. The rule will remain in effect until 90 days after the end of the Governor’s state of emergency ends. Significantly, the Emergency Rules do not distinguish between residential and commercial.
For more information, please contact Laine Mervis at laine@eanetpc.com or Brian Lauter at brian@eanetpc.com.