Eviction law in California has changed quite a bit over the past year, first with “just cause” legislation introduced as part of State Assembly Bill 1482, the Tenant Protection Act of 2019, and then with moratoriums introduced as part of the Governor Gavin Newsome’s state orders by signing the Covid-19 Tenant Relief Act (AB2088) into law in response to the COVID-19 pandemic.
On this episode, Bob speaks with Niv Davidovich, Managing Partner at Davidovich Stein Law Group LLP, to discuss landlord/tenant law, eviction law, and squatters rights in the age of COVID-19.
Topics Covered
[2:20] Niv introduces himself and introduces the areas of his law real estate, construction, and landlord/tenant law oriented practice.
[7:00] Conditions for which a landlord in California might consider evicting their tenant and what is allowed by California law.
[9:49] What if a tenant is conducting illegal activity at the property, is that cause for eviction?
[12:00] What are the steps involved in providing California eviction notices and then filing an Unlawful Detainer?
[18:40] What is the 30-day notice of nonrenewal and the difference between a 30 or 60-day notice to vacate.
[20:55] What are squatters rights and the process for getting a squatter out of a property.
[26:20] California AB 1482 and the concept known as “just cause” in regard to tenant eviction.
[32:00] The impact of Covid-19 on financial distress of tenants and eviction protection under the DOVID-19 Tenant Relief Act (or California AB 3088).
[41:00] Will AB 3088 expire on February 1st or will California take action to extend the law given the recent surge in COVID-19 cases?
[43:08] What about the CDC eviction moratorium? Is it a factor in California landlord/tenant law?
[45:22] Niv shares a story about being thankful for the way things turned out in his life.
[48:28] Parting thoughts and how to get in touch with Davidovich Stein Law Group LLP.
Connect to Davidovich Stein Law Group LLP
(818) 661-2420
https://davidovichlaw.com
Connect with Bob
North County Property Group
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Bob Preston: 01:08 Hello, and welcome to all you brainstormers who are listening in today. This is Bob Preston, your host of the show broadcasting from our studio at North County property group in Del Mar California. If you're new here, please subscribe. So, you have ongoing access to all of our great episodes. And if you like what you hear, please pay it forward with a positive review. Eviction law in California has changed quite a bit over the past year or so, and let's face it. It's gotten pretty complicated first with just cause legislation introduced as part of state assembly, bill 1482, the tenant protection act of 2019. And then with the eviction moratoriums introduced as part of the Governor Newsome’s state orders in response to the COVID 19 pandemic called the COVID-19 Tenant Relief Act or AB3088, pretty confusing. So, to help us get it all straight and keep track of it, I've invited an expert in landlord tenant law, practicing here in California in the greater Los Angeles area onto the show. Niv Davidovich from the Davidovich Stein Law Group LLP. Hey Niv, welcome to Property Management Brainstorm. Hey, how you doing? Thanks so much for having me, you bet, and a great way to start today. I would love it and I'm sure our listeners would love it too. If you would start today by just telling us about yourself, your areas of your law practice in your firm.
Niv Davidovich: 02:24 So, uh, I'm Niv Davidovich, I'm the managing partner of Davidovich Stein Law Group LLP. We are a real estate construction and landlord tenant centered law firm. We provide services in those areas on the transactional side and on the litigation side. So, on the landlord tenant side, that includes evictions and making deals with tenants and buyouts, ellis procedures, procedures to get people out for resident manager, occupancies, or family or landlord occupancies. So basically, the whole gamut of, of landlord tenant law, both as it applies to evictions and relocations, uh, as well as transactional and just, um, creating leases, updating those leases for the panoply of new laws that the legislature likes to put out every single year. Um, you know, keeping leases and landlords and property managers up to date on, uh, local rental stabilization ordinances. And a lot of those are, are either popping up new or are they making changes every year. So that's a lot of our way of our tenant practice, but we also do just regular real estate and construction practice. So that on the transactional side that's purchase and sale agreements, operating agreements for LLCs, uh, loan docs, uh, on the construction side of the agreements with contractors or architects, things like that. And then on the litigation side, it's what happens when all those agreements goes south and people have to unfortunately make claims against one another. So, we represent primarily landlords and developers in all sorts of claims like that.
Bob Preston: 06:07 All right, well, listen, I'm in property management. Uh, most of our listeners are either property managers or investors who self-manage their own properties. And one of the areas of risk in this business of course, is a possibility of having to evict a tenant. Nobody wants to ever think about it or have to do it. But you know, now for the record, we keep this in the context of the state of California, right? Other States may have similar laws, but the conversation today as within that framework, uh, within the state, because you and I are both licensed in the state of California. So, let me start just by asking in the normal flow of process and for reasons other than COVID, let's set COVID aside, just here for a minute. What are the conditions under which a landlord might consider evicting a tenant?
Niv Davidovich: 07:03 So if we're setting COVID aside and we're basically saying, let's pretend COVID didn't exist, you have a few basic reasons that you can evict the tenant. Uh, I'll start with the, I I'll say the main three, um, which are described in code of civil procedure, 1161, two, three, and four. Two is a very simple one tenant doesn't pay their rent, um, even prior to, even during COVID. And certainly prior to COVID, that's the vast majority of evictions that we get, um, 1161, three is a cure or quit. That means that a tenant is kind of is violating some provision of their lease other than fair, to pay the rent. And that would be an example, uh, examples of that would be things like they have more people in their unit than are allowed to, um, so 1161 three would be like, could they change the locks and didn't get, didn't get the keys back to you.
Niv Davidovich: 07:56 Um, if, if they have an obligation to pay the utilities and they didn't pay the utilities, that would be an 1161, three issue. Another 1161, three issue that most people don't know about is if they fail to pay late fees, you cannot put that on an 1161 to failure to pay rent notice. So, if there are monetary obligations, other than the base rent, you have to do that as a cure or quit, not as a pay or quit. Cure or quit being the 1161, three 1161 four is special because that is not a pay or quit or cure or quit. There is no option in 1161, four. It's just, you got to go. It's just a notice to quit. Now, there are obviously limited circumstances when you can use one of those, one of them being nuisance, uh, there are a lot of nuisances that are either not curable where you don't have to, or you don't have to provide a cure.
Niv Davidovich: 08:50 So most of the time we do 1161 fours when tenants are just being unruly or just straight up insane or crazy. Once they've done that, and it's not an isolated incident, you don't use an 1161, three. You can, if you want to, but you don't have to, uh, the other, the other instances where you can use an 1161 four, or an illegal assignment or sublet or waste. Waster is virtually never used waste means that they have done something to the property, which is permanent causes, permanent loss of value. So, it's just almost impossible to see situations where that's the case, especially with residential tenants, conceivably could happen if they burn the place down, but short of something pretty severe, we very rarely use waste. It's almost always nuisance or assigned or illegal assignment sublet, which we actually get a fair amount.
Bob Preston: 09:48 Where does illegal activity like dealing drugs or doing, you know, baking meth?
Niv Davidovich: 09:54 That would be the other 1161 four. Gotcha. So glad you asked him about that. Illegal activity is a really interesting one. And you, you, you raised the example of, uh, did you say dealing meth or doing meth.
Bob Preston: 10:08 Or baking it, you know, making it in the property, right. So, making the dental, I mean, anything in that area.
Niv Davidovich: 10:15 It's actually very interesting. If you are, if you are dealing meth, if you are a meth dealer and you are doing it from your home, that's illegal use of the property. If you're a person who literally just makes meth for your own personal use, you are not selling it. It's, it's questionable whether you can evict that person because the illegal use the, the, um, the 1161, four for doing something illegal means you're using the property to do something illegal. So, if you're running your operation from there, now you're actually using the premises to run any illegal operation. That's a good basis for an eviction. But if you just happened to be doing things which are illegal in the premises, but they don't actually have to do with the premises, you cannot evict someone for that reason, because let's say someone is cheating on their taxes, they're doing something illegal.
Niv Davidovich: 11:15 And if they're cheating on their taxes in their unit, theoretically speaking, you could evict them now. But of course, you can't, the law says you can't, it has to be something that is particular to the premises. Yeah. That's again at 1161, for most of the 1161 fours, we get our elite illegal sublets as specifically Airbnb’s. So, if you're Airbnb being your unit, or if your tenant is Airbnb in your unit without your consent, that is an illegal sublet, and you can evict the tenant for that. And in fact, in some places such as West Hollywood, or even Los Angeles, um, just advertising the illegal sublet can subject the person to eviction.
Bob Preston: 11:58 Wow. Okay. There's a pay or quit there's cure or quit. There's, you know, you just kick them out. What are the steps involved in providing those notices and then filing, I guess, ultimately, and when can you do that?
Niv Davidovich: 12:10 So, um, are we talking to residential or just residential? Just residential, just residential. Okay. The most of them are three-day notices. Uh, if your lease is strange and it happens to have a longer notice than that, then you have to abide by what what's in your lease. That's virtually never seen. So, for most people, it's three days. Now, the law recently changed last year, where it became three business days. So, if you give your notice on say January 2nd, and let's call that a Monday, that day doesn't count, it will go two, three, four. And then on the fifth day, if the, if they haven't left the premises, if they haven't cured the breach, if they haven't paid the rent, whatever it is, then that would be the first day that you could file you unlawful detainer. Unlawful detainer and eviction are synonymous. Those are the same things.
Niv Davidovich: 13:05 And basically what are in an unlawful detainer is, is it's a lawsuit. Um, a lot of, a lot of clients call me, and they say, just go to the court and get an eviction paper. If it were only that easy, uh, it's, it doesn't work that way. Once you give, you have to give the notice. The notice is a mandatory prerequisite. It's very, very important because if you mess up the notice, you're going to start the eviction all over again. But once you've done the notice and the notice time passes, then you have to go to the next step of filing the unlawful detainer with the court, and then you serve it on the tenant or tenants. And they then have five court days again, to file some sort of response.
Bob Preston: 13:44 Okay. So, if a tenant doesn't pay their rent on the first of the month, at what point would you then serve the three day? Is there a grace period in the state of California? I see. I think some people believe there is.
Niv Davidovich: 13:57 Yeah. So, there is no official grace period. No, but the, the vast majority of leases have some sort of provision in there that says the rent is due on the first but will not be considered late until either the second, third, fourth, fifth. I've seen all of those different varieties. I've also seen no grace period, but it's kind of rare when you're dealing with you D you don't have to just worry about what the law is strictly and theoretically, you also have to worry about what the judge thinks the law is, and you really kind of want to color inside the lines. This is not a place to think outside the box or bring your creativity. You don't want to do things that are unusual because the judge will pick up on that and might make a mistake and say, you did something wrong, but even in making her his or her mistake, you’re still going to suffer from it. So, what we tell people is the official law is like this. You have to wait until the grace period is over. If your lease has no grace period, pretend it does have one wait until the third day after it's due. Before you put up your notice, whether or not you have to. Why? Because most judges see leases with three days.
Bob Preston: 15:13 Well, I think it's reasonable to give them some time before you necessarily, you know, serve the notice or a judge might at least see it that way. We had one scenario where the tenant just didn't move out. At the end of their lease, we had asked them to, they told us they would, and they just remained, but didn't pay rent. They claimed that by doing so, things would convert to a month, a month. We serve them with a three-day cure notice. And then our attorney told us that was a mistake because we should've just gone right to eviction. Explain that.
Niv Davidovich: 15:44 Okay. So basically, uh, once you serve a three-day notice, you're acknowledging that there's a tendency. If there's no tendency, if they have terminated their own tenancy, you certainly don't want to acknowledge the existence of that, which you do not want to exist. Right? So, and the three-day notice is something you only give to people who are tenants. You don't give three-day notices to licensees or guests or things like that. And by the way, when we were talking about the 1161, those are the three main things that we talk about. There are also evictions against, uh, employee managers. And there are also evictions against licensees, which is different. Um, and then, uh, evictions against tenants. So back to your question, when someone tells you, here's my 30-day notice, I'm leaving. I want the lease to end when this, these 30 days expire. Once they do that and they don't leave after the 30 days, you're at a right.
Niv Davidovich: 16:46 You go straight to the eviction process because they have, they have done the notice themselves. They're the ones that gave you the notice, the term has ended, and you can now go and a victim. Now, that's the basic California law. A lot of your listeners, and a lot of people might have properties in places where you have a local rent control ordinance, which treats things differently. So, when you have no rent control ordinance, and you have a tenant who has stayed past this time, and you want to evict them, first of course is, do not take any rent. This is really important. Do not accept any rent, which is for any period beyond the date, which you were expecting them to leave. That is. So, for example, let's say you have a 12-month lease and you're in a non-rent control jurisdiction. And your building does not fall under California rent control.
Niv Davidovich: 17:45 So you are completely rent control free. At the end of the 12 months, the residential tenant has to leave. If they don't leave, you can go straight to the, you can go straight to the unlawful detainer. You do not have to give them a notice in practice. Most of my clients, and I recommend this for everybody, give 30-to-60-day notices of non-renewal. That is not a statutorily required notice. There's no rule law regulation saying you have to do that. But from a practical perspective, if you don't communicate with your tenant, that they're expected to leave at the end of the 12 months, they will not know they have to leave, and they will still be there simply because you did not tell them, start looking for a new place to live. So, a lot of the times it's not necessarily a matter of courtesy. It's a matter of practicality.
Bob Preston: 18:32 Sure. One of the things I find that people are confused about is the, what you just mentioned, you know, you called it the 30- or 60-day notice of non-renewal. There's also 30-day notice of rental termination. You know, I think there's a difference, right? Because in a lease, you have a defined timestamp where the lease is up. When you're talking about a month, a month arrangement, you do actually have to give them written notice of the end of their rental agreement. Correct?
Niv Davidovich: 19:01 So let's say you do a year lease, typical lease with a tenant. They stay the year. They're nice. You like them, you don't need the property. So, they stay there. And then they stay there for a year, two years, three years, whatever. And they're basically month to month that entire time, every time they cut you a check, they're buying another one month to add to their lease. The underlying terms of the lease still apply, except for that one-year issue, basically that lease turned into a month to month. It's now some point down the road, you decide, okay, I need that space back for whatever reason, right? That is non-discriminatory of course, at that point, you would get, have to give that tenant a 60 day notice to quit. And again, remember, there's no cure quick here. There's no options. They just have to go right. 60 days is what we see the most often, because it's almost always, um, after the one year has expired. Any time after that one year, they they're entitled to a 60-day notice.
Bob Preston: 20:01 Is that the same thing as notice to vacate?
Niv Davidovich: 20:03 Correct. The technical legal terms notice to quit, but when they say quit, it means vacate. Okay.
Bob Preston: 20:10 Okay. Which is different though than notice of non-renewal, correct?
Niv Davidovich: 20:14 Correct. So, notice of non-renewal is a courtesy notice you would give before the 12 months expires, right. Letting them know that when the, when the 12th month is over, they have to leave.
Bob Preston: 20:26 Yeah. And you don't need to give reasoning for that. It's just that the lease is up, and we want you to go, right.
Niv Davidovich: 20:31 That is correct. And as long as you're doing it for a nondiscriminatory reason, then you're perfectly well within your rights to do that. Right. Except of course, if we're talking about a rent control building or a building that subject to the California rent, okay.
Bob Preston: 20:48 Let’s go back to the, the case that we had, the guy who just stayed, I mean, more or less, he became, I think at least in my vernacular, a squatter, what are squatter's rights and what rights do they have and are the processes different for getting them out of the property and evicting them?
Niv Davidovich: 21:05 So it really depends on what you mean by a squatter, a person who had a right to stay in the property via a lease, but then decides to stay beyond the time that he contracts to is technically not a squatter. It's maybe a tenant at sufferance. Um, but it's not a squatter. So, he basically has the same rights that any other tenant would have, he's just, you're just giving him a different kind of notice. Right? So again, for putting the rent control to the side, a person who's in their lease, as long as they're paying their rent and abiding by the obligations of the lease and not causing nuisance or doing illegal things, you can't evict that person. They have a right to stay there. They're an official tenant. Once the 12 months expires, they have lost their right to stay there. They're not a squater or they're a tenant in sufferance.
Niv Davidovich: 21:58 And for those people, you would either evict them, like we said, or if they've become month to month, they're entitled to a 60 day notice before you can begin the eviction process. So that's those people. When I think of a squatter, I think of a person who has basically taken up residence in a residential premise with absolutely no permission from the landlord. So, for example, a squatter case I had was, um, I have a client who was a developer. He basically, uh, took the onus and the considerable expense of elasing, a three unit building because he needed to demolish it. So, uh, this means the existing tenants there and got paid relocation and got 120-day notices. And he did all of that, the correct way through the city of Los Angeles and all of the people in those, in those units eventually left. Well, some enterprising chap saw that the building was empty, pretended to be the landlord, listed it on Craigslist.
Niv Davidovich: 23:05 And when people came and responded to him, he gave them leases with his own name on it, not the actual landlord or owner's name. And all of a sudden, when the developer’s representatives came to the building, they saw people living in there and the electricity wasn't on. So, we actually have no idea how they were operating. There was no electricity. There was no water. They clearly knew there was an issue. But when you call the police, you basically have a 22, 23, 24 year old guy and his equally young partner shows up, they knocked on the doors of the tenants. The tenants say, I have a lease. They that's, when they stop, they don't read the leases. They don't compare the lease to the grant deed. They just say, this is a civil issue. We can't help you. So, someone can literally take over an apartment building like that. And you have to then go and do, what's called a forcible detainer. A forcible detainer requires a five-day notice. And then you still have to go and file. What is time to, unlawful detainer, and still go through the court process. You cannot just come in and pick that person.
Bob Preston: 24:18 Wow. That's amazing. That's, that's a pretty big squatter case. I mean, what about just the person, you know, who finds the doors open any, he goes in and starts living there and you don't find out about it that, you know, maybe it's a homeless person or somebody who just decides, Hey, this is pretty nice here. I'm just going to hang out. 30 days later, you find out that there's a person living like in a vacant property. Is that the same exact process you just described?
Niv Davidovich: 24:41 Maybe, maybe not. It literally depends on what the police officer says at that time. And in certain jurisdictions, it depends on whether or not you have filed documents with the local police agency to tell them, Hey, this is a vacant building. If you find anyone there, they're trespassers, please remove them. So, for example, if you are a developer or if you have a building that's been abandoned and you don't want it to become, you know, uh, the homeless Best Western. So, you need to do that. You need to put up signs everywhere. It says, this is private property. You will be, you're a trespasser if you come in without permission, you need to gate it, preferably board up the windows. And then if your local police agency requires it, file the papers with the agency saying, Hey, this is a vacant building. Um, if you get a call saying, someone's in there by definition, they're there without my permission. If you do all of those things in LA, they will just take the person out. You will not have to evictim if it's sometimes if you don't do all of those things, but it seems pretty obvious to the police officer that the person is a squatter or that they're homeless. They might still take them out. Other times, if the person doesn't seem like a homeless person, they seem like a regular person who might've gotten bamboozled. Like in my story, the police won't take them out. It is very, very unique and circumstance specific.
Bob Preston: 26:05 Wow. That's crazy. I have a little experience with adverse possession. I won't go there because I know that's a whole another topic and I don't want to take us down a rat hole. That's a whole another aspect, but, uh, some someday I'll tell you that story over a cup of coffee or a beer or something. That'd be awesome. Yeah. Hey, and I know since, uh, AB 1482, there's a concept known as just cause now, which I guess restricts evictions a bit. Can you explain that?
Niv Davidovich: 26:29 Yeah. It actually restriction restricts evictions quite a lot. AB 1482 was the law that got passed in California, which basically created California statewide rent control. The statewide rent control applies to any, uh, apartment building or any multi-family building, which is more than four, 15 years old. People say 15 years from when the sad part is all the time. It's a rolling 15 years. Right? So, in that, in that, uh, law, what they said was you cannot evict the tenant unless you have just cause. And there is a long list of things that are just cause. Now they contain a lot of the same kind of things that you would find, uh, as normal basis for just cause. So, for example, if a person doesn't pay the rent, that's just cause they're causing a new sense. If they, they violate a provision of the lease and material provision of the lease, those are all things that are just cause you also have, you also have a cause when there's no fault.
Niv Davidovich: 27:39 So you got just cause at fault or just cause no fault, no fault. Still PR still allows you to evict the tenant. If you, as the landlord and the owner wants to take possession of the property yourself, and of course they're month to month, they're not in their term lease. If you want to put in a resident manager, if you want to demolish the building, if you want to go off the rental market, all of that stuff. But when you have no fault, uh, evictions, you are required to pay a relocation fee. Thankfully the relocation fee really isn't that bad as compared to what it is in local jurisdictions. And it's, it's a month of rent, which you can also just do as a credit as against the last month of rent.
Bob Preston: 28:21 Okay, so during the current time filing unlawful detainers with the court system. I'm just wondering, realistically, are the courts open and hearing cases? And if so, how long would it be realistically for a landlord to get to appear and state their case before a judge?
Niv Davidovich: 28:35 Once again, we're talking about differences of months and months, depending on where you live, what County you live in and believe it or not, what court you are assigned to. It's a complete and total mess. I don't want to sugar coat it. If you are in San Bernardino, if you're, uh, you know, you'll get there faster and yes, the courts are open to answer your questions. All of the courts are open. They were never really closed per se, but there were very, very limiting rules such as the judicial council rules, which expired in, in 2020, which just limited your access to what you could file. When those expired and they were replaced by AB 3088. Then you have to contend with the differences between some local jurisdictions and AB 3080, and the state restrictions of AB 3088. And the fact that some local jurisdictions didn't care that the state rules got submitted and made law.
Niv Davidovich: 29:38 They just want to stick with their own local rules. And if you don't like it, take it up with the court. It's pretty much their attitude. So, in terms of the time it takes, it really depends on what happens. For example, let's say for defaults, a lot of times tenants just don't answer complaints. Theoretically speaking, once five court days pass, you're supposed to be able to, to default the tenant. And from there, get a default judgment for possession or for example, at the end of 2020, the presiding judge of Los Angeles decided, you know, what, we’re are you going to have court holidays for a month? He just declared court holiday in LA. What that means is that the answer isn't due for an additional month, wow. The judge took the law, which says in the law it's five court days. And he changed that law to three to five court days.
Niv Davidovich: 30:28 Plus this extra month at the end of 2020, he's not allowed to do that. That is legislated, but they did it. And because it's a short amount of time, there's nothing anybody can really do about it. In Oakland, for example, they decided that they're going to still have the same rules as when the judicial council emergency rules were in place. So, we submitted a case in November come to find that they're still requiring as they did during the emergency rules time, landlords to come in and have a whole ex parte hearing and explained to them, explain to the judge why there's a public health and safety issue before they will even issue you the complaint with a stamp on. Now that was the rule until September 1st of 2020 California wide. But it expired well in Oakland. They decided not, it didn't expire. That's what we still want to have. They don't even have a local rule, a local Oakland County or city ordinance to support this as far as I can tell.
Bob Preston: 31:28 That was going to be my question. I mean, because you do hear of cities passing their own eviction, moratoriums and such, but you're talking about the court, just arbitrarily sort of deciding what they're going to hear is that right?
Niv Davidovich: 31:39 Sometimes. Yes. And, and passing these, these issues, uh, in Long Beach, they just decided we're not doing defaults anymore. That wasn't even a judge. There was a clerk, a clerk told us we're not doing UDD defaults. We're just not stamping them. We said, why? They're like, Oh, that's just what the supervisor told us. If you have a problem with it, talk to the supervisor.
Bob Preston: 32:02 So I'm guessing that some of this stuff has to do with the flood of issues that have been caused by COVID-19 with the pandemic. I'm guessing that right, because there's just such an amazing backlog right now. So, let's shift gears a little bit and talk about financial distress due to COVID rights and protection under the COVID-19 tenant relief act. You mentioned it a bit ago, AB 3088, help us understand. I know the process and the requirements are substantially different. And even within the act itself, there are different time periods for how you would need to treat a tenant based on when they miss their rent payments or when their impact occurred.
Niv Davidovich: 32:40 Correct. So, I think everyone probably heard about the cancel rent movement that was certainly very, very loud in 2020, and really precipitated by COVID. I just want to explain what this was in practical, realistic terms. A legislature cannot cancel rent. People can yell and scream all day long, but they can't cancel rent without paying the landlord. The rent because that's called a taking it's unconstitutional, right? The government at least nowadays look under current constitutional provisions that we have the government can't come in and say, yeah, well there was an emergency, and this tenant doesn't owe you that rent anymore. Period. They, they can't, they can't do that because now they've taken your property from the landlord and given it to the tenant, even as for a short period of time without compensating, the landlord, that means the government just stole your property for a little while. That's not allowed. And the legislature knows that, but they wanted to try and figure out a way to cancel rent legally.
Niv Davidovich: 33:33 And so we passed AB 3088 and they put in a bunch of these provisions that practically speaking, cancel rent without actually doing it for real. How does that work? They said, okay, we're going to have three timing periods. We're going to go from March 1st to August 30th, 2020, you'll rent from, if you didn't pay rent from March 1st to August 30th, 2020 first as a landlord, you would have had to give your tenants a special notice that explains what their rights are under AB 3088, by September 30th. If you didn't do that, then all the rent from March 1st to August 31st immediately becomes what's called consumer debt. It means that they technically legally owe you the money, i.e. the state did not take it from you. You still have a right to go collect it. However, you cannot evict them for not paying. If you can't evict the tenant for not paying a particular kind of rent for all practical purposes, it's a taking because you're right to repossess the property is the primary, right? You have to enforce the rental obligation. It's not suing. So that's, that was how they dealt with that period. In one sense, in another sense, they say fine. If you give the, this notice by September 30th, you also have to give them a 15 day notice to cure or quit. It was 15 business days. It's really three weeks. And what this notice said was you have three options as the tenant in response. You can pay the rent, you can leave, or you can check a box on the attached declaration saying that you weren't able to pay the rent or any part of it due to a COVID related circumstance. COVID related circumstance, which is actually pretty close to the definition used by almost every single local ordinance is anything related to COVID that has also impacted you financially. So that means lost a job, lost hours at a job, ended up having to pay a caretaker, to take care of kids, medical payments, medical payments, literally anything if it's money and COVID and as a result, the tenant had less money. Then that is a reason they can use to basically support that declaration. As long as they're making less than 130% of whatever your local average median income is, it was self-certified. In other words, they did not have to provide you any proof and that's still the case, but the second time period, we'll talk about in a second. If you do have evidence to suggest, or you do have a good faith belief as the landlord, that the person or the family is making more than 130% of the average median income, then you can check a box on the notice and then they would have to provide you some sort of evidence of their inability to pay, because believe it or not, we had a lot of people who were not paying the rent, checking these declarations, right? And then the landlord would see them roll around in brand new six figure Mercedes or BMWs, and, you know, with new clothes on, from Versace and then not paying the rent.
Bob Preston: 36:53 Well, and typically a landlord has accepted a rental application where they've provided some proof of income. So, they have some, some knowledge of how much that tenant makes unless they've lost their job.
Niv Davidovich: 37:05 Correct. But, uh, so, and that's where the law sort of was designed to give people options because person could have been making $200,000 a year, certainly well above the AMI, but they lost her job completely correct. $0 a year. That would qualify, but that person would have to provide evidence of that. And so, if, if a person does claim that, but they're also rolling around in brand new luxury cars, something doesn't add up. So at least the legislature was wise enough not to allow people who are making that kind of money and still make that kind of money from abusing the system to stop paying rent to landlords when they have no good reason to do so. From September 1st to January 31st is what they call them the law of the transition period. During the transition period, you could send a notice to a tenant basically every month, right? At each time you would send them the notice. It would supplant whatever the notice was for the prior month. The difference here is that they would have to reply to the notice every single month, right? If they didn't reply to the notice, then you can actually evict them even back in 2020 and believe it or not. We had a lot of tenants who just ignore these notices completely. They didn't pay, they didn't quit. And they didn't write backs with a declaration under penalty of perjury saying, I cannot pay as a result of a COVID related circumstance for those people. You can just go ahead and file the eviction. You have your 15-day notice, you have their failure. And we did actually start filing evictions even back in 2020. For this reason, theoretically speaking, the law does provide that even if they don't provide the notice in a timely fashion, they can come to the court and provide the notice during that during, during that hearing or during that proceeding. And as long as they can show some sort of excusable mistake or inadvertence or negligence, and there's virtually no way to prove that it wasn't that, uh, the judge will give him a pass and cancel the eviction. But we had situations where they didn't do that. And we play in courts where we could get defaults. We were getting default judgments. And again, this is even back in 2020. So that goes to January 31st as the law stands today. February 1st, as the law stands today, 3088 expires, and you can start doing evictions, right then. What's the, what's the importance of the date March 1st, as it stands today, it, again, in order to strengthen the constitutionality here, what they said was we know a lot of landlords would not be able to go to a lawyer and start filing claims for large amounts of rent. But they're stuck with very low jurisdictional limits on small claims access. So if you're a landlord and your property is owned by an LLC or a corporation or partnership, something that is a fictional entity. When you go to small claims court, you are only allowed to sue for a, a limit of $5,000. And B you're only allowed to go twice a year, one twice in every 12-month period. So, what the legislature did was said, if you are a landlord and you are collecting COVID rent, both of those limitations are removed. Starting March 1st, you can go to small claims, ask for any amount of money you want COVID rent, and you can file as many claims as you want for COVID rent. So, starting March 1st, theoretically, if the law doesn't change, you are going to see an avalanche tsunami of small claims cases get filed by landlords.
Bob Preston: 40:56 Wow. And you made a good point as it stands today. I mean, what's the likelihood that this won't change because I mean, there's this complete surge going on in Southern? Well, all of California, it's Southern California in particular, something's going to happen here. I would imagine. Right?
Niv Davidovich: 41:10 So, um, uh, San Francisco legislator did submit a bill called AB 15, uh, which is currently making its way through several committees. AB 15 is just far too drastic. Um, but what it says is they want to take that January 31st, 2021 date and make it December 1st, 2021. In other words, take AB 38 and make it.
Bob Preston: 41:38 Put it through the entire year. Yeah. The entire year of 2021.
Niv Davidovich: 41:42 Yeah, exactly. Which is just it's insane. And I don't think it will pass, uh, the California, um, Assembly and Senate as drafted. It seems far to access it. So, it's the same thing in the court where judges and clerks are making up their own mind as to what to enforce what not to enforce, what rules to make, what not rules to make, they're putting their own personal spins on things. So, it’s kind of doesn't even matter necessarily what happens with the AB 15. We might get still stuck with a lot of these local rules being made and local jurisdictions also flouting the law anyway, in Los Angeles, the city of Los Angeles as law basically says our rental, uh, our, sorry, our eviction moratorium runs into the local jurisdiction is over period until Mayor Garcetti says, it's done. That's not what the state law says. The state law is supposed to supplant all the local moratoriums. And LA says, no, we want ours. We like ours. That's okay.
Bob Preston: 42:52 So that would take precedence, the LA moratorium?
Niv Davidovich: 42:55 It shouldn't, that's not the law. It directly conflicts with the state law and the state law should preempt, but the city is saying, no, we think our law is perfectly fine. And if you don't like it, take it up with the judge.
Bob Preston: 43:08 What about the CDC moratorium? Where does that come into play?
Niv Davidovich: 43:11 That gets into an issue of federalism because the CDC is obviously not part of the legislative branch. They're basically trying to make some sort of executive order it's supposed to also expire January 31st. I've never actually seen someone use the CDC as a defense because theoretically speaking, the federal government is not supposed to be getting involved with state laws and all evictions, all eviction laws in any state are a matter of state law. It's it would be tantamount to CDC coming out and saying, okay, no more divorces until the, until it's done, because we don't want people to separate. Right. There's literally no difference. You can't do that. You can't, you can't, the federal government is really not committed to come in and start meddling in state law issues, yet they have, and it's the CDC. It's not even, even the legislature. I mean, I'm sorry. It's not even the Congress. So, it's, it's, it's confusing. And then it gets down to that. Is a judge going to look at this and say, well, no, this is unconstitutional. I'm not, not buying this as some judges have done in different States and even in California, or is the judge look at this and say, huh, this is great. I have an excuse to basically, uh, support my own personal opinion of what should be done here. And if that judge thinks, uh, Nope, no evictions period, then they're going to use anything that's at their disposal, including the CDC more joining. So, it really comes down to that particular judge, that particular clerk or that particular sheriff, what their opinion is on the subject.
Bob Preston: 51:24 Thank you. As we wrap up today, I'd like to make another quick plug to our listeners to click on the subscribe button and give us a like also please pay it forward with a positive review to help encourage more great guests to come on the show that concludes today's episode of the property management brainstorm. Thank you for joining us until next time we will be in the field, working hard for our clients to maximize rental income and property value while maintaining top tenant relations.
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