COVID-19, the illness caused by the novel Coronavirus, has disrupted the global economy on a huge scale. In the United States alone, there were more than 3 million new unemployment claims filed in the first week of social-distancing measures enacted by some states. Millions of Americans have been laid off or had their hours or salaries cut.
One result of job and wage losses will be people struggling to pay their housing expenses, either rent or mortgage payments. State and local governments have responded to that challenge by issuing moratoriums on evictions. In California, Gov. Gavin Newsom signed an executive order allowing local municipalities to pass new eviction prevention ordinances related to COVID-19.
Here’s a look at how local eviction laws have changed as a result of the pandemic.
San Jose and Santa Clara County have both issued moratoriums on evictions for non-payment of rent due to COVID-19. Gov. Newsom, in his original order, made it clear that pressing the pause button on evictions did not mean that rent obligations were waived. They are deferred.
Santa Clara County’s eviction ban was put in place on March 24 and will last through the month of May. The city of San Jose passed a moratorium, but made it a one-month duration, expiring on April 17. City council left the door open for a further extension, which some San Jose property management businesses are expecting.
In order to avoid eviction, tenants will have to show proof of “substantial ” loss of income due to job loss, reduction in hours, business closure, or a significant drop in business income due to reductions in hours of operation or consumer demand. They must declare in writing, no more than seven days after rent is due, that they are unable to pay.
On the California Apartment Association (CAA) website a sample letter can be found that renters can use to inform their landlords or property managers of their hardship.
The county-wide restriction on evictions does not supersede any stronger renter protections established by individual municipalities. Tenants are urged to check with their local housing departments regarding COVID-19-related hardships.
What it means for landlords
Obviously, area landlords will likely see a reduction in income, too. Without the recourse of eviction available, they won’t be able to do much to force tenants to pay rent. There may be some remedy for rental property owners, however.
Four major banks – Wells Fargo, Citi, US Bank, and JP Morgan Chase – announced on March 25 that they would suspend residential mortgage payments for California residents for 90 days. Smaller regional banks and credit unions have made similar pledges. Bank of America, another major mortgage lender has a 30-day suspension in place.
Gov. Newsom said everyone is eligible regardless of income, though they will have to show proof of some hardship due to the coronavirus in order to qualify. Property owners with mortgages might be able to suspend payments while they’re not collecting rent. Owners should check with their mortgage holder for details on the information that would need to be submitted to them. The federal stimulus bill signed into law on March 18 also places a temporary ban on foreclosures for mortgages backed by Freddie Mac or Fannie Mae. Therefore Owners should not lose properties to foreclosure.
The CAA is urging tenants and renters to cooperate in the process. CAA public affairs officer Debra Carlton stated at a recent news release: “The COVID-19 pandemic has brought frightening and uncertain times, leaving many Californians with health challenges and economic difficulties. CAA believes rental housing providers have an obligation to stay informed, to look out for each other and their residents, and work together to weather this storm.”
Valley Management Group, a San Jose property management company, shares the association’s view on cooperation and is urging rental property owners to act with compassion in dealing with residents who are facing coronavirus-related hardships.
Reviewed and Approved by Lloyd Kipp
Property Manager and Owner of Valley Management Group