The coronavirus and Governor Gavin’s executive orders, including his stay-home restrictions have affected us all. In the past five weeks, 2.3 million people have applied for unemployment in California and 26.5 million in the Country, setting dubious new records.
Hundreds of thousands of Californians have been laid off or forced to stay home or are unable to work and are not being paid; as such rents are not being paid. Traditionally when rents are not paid, landlords start eviction proceedings with a notice to pay rent and the filing of an Unlawful Detainer action.
California now has two parallel but different laws temporarily delaying evictions against tenants.
GOVERNOR GAVIN’S EVICTION ORDER
On March 27th, Governor Gavin issued Executive Order N-37-20, for residential tenants only, essentially suspending evictions through May 31st provided the tenant meets certain criteria. The tenant must have been paying rent and must notify the landlord in writing within seven days after rent is due proving the tenant needs time to pay rent because of work issues related to COVID-19 or needs to care for a child whose school is closed. The tenant must retain documentation to verify the hardship from the virus. Under the Governor’s Order, the courts will not issue a summons and process an Unlawful Detainer action to evict a tenant.
The Order does not relieve the tenant of the obligation to pay rent but postpones that obligation. Of course, this will result in a very ugly situation with a potential rush to the courts unless the Order is extended.
CALIFORNIA SUPREME COURT EVICTION RULE
On April 6, the California Supreme Court issued 11 Emergency Rules of Court, Rule 1 is regarding Unlawful Detainer actions.
A court may not issue a summons for a filing of an Unlawful Detainer action, residential or commercial, unless the eviction action “is necessary to protect public health and safety,” which is undefined but certainly will be narrowly construed. In other words, a landlord can file an Unlawful Detainer action, but it will not be processed by the courts. Additionally, the courts will not take tenant’s default, and trial dates are deferred for at least 60 days – measures to postpone evictions.
The Supreme Court’s new emergency rule on evictions remains in effect until 90 days after Governor Gavin declares that “the State of Emergency related to the COVID-19 pandemic is lifted.” In other words, the Supreme Court’s rule is in effect longer than the Governor’s, unless the Governor’s Order is extended which seems likely.
Tenant’s rights advocates are critical of the two new eviction policies claiming they did not go far enough by waiving rent versus delaying payment. Property owner advocates claim the new rules go too far and will be taken advantage of by unscrupulous tenants.
The California Supreme Court issued an emergency rule suspending judicial foreclosures, which sounds better than it really is given that 99% of all foreclosures are not done judicially through the courts, but by lenders’ foreclosure services which after approximately 4 months results in an auction of the property following a Notice of Sale published in a regional newspaper.
With more impact, the federal Department of Housing and Urban Development is suspending all foreclosures (and evictions) through mid-May which affects single-family loans backed by Fannie Mae or Freddie Mac. As I understand these federally backed loans represent about 65% of outstanding single-family loans. Not much, but better than nothing.
NEVADA COUNTY BUSINESSES OPEN FOR STAGE 2
Starting now, Nevada County businesses, many anyway, are moving into COVID-19 Stage 2 of the 4 Stage reopening. Big news. See www.mynevadacounty.com/coronavirus/businesses.
Jim Porter is an attorney with Porter Simon licensed in California and Nevada, with offices in Truckee and Tahoe City, California, and Reno, Nevada. Jim’s practice areas include: real estate, development, construction, business, HOA’s, contracts, personal injury, accidents, mediation and other transactional matters. He may be reached at firstname.lastname@example.org or www.portersimon.com. Like us on Facebook. ©2020