TALG serves our real estate clients’ needs in California, Nevada, Texas and North Carolina. One of the critical areas in which we are advising clients involves new state laws regarding landlord and tenant rights and obligations involving lease/mortgage payments and evictions due to hardships suffered as a result of COVID-19. Below is a summary of each state’s laws:
Recently, California Assembly Bill (AB) 3088, known as the “Tenant, Homeowner, and Small Landlord Relief and Stabilization Act of 2020” (the Act) was signed into law. Highlights of the Act are:
- It extends the moratorium on unlawful detainer / eviction filings based on non-payment of rent for reasons due to COVID-19. As long as a COVID-19-impacted residential tenant pays at least 25 percent of the rents due, eviction cannot proceed.
- The Act doesn’t waive the unpaid rent, but instead converts that amount to consumer debt, collectible in small claims court beginning March 1, 2021. For tenants that are not able to meet the 25 percent minimum, the Act provides eviction protection only until February 1, 2021. Landlords who resort to “self-help” actions, such as shutting off utilities to force a tenant to vacate will be liable for new penalties of $1,000 to $2,500.
- To qualify for the protections under the Act, tenants need to sign a declaration that they’ve been financially impacted as a result of COVID-19. The Act defines “impacts” broadly, including increased expenses due to health impacts, increased childcare or eldercare responsibilities, and loss of income. Higher-income tenants must provide specific documentation regarding proof of financial loss.
- The Act does not protect landlords against foreclosure or require banks to provide them forbearance. Instead, it extends the protections already in place in California’s “Homeowners’ Bill of Rights” to small landlords (those owning residential property with no more than four units). Mortgage servicers must contact borrowers before pursuing foreclosure proceedings in order to provide potential forbearance options. Additional anti-foreclosure protections for small landlords apply and remain in effect until January 1, 2023.
Nevada’s COVID-19 landlord-tenant laws have proceeded via Executive Orders issued by the Governor, as follows:
- On March 24, 2020, Governor Steve Sisolak issued an order establishing a statewide eviction moratorium through June 30, 2020 (“Eviction Order”). The Eviction Order prohibits the following actions by landlords against residential tenants:
- Notices to vacate
- Notices to pay or quit
- Foreclosure action, or other proceeding involving residential or commercial real estate based upon a tenant or mortgagee’s default of any contractual obligations imposed by a rental agreement or mortgage may be initiated under any provision of Nevada law.
- On June 25, 2020, Governor Sisolak issued a new order modifying the Eviction Order. Beginning August 1, 2020, housing providers may file for lease violations outside of nonpayment using a 5-day notice to cure followed by a 5-day unlawful detainer. Additionally, filings for nonpayment will be allowed in cases where residents default on payment plan arrangements, provided the governor’s form or other acceptable form is used and is an addendum to the lease agreement. Filings for any nonpayment of rent can be filed and late fees may be charged on future rent. Any evictions currently stayed will need to be re-served unless the resident in question responded to the initial notice.
- On August 31, 2020, the Governor signed Emergency Directive 031 extending the moratorium on certain residential evictions for 45 days, through October 14, 2020.
On September 25, 2020, the Texas Supreme Court issued an emergency order allowing for eviction proceedings to be abated by agreement of the landlord and tenant for 60 days, under a new Texas Eviction Diversion Program (“Program”). The Program seeks to reduce the number of evictions by creating a forum for landlords and tenants to agree upon the resolution of non-payment of rent issues, supported with rental assistance for tenants provided from federal CARES Act funding distributed through the Texas Department of Housing and Community Affairs. Under the Program:
- Landlords must review information about the Program on the Office of Court Administration website before filing an eviction case. In their eviction citations issued to tenants, landlords must:
- (1) affirm they reviewed the program information and
- (2) include a specific notice to tenants and a copy of the Program brochure
- On the date listed in the citation for the eviction case trial, the judge must discuss the Program with the landlord and tenant and ask whether they are interested in the program
- At any time during the 60-day period, a landlord in an abatement agreement can file a motion to reinstate the eviction case, and the eviction trial must then be set within 21 days
- In a previous emergency order, the Texas Supreme Court updated the list of items that must be included in the landlord’s sworn petition required in residential eviction filings. These items include a statement of whether or not: (1) the premises is a “covered dwelling” subject to Section 4023 of the CARES Act; (2) the plaintiff is a “multifamily borrower” under forbearance subject to Section 4023 of the CARES Act; (3) the landlord has provided the tenant with 30 days’ notice to vacate under Sections 4024(c) and 4023(e) of the CARES Act; and (4) the tenant has provided the landlord with a declaration under the Centers for Disease Control’s (CDC) Order of September 4, 2020 to temporarily halt residential evictions to prevent the further spread of COVID-19. The court’s order also requires landlords to notify tenants in eviction citations of their rights to file a declaration stopping the eviction in the instances applicable under the CDC order. Landlords must also include a copy of the CDC declaration form. The Supreme Court’s order runs until December 15, unless extended by the Chief Justice.
Similar to Texas, North Carolina is currently following the CDC’s moratorium on evictions (which lasts through 2020). Under the CDC plan, to avoid eviction a tenant must have “used best efforts to obtain all available government assistance for rent or housing”. An individual also must earn no more than $99,000 in annual income or $198,000 if filing a joint return. In addition, the renter or renters must be unable to pay the full rent or make a full housing payment due to “substantial loss” of household income. Other conditions include a layoff or “extraordinary” out-of-pocket medical expenses. To qualify under the CDC plan, each adult listed on the lease must complete the CDC form attesting to their income and hardship (as it is an official government document, lying on the CDC form may make the tenant subject to perjury), and provide the completed form to their landlord.
Prior to the implementation of the CDC moratorium, on May 30, 2020, North Carolina Governor Roy Cooper signed Executive Order No. 142. Under Executive Order 142, evictions in the state were halted for three (3) weeks, along with the following protections:
- Prevented landlords from assessing late fees or other penalties for late or nonpayment;
- Prevented the accumulation of additional interest, fees, or other penalties for existing late fees while this Order is in effect;
- Required landlords to give tenants a minimum of six months to pay outstanding rent;
- Required leases to be modified to disallow evicting tenants for reasons of late or nonpayments; and
- Clarified that evictions for reasons related to health and safety were allowed to proceed.
A utility shutoff moratorium was also included in Executive Order No. 142, which lasted 60 days. This prohibited utility disconnections for all customers, prohibited billing or collection of late fees, penalties, and other charges for failure to pay; and extended repayment plans at least six months. Executive Order No. 142 has since expired.