Eviction moratorium extension coming? Perhaps… and it’s complicated

Eviction moratorium extension coming? Perhaps… and it’s complicated

  • The CREM Group
  • 12/17/20
The CREM Group team members are primarily probate property realtors, but realtors, nonetheless, and part of the bigger industry that comprises real estate of all kinds in Southern California. We bring you the latest news on a burning issue in California, the possible extension of the eviction moratorium. It’s currently being argued in the State Legislature.

In our September 2020 journal entry on the Corona Virus Eviction Mortarium, we discussed the consequences the eviction moratorium’s end–meaning tenants could be evicted for non-payment of rents. As of December of 2020, the eviction moratorium may have to be extended. Good news for renters, not-so-good news for landlords and banks (lenders).

Just A Few Months Ago

The August 2020 ‘Cal Matters’ article by Matt Levin on this website cites layers and players in this three-way game of COVID roulette. The tenants, landlords, and banks all have their chips on the table. The California State Legislature is faced with spinning the wheel to decide the extent of the new legislation.

Tenants: Renters couldn’t be evicted for payments they had missed from March 2020, when the pandemic first arrived, through August 31, 2020. Then, from September through January 31, 2021, if renters could come up with 25% of the rent they owed, they would also be protected from eviction, and they could pay the 25% any time before January 31, 2021.

Landlords: Landlord groups fought back… wanting to be able to evict tenants for reasons unrelated to virus-induced financial hardship. Under the current eviction moratorium, the landlords maintained that they could not remove renters who they claimed damaged property or were a nuisance to neighbors.

Banks: There was talk that banks would be forced to offer mortgage forbearance options to struggling small landlords. There are apparently laws that limit government interference with private contracts like mortgages through “contract clauses” in state and federal constitutions. It’s sometimes easy to forget that banks need to make money so they can fund business growth and investment, but they do.

Now Now what? It’s serious. If nothing is done by January 31st, an estimated 240,000 California households with back rent owed could be evicted just a few months away from receiving the vaccine. Here’s why: Starting February 1, 2021, the old eviction rules were to go back to normal.

The newest proposal before the California State Legislature would forbid landlords from evicting renters financially harmed by the pandemic through December 31, 2021, a year from now. Renters/tenants would have until then to pull together a quarter of the back rent they had accumulated since last September to avoid being kicked out in 2022.

Three gambles

Gamble # 1. Tens of thousands of renters could be forced from their homes and apartments, making COVID much more likely to spread if the mortarium is not extended.

Gamble# 2. On the other side, landlord groups contend that extending an eviction moratorium for fewer months (not all the way to December 2021) would help them stay afloat. Stretching the eviction moratorium to 12/31/21 would mean almost 18 months without rental income because of the state COVID-19 eviction moratorium that was imposed in April 2020. Property owners doubt they could survive that long, arguing for a shorter moratorium that could be revisited if necessary.

Gamble #3. What are the banks to do? They need some relief as well. They will need some assurance their mortgages will be paid, or they risk of going out of business.

How big is the roulette wheel? California tenants owe about $1.7 billion in past-due rent, according to an estimate by the Federal Reserve Bank of Philadelphia. If the unemployment benefits are not extended, the debt may grow.

Playing the Game

Governor Newsom will continue to advocate for renter and homeowner relief. If a major federal rental assistance package is delivered in the next few weeks and months, landlord and renter groups could arrive at a compromise on when the moratorium should expire. Until then, December of next year is too long. February 2021 is too short. There’s got to be a Goldilocks answer in the wind.

What Do We Think?

There are no easy problems these days, with no easy answers. Some of our trust properties are rentals – homes, apartment buildings, offices. When these land in a trust, the beneficiaries can choose to keep the income property by becoming Instant landlords. However, eviction moratoriums can bring new headaches to families who thought their passive (or active) income ship had arrived.
Hopefully, a compromise will be struck. The eviction moratorium may be extended to help renters and protect our neighborhoods from an influx of homeless COVID victims. Equally, it is hoped that property owners will begin to have some (albeit reduced) income before they have to relinquish their properties to the banks. The state and federal governments will, with luck, settle on getting relief sent our way. Whatever you do, don’t give up. Hang in there. When you need help on real estate and with probate and trust real estate, especially, see counsel from trustworthy probate lawyers and ridiculously friendly and experienced probate real estate professionals (like the CREM Group). We’d love to answer your questions. * * *

As long time probate real estate agents and as attorneys working in and around all kinds of properties in Los Angeles and Orange Counties, the CREM Group has made sure we support our clients, so they know the alternatives to buying, selling, or renting probate, trust, and conservatorship homes and commercial properties in California.

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As always, contact us by email here if you have any questions about real estate, probate real estate, conservatorship, or trust real estate properties, especially in Los Angeles and Orange Counties in California.

Mark Cianciulli, Esq. [email protected]

DISCLAIMER: This content is meant purely for educational purposes. It contains only general information about real estate matters. It is NOT legal advice and should not be treated as such. We recommend consulting a legal or tax professional before acting on any material, opinion, or perspective described herein.

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COVID-19 Safety. As all of us at the CREM Group market and sell our inventory of probate, trust, and conservatorship homes for our clients, we adhere to the COVID-19 regulations set by the California Association of Realtors.

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