AB 1436 - Additional tenant protections

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AB 1436 - Additional tenant protections

Michael D.
Attorney · Laguna Niguel, CA · Member since 2020 · 6 posts · 5 votes

Since I'm still new here I figured I should start contributing by sharing this to the group.  A bill pending with the California legislature just came across my desk, AB 1436.  A link and a summary appear below.  It's just a proposed bill at this point, and while it may or may not become law (at least in current form), I think that it is a good indicator of where Sacramento is going towards in terms of tenant protections related to COVID-19.

http://leginfo.legislature.ca....

According to the legislative summary, the bill:

-"Prohibits a landlord from applying a security deposit or monthly rental payment for the satisfaction of an obligation other than the prospective month’s rent if the obligation accrued  between the date a state of emergency
relating to the COVID-19 pandemic was declared and either April 1, 2021, or 90 days after termination of the state of emergency, whichever is earlier (hereafter “effective time period”), unless the payment or security is specifically designated by the tenant for the obligation." 

-"Provides that a covered tenant, as defined, who failed to pay rent that accrued during that effective time period shall not be deemed to be in default and would prohibit any action for recovery of unpaid rent until 12 months after the effective time period. The bill would define “covered tenant” as a tenant who is unable to satisfy rent accrued during the effective time period due to a loss of income or increased expenses resulting from COVID-19 and who provides a written statement to that effect to their landlord, as specified. The bill would prohibit certain entities, including a housing provider, from using an alleged default in rent that accrued during the effective time period as a negative factor for the purpose of evaluating creditworthiness or for other specified purposes."

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Anne C.
Member since 2018 · 13 posts · 8 votes
6y

Yup, most ridiculous and unconstitutional bill AB 1436 seems like it's on its way to passing. I can't believe that no one at any level of our government is stopping this bill for the obvious reasons it violates our constitution. 

I started a Twitter account just so I can comment on David Chiu's tweets on the eviction moratorium and tell my side of the story / my struggles as a small landlord. Obviously don't expect him to take anything in that does not agree with his narrative. 

My tenant has not paid rent since June 2020 and has avoided all attempts at communication, even though I've offered to work out a payment plan or partial rent deferral from the beginning of the pandemic. This whole situation gets more and more frustrating every month and I'm starting to feel helpless. Even though I know I shouldn't take mortgage forbearance until I absolutely have to, and it will have financial ramifications in the future, if AB 1436 passes, I'm thinking about taking forbearance anyway so that I can conserve cash in case CA politicians decide to continue their unconstitutional bill indefinitely. You never know, it may happen.

I already plan to sell the property once I can get the tenant to vacate, but with AB 1436 I'm not sure if I can even vacate the tenant with a 60-day notice after April 1, 2021 if my tenant was still trying to make up for his past due rent payments until April 1, 2022. 

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  • Ronil DwarkaPro Member
    Real Estate Broker · Sacramento, CA · Member since 2020 · 18 posts · 3 votes
    6y

    Great stuff Michael - always wondered how the layman landlord finds out about all these critical info apart from news sources. Cheers.

    0Reply
  • Dave Peterson
    Investor · Sacramento, CA · Member since 2016 · 96 posts · 41 votes
    6y

    Pretty soon CA will require you to rent to the first person who shows up at your rental doorstep regardless of their qualifications.

    1Reply
  • Steven Chessler
    Investor · Mountain View, CA · Member since 2015 · 6 posts · 1 vote
    6y

    I am surprised AB 1436 isn't getting more attention here. It allows any renter, regardless of actual financial situation, to not pay rent simply by stating that the Covid-19 crisis makes them unable to pay rent. No proof necessary: just a statement that they can't pay because of Covid-19. Nonpayment will continue until 90 days after the state declares the emergency over or until April 1st, which almost certainly means that nonpayment of rents will continue until April 1st, 2021.  So, rental property owners could potentially have no rent coming in until April 1st, 2021. On its face, the bill promises mortgage relief, but, in truth, this provision is most likely not enforceable AND property owners will still have to cover all other property-related costs, with potentially no income coming in. Amazingly, aside from what  is probably an empty promise of mortgage relief, the bill offers no financial support to help property owners with other expenses despite the fact that they are being asked (forced) to forgo rent. No help or chipping-in by the state. Your on your own.  Can't pay for maintenance, utilities, employees, property tax because of this mandate from the state?  Tough luck. The LA Times--certainly not a conservative paper--editorialized correctly that AB 1436 would be disastrous for mom-and-pop landlords.

    On April 1, 2022 (yes, 2022, not until then) you will be allowed to take legal action to recover the rent from the Covid-19 period.

    This post is already too long, to just two more points: 1) as insane as this bill is, its sponsors also don't seem to care that it is almost certainly unconstitutional, in violation of both the state and US constitutions. The California Apartment Association (CAA), the mega-law firm of Gibson, Dunn and Crutcher, and other organizations have nice write-ups about the (un)constitutionality of the provisions of this bill that you can find on the web. 2) renters are hurting due to the crisis and need help. But the State and all of us in California need to provide that help collectively. It is not fair, smart or constitutional to decide that rental property owners alone should bear the burden of providing this cost, regardless of the harm to the property owners.

    1Reply
  • Anne C.
    Member since 2018 · 13 posts · 8 votes
    6y

    Yup, most ridiculous and unconstitutional bill AB 1436 seems like it's on its way to passing. I can't believe that no one at any level of our government is stopping this bill for the obvious reasons it violates our constitution. 

    I started a Twitter account just so I can comment on David Chiu's tweets on the eviction moratorium and tell my side of the story / my struggles as a small landlord. Obviously don't expect him to take anything in that does not agree with his narrative. 

    My tenant has not paid rent since June 2020 and has avoided all attempts at communication, even though I've offered to work out a payment plan or partial rent deferral from the beginning of the pandemic. This whole situation gets more and more frustrating every month and I'm starting to feel helpless. Even though I know I shouldn't take mortgage forbearance until I absolutely have to, and it will have financial ramifications in the future, if AB 1436 passes, I'm thinking about taking forbearance anyway so that I can conserve cash in case CA politicians decide to continue their unconstitutional bill indefinitely. You never know, it may happen.

    I already plan to sell the property once I can get the tenant to vacate, but with AB 1436 I'm not sure if I can even vacate the tenant with a 60-day notice after April 1, 2021 if my tenant was still trying to make up for his past due rent payments until April 1, 2022. 

    2Reply
  • Steven Chessler
    Investor · Mountain View, CA · Member since 2015 · 6 posts · 1 vote
    6y
    0Reply
  • Steven Chessler
    Investor · Mountain View, CA · Member since 2015 · 6 posts · 1 vote
    6y

    Sorry about your difficult situation, Anne. Regarding the mortgage protection in AB 1436: proponents of the bill are trumpeting this provision as a way of protecting rental property owners. Unfortunately, this provision is likely, for the most part, a false promise to property owners. "State authority over large national banks is significantly constrained by federal law . . . under the National Bank Act and related case law, courts have widely upheld federal preemption over state laws that interfere with the business of banking. Courts would likely stop any attempts by the state to force banks to limit rates or fees, demand forbearance or loan modifications, or require banks to make certain loans" (quotation from the CAA).

    There is another bill, SB-1410, that is better for property owners. Governor Newsome indicated that the way forward would be to combine the two bills.  This would take some of the sting away.

    I've seen a couple of Chiu's tweets about AB 1436. He talks about big corporations (naturally). The severe injury to small property owners, whom he fails to mention, will be collateral damage, not to be discussed. If this gets thrown out in court, which it should, then he will have also hurt the tenants he purports to want to help, costing them having a legal Covid-19 relief bill in place.

    0Reply
  • Kyle J.
    Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    6y
    Originally posted by @Ronil Dwarka:

    Great stuff Michael - always wondered how the layman landlord finds out about all these critical info apart from news sources. Cheers.

    The best way to stay up to date on pending legislation like this is to become a member of one of the large landlord associations (like California Apartment Association).  Not only do they have a lot of great benefits just for joining (free landlord forms, legal advice, webinars, etc), but they'll send you regular updates on all the pending legislation that affect us landlords (like this one) and they help lobby against (and defeat) the ones that hurt us.  

    Here's one of the recent updates they sent out on AB1436: VoterVoice: Stop the Government Sanctioned Rent Strike

    0Reply
  • Kyle J.
    Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    6y

    Well, here's some good news that just came out with regard to AB1436:

    CAA derails 'free rent' bill, negotiates alternative: AB 3088

    Link to article: CAA negotiates alternative to AB 1436

    0Reply
  • Anne C.
    Member since 2018 · 13 posts · 8 votes
    6y

    Very relieved that AB3088 passed instead of AB1436. 
    Joined CAA last night to access the forms they provide and currently filling out the 15-day eviction notice form for unpaid rent from March 1 to August 31 provided by CAA. The form seems to cover everything and seems straightforward, but wondering if I should still have an attorney walk me through filling it out and serving it, or I can just fill it out myself and have someone I know serve for me. With labor day weekend this weekend, seems like I won't be able to get legal help until Tuesday, but I feel rushed to serve him the AB3088 informational notice and 15-day eviction notice this weekend. 

    0Reply
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