On January 29, 2021, Governor Gavin Newsom signed Senate Bill 91 (SB 91) into law. This new legislation, which aims to benefit both tenants and landlords in the state of California, instantly took effect on the 1st of February 2021.
SB 91 supplements the COVID-19 Tenant Relief Act (CTRA) of 2020, or AB 3088, which was originally passed by the State Legislature and signed by the Governor on August 31, 2020. SB 91 effectively extends Assembly Bill 3088, or the COVID-19 Tenant Relief Act of 2020, for another five months; that is, until June 30, 2021. It also enacts additional provisions related to the COVID-19 pandemic for tenants who have suffered COVID-19-related financial distress and creates a state government structure to pay up to 80 percent of tenants’ past due rent to landlords.
Moreover, SB 91 establishes the rules for the disbursement of funds allocated to California under the $25 billion federal Consolidated Appropriations Act of 2021, the federal stimulus bill passed by Congress on December 27, 2020, to fund the government’s emergency rental assistance.
If you want to check if you’re eligible to apply for SB 91 Rental Assistance or have questions regarding this particular legislation, please get in touch with Express Evictions.
How SB 91 Extends Assembly Bill 3088
Assembly Bill 3088 or AB 3088 – which was adopted in August 2020 – provides residential tenants with eviction protection as long as they submit a declaration of financial hardship related to COVID-19 to their landlords.
Under AB 3088, residential tenants who receive a 15-day notice to pay or quit and submit their hardship declaration promptly cannot be evicted for their failure to pay any rent due between March 2020 and August 2020. Additionally, AB 3088 states that residential tenants who submit their declaration of COVID-19-related hardship cannot be evicted for not being able to pay rent due between September 2020 and January 2021. That is, as long as they pay at least 25 percent of their rent due within the applicable period.
SB 91 extends this eviction protection until June 30, 2021 and requires tenants to pay at least 25 percent of any rent due before June 30, 2021.
While AB 3088 permitted landlords to start their COVID-19 rent collection as consumer debt in small claims court starting March 1, 2021, SB 91 extends that date to August 1, 2021 instead. Moreover, all AB 3088 notices are no longer valid as of February 1, 2021.
According to SB 91, new breach of contract actions may be filed in a superior court starting July 1, 2021.
How SB 91 Extends Assembly Bill 1482 (Statewide Rent Control)
SB 91 also expands on the just-cause eviction requirements of Assembly Bill 1482. Therefore, AB 1482 temporarily extends to all kinds of residential rental properties like single-family homes. This also means that all tenants are covered starting from their first day of tenancy.
Four Major Changes in SB 91
In sum, there are four important changes in terms of the provisions of AB 3088 in the new SB 91 legislation, namely:
- The 5-month extension (until June 30, 2021) of the existing eviction prohibition for residential tenants who are affected economically by the COVID-19 pandemic and have paid at least 25 percent of their rent due
- Introduction of the new California state rental assistance program for many low-income tenants, which is being funded by the recent federal stimulus funds
- New requirements for the collection of COVID-19 rental debt by landlords
- New protections for residential tenants affected by COVID-19
New Major Tenant Protections Under SB 91
SB 91 provides substantial tenant protection, including the following key provisions:
No Late Fees
According to SB 91, landlords are prohibited from charging late fees between the March 1, 2020 to June 30, 2021 period for tenants who have submitted their declaration of hardship. It doesn’t allow landlords to charge tenants any new fees for services that are already being provided. It also forbids landlords from increasing existing fees for services that are already in place.
Security Deposits and Payment Attempts
The landlord is not allowed to use their tenant’s security deposit to satisfy unpaid rent payments during the tenancy period. However, when the tenant vacates the property, the security deposit can be used to offset unpaid rent.
The security deposit can also be used to cover a tenant’s COVID-19 rental debt if the tenant provides consent in writing authorizing their landlord to use the security deposit.
Any payments made by a tenant as an attempt to pay part of their overdue rent must be treated as “prospective” rent. Therefore, it cannot be applied to COVID-19 rental debt, which is any amount owed between the March 2020 and June 2021 period. However, such payments can be applied to overdue rent if the tenant issues a written consent form to their landlord.
Just-Cause Eviction Protection
As outlined in AB 1482 before July 1, 2021, an eviction can only be filed for just cause. This provision applies to all tenancies, including tenancies that have been in effect for less than one year, as well as affordable housing, new construction, and single-family homes. Previously, under AB 3088 and now under SB 91, the just cause reasoning continues to be upheld.
Protection for Tenant Applicants
SB 91 expressly forbids landlords from disqualifying tenant applicants because of COVID-19-related financial hardship. Applicants who are otherwise qualified for the property must be treated fairly. If the applicant filed a COVID-19-related hardship declaration with their previous landlord, it should not be used against them.
Rental Debt Protection
If a tenant declared financially affected by COVID-19 between March 1, 2020 and June 30, 2021 also has a household income below 80 percent of the area median income, the landlord is forbidden from assigning or selling the rental debt to the tenant permanently. Meanwhile, landlords are not allowed to sell or assign COVID-19 rental debt until July 1, 2021 for all other residents with a household income above 80 percent of the area median income.
COVID-19-Related Financial Distress
Financial distress due to COVID-19 refers to any of the following situations:
- Total loss of income because of the COVID-19 pandemic
- An increase in out-of-pocket expenses related directly to the performance of essential work during the COVID-19 pandemic
- An increase in spending or expenses related to health due to the COVID-19 pandemic
- Childcare or caregiving responsibilities, such as having to attend to an elderly, disabled or sick family member due to the COVID-19 pandemic, which have limited or affected a tenant’s ability to make a living or earn an income
- An increase in childcare expenses or the cost of having to attend to an elderly, disabled or sick family member
- Any other situation or instance where a tenant experiences a reduction in their income due to COVID-19
COVID-19 Rental Debt
Under SB 91, rental debt refers to any unpaid rent or financial obligation that became due between March 1, 2020 and June 30, 2021.
SB 91 Eligibility Requirements
In order to qualify for rental assistance under SB 91, eligible households have to meet the following criteria:
- At least one household member qualifies for unemployment benefits OR has suffered complete or major income loss or experienced financial distress because of COVID-19.
- At least one household member shows a high risk of becoming homeless by providing proof of past-due utilities or an eviction notice or is living in unsafe conditions.
- The total household income is less than 80 percent of the local median.
The rental assistance program prioritizes the provision of help to households with incomes below the 50 percent local median income level. Next on the priority list are qualified households located in communities that COVID-19 has impacted immensely.
How to Apply for SB 91 Benefits
Landlords can apply for rental assistance benefits on behalf of their tenant. However, it’s important to remember, the program is based on the tenant’s circumstances.
In the SB 91 program, a landlord can apply for rental assistance benefits directly on behalf of their tenant for the payment of rental arrears. During the application process, the landlord and tenant must work together as eligibility for funding assistance is based on the situation of each resident.
However, the details of the application process are yet to be made known. However, it seems likely that tenants will need to provide income-related information.
To benefit from the protections provided under SB 91, residential tenants must also comply with certain requirements.
They need to provide a declaration of hardship or supporting documents that state they belong to a certain income level; otherwise, their landlord can file an unlawful detainer.
However, always remember that there may be certain federal laws and local ordinances that take precedence even in such situations and which can prevent a landlord from filing an unlawful detainer.
Tenant declaration letters should be furnished to the landlord within 15 days once the 15-Day Notice to Pay Rent or Quit has been served.
This 15-day period during which a tenant must provide their declaration of financial hardship begins the next business day after the 15 Day Notice to Pay or Quit is delivered to them personally, and ends 15 days later. The 15-day count excludes weekends and holidays.
The tenant can deliver their declaration of COVID-19-related financial hardship to their landlord:
- In-person, that is, if the landlord has provided an address where the personal delivery of the declaration is possible
- By email, if the landlord has provided an email address to which the tenant can send the declaration
- By mail, using the address provided by their landlord
- Through any of the usual methods their landlord uses to collect rent
Tenants must note that even after they adhere to all of their obligations under SB 91, they still owe any unpaid rent to their landlord.
Landlords must notify their tenants about SB 91, particularly to tenants who owe any rent due between March 1, 2020 and June 30, 2021. Landlords must serve the notice before February 28, 2021. Also, a landlord may not serve any new 15-day notices before said date.
Aside from the above, landlords have further obligations they must fulfill:
- Since the SB 91 notice form has a different language than that of AB 3088, landlords must use the new version.
- Landlords are prohibited from charging late rental fees to tenants who have filed their COVID-19 financial hardship declaration under SB 91.
- Landlords are not allowed to charge late rent frees from March 1, 2020 until June 30, 2021 to any tenant who filed a signed COVID-19 hardship declaration.
- Landlords are forbidden from selling any COVID-19 rental debt for the period between March 1, 2020 and June 30, 2021.
- If so requested, a landlord must provide a translated version of the Tenant Declaration letter if and when they have provided a translated version of their rental agreement to their tenant.
How Much the State Assistance Program Covers
Residential tenants can qualify for up to 80 percent of their past-due rent that accumulated between April 1, 2020 and March 31, 2021.
Landlord Acceptance of the Rental Assistance Payment
If a landlord accepts the overdue rent payment (up to 80 percent) from the rental assistance program, they are required to accept said payment as payment in full for the entirety of the overdue balance for the applicable period; that is, April 1, 2020 through March 31, 2021.
Therefore, the landlord is prohibited from evicting or suing a tenant in small claims court for the 20 percent remaining of the rent due for the said period.
However, landlords are also free to decide not to participate or apply for rental assistance funding.
If the landlord chooses this route, their tenant can still apply for rental assistance funding. However, the tenant can only receive up to 25 percent of the past-due rental debt. The remaining 75 percent of the rental amount owed would be converted into consumer debt, which the landlord can collect through small claims court starting August 1, 2021.
Effects of SB 91 on Small Claims Court
SB 91 moved the March 1, 2021 date to August 1, 2021. This is the start date when landlords are permitted to sue a tenant for overdue rent through small claims court. SB 91 also includes changes to the type of documentation a landlord must provide to file a small claims action to recover COVID-19 rental debt.
- Proof that the landlord exerted effort to provide the tenant information on government rental assistance programs
- Evidence of the landlord having already applied for government rental assistance programs on behalf of their tenant
- Proof of cooperation with their tenant in helping them get government rental assistance
SB 91 Help by Express Evictions
Do you have other questions or concerns regarding SB 91?
Express Evictions continually updates our website with key information affecting landlords and tenants in the state of California.
If you have particular concerns regarding SB 91, please reach out to us online or call us at 800-491-1951.